A federal appeals court last week reinstated a lawsuit that alleges Wells Fargo & Co. of charging excessive fees on home loans.

The U.S. 2nd Circuit Court of Appeals in New York reinstated a suit against the San Francisco-based bank that a trial judge had dismissed, according to news reports. The suit claims Wells Fargo violates federal laws by requiring mortgage customers to pay excessive fees for some services.

Specifically, the suit focuses on tax services, document presentation and flood certifications during the mortgage process that were preformed by third parties. The suit claims Wells Fargo improperly marked up those fees to consumers without providing additional settlement services itself.

Settlement service providers are prohibited from marking up the cost of another provider’s services without providing additional settlement services, according to court documents.

The appeals court did not rule on the merits of the case, instead simply finding that the group of homeowners who had used Wells Fargo – all from New York and California – had made sufficient arguments for the case to go forward. The court reinstated the claim, which had previously been dismissed by the U.S. District Court in the Eastern District of New York.


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