• 07
  • October
    2011

On Tuesday, a federal court in Atlanta unsealed a lawsuit which questions some of the fees charged by certain banks during the mortgage loan process. The lawsuit casts a wide net naming several large banks including Wells Fargo, JP Morgan Chase & Co., and Bank of America.

The central allegation is that the banks fees which the banks described as "title examination" or "title search" fees, where actually fees for other services from which the banks are allegedly prohibiting from charging. These include attorney's fees and settlement closing costs.

The lawsuit was brought by a two mortgage brokers in 2006 and was sealed until this week. It is not uncommon for a lawsuit such as this to remain sealed while to allow time for investigation.

The mortgage loans at the center of this lawsuit are a special variety which are made available to military veterans and are guaranteed by the Department of Veterans Affairs. The complaint relies upon the Federal Claims Act.

Filings in the lawsuit indicate that banks are allowed to "reasonable and customary" fees and taxes. In their court filings, the banks have denied the allegations of wrongdoing alleged in the lawsuit.

The plaintiffs in this case allege that more than 90 percent of the more than one million loans made to veterans have included the improper charges, and that in each case the amount of improper charges ranges from $300 to $1,000.

Litigation related to mortgage loan practices in the wake of the troubles in the real estate market present a challenge for banks and lending institutions as they attempt to put themselves on firmer ground as part of an economic recovery.

Source: The Wall Street Journal "Lawsuit claims banks cheated veterans with fees," Oct. 4, 2011