Washington v. Countrywide Home Loans, Inc., 655 F.3d 869

Washingtons allege Countrywide charged unauthorized MSMLA fees and interest on a second mortgage and sue for putative class relief.
Action removed to federal court on diversity grounds under CAFA; district court granted summary judgment for Countrywide; appellate court reverses and remands.
In April 2005, Washingtons obtained a $23,000, 15-year loan at 12% interest; HUD-1 disclosed four charges: $690 loan discount, $100 closing fee, $60 document processing/delivery, and $37.80 prepaid interest, all included in the loan principal.
Countrywide later audit reversed the $690 and $100 charges; Servicelink paid $790 to the Washingtons; HUD-1 was revised, but the Washingtons were not informed or asked to sign the revised HUD-1.
Interest began accruing on April 26; first disbursement including the $790 occurred on April 28.
The court addresses whether the $690/ $100 charges violated the MSMLA, whether the $60 fee was authorized, whether the $37.80 prepaid interest violated the MSMLA, and standing/causation issues relating to any loss of money.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the $690 loan discount and $100 closing fee violate MSMLA and confer standing	Washingtons; losses due to charges.discretion	Countrywide; these charges were properly incurred or not recoverable.	Not decided; remanded for district court to resolve.
Whether the $60 document processing/delivery fee violates MSMLA	Washingtons contend fee not authorized and violates MSMLA.	Countrywide argues fee is an authorized closing cost.	Violated MSMLA; exclusive list controls; remand not required.
Whether the $37.80 prepaid interest violated MSMLA	Prepaid interest is part of MSMLA violation when closing costs violate the statute.	Interest is recoverable only if MSMLA terms are violated.	Violation established; prepaid interest deemed improper.
Standing and causation: whether Washingtons have a loss of money caused by MSMLA violations	Washingtons suffered loss due to two-day interest accrual prior to receipt of funds.	No loss, or loss not causally tied to violations.	Material issues of fact regarding loss and causation; remand on standing/causation.

Mitchell v. Residential Funding Corp., 334 S.W.3d 495 (Mo. Ct. App. 2010) (MSMLA fees; document fees not authorized; HUD-1 determination controls classification)
Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938) (state law governs in diversity cases absent federal question)
Fielder v. Credit Acceptance Corp., 19 F.Supp.2d 966 (W.D. Mo. 1998) (MSMLA damages; loss of money includes interest period losses)