Ty and Kimberly Mitchell refinanced their home loan withBeneficial Loan and Thrift Co. They allege Beneficial violated the federal HomeOwnership and Equity Protection Act (HOEPA) by charging excessive “pointsand fees” exceeding 8 percent of the amount borrowed, or $400, whicheveris greater.
The Mitchells argue the $455 appraisal fee, $821 title insurancefee, $67 phone bill and the $1,178 overstatement of the payoff amount for theirold refinanced mortgage should be included in the total points and feescalculation of their new Beneficial mortgage.
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Beneficial replied that the appraisal fee, title insurancefee, $67 phone bill and the $1,178 overstatement of the payoff on the oldmortgage were paid to third parties so they should not be considered as”points and fees” charged for the new Beneficial mortgage. Therefore,Beneficial contends this mortgage transaction is not subject to regulationrules of the HOEPA federal law.
If you were the judge would you rule Beneficial chargedexcessive “points and fees” in violation of federal law?
The judge said no!
“Appraisal and title insurance fees, if bona fide andreasonable, are excluded from HOEPA’s definition of total points andfees,” the judge began. Neither did these fees violate the federal RealEstate Settlement and Procedures Act (RESPA) because they were paid tounaffiliated third parties for services performed and Beneficial derived nobenefit from the payments, he explained.
As for the $67 Verizon telephone bill, he continued,evidence shows this was paid by Ty Mitchell after the loan closing soBeneficial never received that payment nor was it incident to the extension ofmortgage credit.
The alleged $1,178 overcharge for the mortgage payoff demandof the previous first mortgage was not a finance charge because it was not anincident to extending credit, the judge emphasized. Therefore, there were no excessiveloan points and fees that would make this mortgage subject to HOEPA’sregulation provisions, the judge ruled.
Based on the U.S. Court of Appeals decision in Mitchellv. Beneficial Loan and Thrift Co., 463 Fed.3d 793.
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Copyright 2007 Inman News