Big LV lender sued over mortgage fees

Brian Seals

Monday, Aug. 10, 1998 | 10:13 a.m.

A class-action lawsuit accuses Norwest Mortgage Inc. of overcharging homeowners on loan closing statements and service fees.

Norwest Mortgage, which claims to be top mortgage lender in Las Vegas, was sued in Riverside, Calif. The suit was filed under California's Unfair Competition laws, but lawyers say customers nationwide could be involved.

"Thousands of borrowers may have been affected in California and across the United States," said attorney Jordan Lewis.

The July 29 complaint alleged Norma Saunders, the lead plaintiff, saw several discrepancies on her closing statement when she received it in September 1996. Her statement showed charges to her accounts such as $26.50 for a credit report while the report cost $14 to process, for example.

Lewis alleged Norwest fails to inform borrowers or prospective borrowers of the true cost of credit reports and loan-related services. Lewis said lenders typically use third parties to perform such services, mark up the price and charge the consumer.

"As a matter of practice for certain loan-related services, Norwest negotiates and-or obtains rates from third-party service providers that it keeps secret from its borrowers and that are considerably less than the amount it discloses," the complaint states.

The company has been the target of one similar complaint in Las Vegas this year, said Lyndon Evans, deputy commissioner of the state Financial Institutions Division.

That complaint was from a borrower who was charged for extending her "lock-in" provision from 30 to 60 days. The charge was not disclosed, according to the complaint. That matter has been settled.

The suit seeks damages, restitution and an injunction prohibiting Norwest from such practices.

Norwest officials would not comment on specific allegations in the lawsuit.

"We can confirm, however, Norwest Mortgage has a long-standing policy against marking up any and all third-party costs, including fees for closing services," spokesman Dan Frahm said in a statement.

Based on 1996 data, Norwest Mortgage claims to be the top mortgage lender in Las Vegas. It claimed a 9.8 percent market share that year by originating 7,494 loans exceeding $820 million.

Nationwide, the company originated about $51.5 billion in loans in 1996.

Norwest Mortgage, with 750 branches across the country, is a unit of Norwest Corp. of Minneapolis. Norwest is merging with Wells Fargo Bank.