N.J. Court Says Lenders May Pass along Some Legal Fees
Brockman, Joshua, American Banker
Mortgage lenders in New Jersey may charge borrowers "reasonable and modest" legal fees for reviewing loan documents, under a ruling by the Supreme Court of New Jersey.
New Jersey's highest court also ruled that thrifts in New Jersey are effectively immune from state laws that would affect their lending operations and therefore remain under federal regulations handed down by the Office of Thrift Supervision.
Leonard A. Bernstein, a partner with Reed, Smith Shaw & McClay in Princeton, N.J., who represented Chase Manhattan Mortgage Corp., said the Dec. 9 ruling was a victory for mortgage lenders.
The case is "an example of the attacks on fees that plaintiffs' lawyers are making throughout the lending industry and throughout the country," he said. "The lesson here is to try to work with the legislature in this state or any other state to ensure precise drafting of laws regarding fees so that ambiguities don't result in litigation."
The ruling also is a victory for federally chartered thrifts because it gives them "ample authority by virtue of the federal law -- both the statute and the regulation -- to proceed and impose attorneys fees, irrespective of what New Jersey says," Mr. Bernstein said.
Thrifts may be able to use the case as a legal precedent, he said, because it protects them from suits by plaintiffs "alleging some violation of a state law concerning fees." He said "a court will recognize that a federal savings institution is governed by one entity: the Office of Thrift Supervision. …