Mortgage agreements are complex and difficult for many consumers to understand. Prospective buyers often rely on the expertise of their realtor and the advice of their mortgage company representative or banker to help them parse the language and terms of the agreement. Some homebuyers choose to be represented by an attorney in the negotiation and execution of a home purchase so that they have an expert that will advocate for their interests alone.
One area of confusing is often the different fees that are assessed in a mortgage agreement. Some line items will be taxes or other regulatory fees, and some will be administrative fees from the various parties to the agreement. This week, a Supreme Court decision clarified and restricted a law that governs those fees, which says that no person can accept a fee for a service that they did not actually perform.
The recent decision clarified that this rule only applies to a situation where a service provider is splitting a fee with another entity or person.
The case before the court was brought by several families who were charged an interest rate discount fee, but who said that they did not benefit from a lower interest rate. The mortgage company says that they did receive a lower interest rate and that the claim for damages was unfounded, since the service was performed.
This ruling is been seen as a setback for some consumer advocates, but is being cheered by the mortgage industry. The decision was unanimous and upholds an earlier Court of Appeals decision.
Source: Washington Post, “Supreme Court says families cannot sue mortgage company over loan discount fee,” May 24, 2012.