Lawyer sues to block refinancing fee
December 29, 2010
By Alexander Coolidge
A Cincinnati lawyer has filed a proposed class action lawsuit against PNC Financial Services Group after the lender slapped her with a $135 fee when she refinanced her mortgage with another lender.
Ellen Essig, the local lawyer, refinanced her mortgage in September with Cleveland-based Third Federal Savings and Loan, which held her original home loan. Pittsburgh-based PNC charged Essig the fee in connection with her home equity line of credit.
Essig's home equity loan provides that a fee be charged when PNC agrees to subordinate its loan to another creditor. Home equity loans are typically subordinated to first and even second mortgages.
Essig says the clause in her home equity agreement is vague and should not be allowed to charge her the fee after refinancing her mortgage, in court papers. She adds the bank even overcharged her, noting the clause spells out a $100 subordination fee.
The lawsuit, filed in U.S. District Court in Western Pennsylvania last week, is seeking damages and a court order to ban PNC from collecting similar fees. The lawsuit also seeks class action status for similar cases since Dec. 24, 2004.
PNC officials declined to comment on the lawsuit. The bank is the nation's No. 5 home equity lender with $23.8 billion in outstanding loans as of Sept. 30, according to the Federal Deposit Insurance Corp.
Essig deferred comment to her own lawyer, Jeffrey Norton in New York.
"It's so vague - It's preying on unsuspecting borrowers," he said. "It allows them to attach fees whenever they want."