655 F.3d 869
8th Cir.2011Background
- Washingtons sued Countrywide under the MSMLA for unauthorized interest/fees tied to four HUD-1 charges included in the loan principal.
- Initial loan: $23,000, 15 years, 12% interest, April 2005 closing.
- Audit post-closing determined $690 loan discount and $100 closing fee should not have been charged; $790 paid to Washingtons was not offset in principal.
- Countrywide wired Servicelink $790 to the Washingtons and revised HUD-1 to reflect removal, but Washingtons were not informed or asked to sign the final HUD-1.
- Interest began accruing April 26; first loan disbursement (with $790) occurred April 28; MSMLA violations alleged include charging improper fees and resulting prepaid interest.
- District court granted Countrywide summary judgment; this court reverses and remands for proceedings consistent with the opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether $690 loan discount and $100 closing fee violate the MSMLA | Washingtons suffered a loss due to improper charges. | District court held lack of standing due to disbursement; not decided on MSMLA violation. | Not decided at this stage; remanded to determine MSMLA violation. |
| Whether the $60 document processing/delivery fee falls within authorized MSMLA charges | Document processing/delivery is not authorized; mischaracterized as a permissible fee. | Final HUD-1 labeling should be construed to determine authorization. | Exclusive list issue; Washingtons win on the charging of the fee; fee not authorized under MSMLA. |
| Whether the $37.80 prepaid interest violated MSMLA | Violation of MSMLA fee limitations leads to loss of prepaid interest. | Interest collected on prepaid amount may be recoverable as violation. | Dependent on whether earlier fees violated MSMLA; remand for full consideration. |
| Whether the MSMLA fee-list is exclusive or inclusive of other bona fide closing costs | Exclusive nature supported by Mitchell v. Residential Funding Corp. | MSMLA may permit other closing costs not listed. | Court follows Mitchell; list is exclusive; fees outside list violate MSMLA. |
Key Cases Cited
- Country Life Ins. Co. v. Marks, 592 F.3d 896 (8th Cir. 2010) (de novo review standard for summary judgment; standing to show loss)
- Mitchell v. Residential Funding Corp., 334 S.W.3d 493 (Mo. 2010) (MSMLA closing costs; HUD-1 labeling governs permissible charges; list exclusive)
- Williams v. City of St. Louis, 783 F.2d 114 (8th Cir. 1986) (remand when issues decided on summary judgment require additional briefing)
- Erie v. Tompkins, 304 U.S. 64 (1938) (state law governs in diversity cases; best evidence of Missouri law given Missouri Court of Appeals precedents)
- Hartford Fire Ins. Co. v. Clark, 562 F.3d 943 (8th Cir. 2009) (summary; remand when not all issues addressed at trial)