647 F.3d 850
8th Cir.2011Background
- Washingtons sued Countrywide under the Missouri Second Mortgage Loan Act (MSMLA) for unauthorized interest and fees based on HUD-1 disclosures.
- Fees at issue include a $690 loan discount, a $100 settlement/closing fee, a $60 document processing/delivery fee, and $37.80 prepaid interest; the $790 charged was included in loan disbursement but not credited to principal.
- Countrywide later revised the HUD-1 to reflect the $790 payment, but the Washingtons were not informed or asked to sign the revised HUD-1.
- District court granted summary judgment for Countrywide; this court reviews de novo with all evidence in the Washingtons' favor.
- A central issue is whether the $60 processing/delivery fee was an authorized closing cost under MSMLA § 408.233.1(3) and whether the fee list is exclusive.
- The court ultimately remands, holding the $60 fee was not authorized and that the $690 and $100 charges could be actionable despite the initial disbursement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Washingtons suffered any loss under MSMLA for the $690 and $100 charges | Washingtons suffered loss via excess interest during disbursement period | No loss since amounts were repaid or offset in disbursement | Washingtons must prove loss; material issue of fact remains as to loss and causation |
| Whether the $60 document processing/delivery fee was an authorized MSMLA charge | Fee was not authorized; mischaracterized as processing rather than a third-party service | Fee is an authorized closing cost under § 408.233.1(3) as document preparation | The fee was not authorized; the HUD-1 identified services show it as document processing/delivery |
| Whether MSMLA § 408.233's fee list is exclusive and thus prohibits other closing costs | Enumerated list may be non-exclusive; other bona fide closing costs allowed | List is exclusive of permissible fees | MSMLA list is exclusive; the $60 fee violated the statute |
| Whether the $37.80 prepaid interest violated MSMLA due to interest prohibition | Prepaid interest constitutes MSMLA violation when closing costs are improper | Prepaid interest falls within permitted charging absent specific limitations | Prepaid interest violated MSMLA as a consequence of the unlawful processing/delivery fee |
Key Cases Cited
- Mitchell v. Residential Funding Corp., 334 S.W.3d 499 (Mo. Ct. App. 2010) (HUD-1A determinations control whether fees are permissible; processing/federal express fees often not authorized)
- Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938) (state law governs in diversity actions absent federal questions)
- Mayo v. GMAC Mortg., LLC, 763 F. Supp. 2d 1091 (W.D. Mo. 2011) (disagreement about whether MSMLA closing-cost list is exclusive)
- Thomas v. U.S. Bank Nat'l Ass'n, 575 F.3d 794 (D. Mo. 2009) (MSMLA fee limitations and consumer protections; causation considerations)