A lawsuit claming NovaStar Mortgage paid mortgage brokers extra fees to arrange loans with higher interest rates has been granted class-action status by a U.S. District Court judge in Tacoma, Wash.

The lawsuit alleges that the yield spread premium on the loans was not disclosed to borrowers until the day of closing, if at all. State and federal laws require lenders to disclose such fees within three days of a loan application.

A lawyer for eight Washington state residents who sued NovaStar in December told the Seattle Post-Intelligencer that at least 1,000 people were affected, and that the premiums cost the borrowers $3,000 on average. The case is scheduled to go to trial in February.

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