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Sonoda v. Amerisave Mortgage Corp.

Nationwide Class ActionUnited States District Court Court (N.D. Cal.)Case No. C-11-1803 EMC

Case Type:  Consumer RightsMortgage and Lending

The Sturdevant Law Firm was co-lead counsel in this action representing homeowners from San Mateo, California, Potomac, Maryland and Jupiter, Florida in a national class action suit against Amerisave, a mortgage lender and broker, alleging that it illegally charged fees before providing a good faith estimate and for promising—but failing—to lock-in interest rates for its customers.

Under the Truth in Lending Act (TILA), mortgage lenders and brokers are prohibited from charging any fees, other than for a credit check, before providing consumers with a good faith estimate of all fees and costs for the loan. Federal law prohibits this practice to prevent unscrupulous lenders from collecting fees from consumers before they know the ultimate cost of the loan. Plaintiffs allege that Amerisave charges hundreds of dollars in fees before issuing good faith estimates to its customers. This lawsuit challenges Amerisave’s practices and seeks damages for the victims of Amerisave’s illegal fees and injunctive relief to halt the practices.

The lawsuit also charges that Amerisave promises consumers low lock-in mortgage rates in order to obtain upfront fees, and then does not provide the lock-in, either refusing it altogether, letting the rate lock period expire, and/or failing to process consumers’ applications, often delaying the process for weeks and even months. If the applicant pulls out of the loan, Amerisave charges a substantial cancellation fee, as high as $500. Plaintiffs allege that these practices also constitute violations of state consumer protection laws, and constitute a breach of contract.

Lock-in mortgage rates are crucial to many consumers because they provide certainty about housing costs in an uncertain environment in real estate and the economy in general. Plaintiffs allege that Amerisave misrepresents available rates in order to “lock in” consumers who otherwise would transact business with Amerisave’s competitors.

Amerisave’s motion to dismiss was denied. Plaintiffs expected to file a class certification motion in 2012, but after two mediation sessions before the Hon. Edward A. Infante in San Francisco, settlement was reached for $3.1 million.  Final approval was granted on March 4, 2013, as were attorneys’ fees, costs, and expenses in the amount of $775,000.  The three named plaintiffs each received $5,000, 80,889 class notices were sent, and class members received a refund of 36% of the amount they overpaid.

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