Ty and Kimberly Mitchell refinanced their home loan with Beneficial Loan and Thrift Co. They allege Beneficial violated the federal Home Ownership and Equity Protection Act (HOEPA) by charging excessive “points and fees” exceeding 8 percent of the amount borrowed, or $400, whichever is greater.

The Mitchells argue the $455 appraisal fee, $821 title insurance fee, $67 phone bill and the $1,178 overstatement of the payoff amount for their old refinanced mortgage should be included in the total points and fees calculation of their new Beneficial mortgage.

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Beneficial replied that the appraisal fee, title insurance fee, $67 phone bill and the $1,178 overstatement of the payoff on the old mortgage were paid to third parties so they should not be considered as “points and fees” charged for the new Beneficial mortgage. Therefore, Beneficial contends this mortgage transaction is not subject to regulation rules of the HOEPA federal law.

If you were the judge would you rule Beneficial charged excessive “points and fees” in violation of federal law?

The judge said no!

“Appraisal and title insurance fees, if bona fide and reasonable, are excluded from HOEPA’s definition of total points and fees,” the judge began. Neither did these fees violate the federal Real Estate Settlement and Procedures Act (RESPA) because they were paid to unaffiliated third parties for services performed and Beneficial derived no benefit from the payments, he explained.

As for the $67 Verizon telephone bill, he continued, evidence shows this was paid by Ty Mitchell after the loan closing so Beneficial never received that payment nor was it incident to the extension of mortgage credit.

The alleged $1,178 overcharge for the mortgage payoff demand of the previous first mortgage was not a finance charge because it was not an incident to extending credit, the judge emphasized. Therefore, there were no excessive loan points and fees that would make this mortgage subject to HOEPA’s regulation provisions, the judge ruled.

Based on the U.S. Court of Appeals decision in Mitchell v. Beneficial Loan and Thrift Co., 463 Fed.3d 793.

(For more information on Bob Bruss publications, visit his
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