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Sunday, June 23, 2024 | Back issues
Courthouse News Service Courthouse News Service

Court Tosses Countrywide Class Action Over $35 Fee

ATLANTA (CN) - Countrywide Home Loans and Landsafe, a credit reporter, won their bid in the 11th Circuit to dismiss a class action accusing them of illegally marking up loan costs by charging a $35 credit-report fee to borrowers who locked in Countrywide loans to make up for the cost of providing free credit reports to applicants who did not end up getting a loan through Countrywide.

Landsafe, a subsidiary of parent company Countrywide Financial Corp., provides almost all of the credit reports Countrywide orders for its customers during the pre-qualification or pre-application stage of the loan process. Before August 2002, Landsafe charged Countrywide $25 for each credit report, a cost that Countrywide passed on to customers who locked in their loans with Countrywide. But the mortgage broker had to absorb the cost of credit reports provided to customers who chose not to get their loans through Countrywide.

In order to avoid the loss, Countrywide asked Landsafe to raise its price for locked-in borrowers to $35.

Homeowners sued Countrywide and Landsafe under the anti-kickback and anti-markup provisions of the Real Estate Settlement Procedures Act.

But the appeals court rejected their arguments on the basis that: "1) all of the money Countrywide charged from the credit reports was paid over to Landsafe; and 2) the increase in price was related to services actually performed for the locked-in customers." See ruling.

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