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Decided: July 10, 2014

The Fourth Circuit affirmed the district court’s judgment as a matter of law in favor of Prosperity Mortgage, and found that Prosperity Mortgage did not violate the Maryland Finder’s Fee Act.

Appellants, Petry, borrowed money from Prosperity Mortgage, the Appellee, to purchase a house, and contended that the fees that Prosperity Mortgage charged at closing violated the Maryland Finder’s Fee Act because of the way Prosperity Mortgage operated in relation to Long & Foster Real Estate, Inc., and Wells Fargo Bank, N.A., each of which indirectly owned one-half of Prosperity Mortgage. When Appellants purchased their house, their Long & Foster real estate agent introduced them to a Prosperity Mortgage loan officer, who in turn arranged a mortgage loan that enabled them to purchase their house without a down payment. To fund the loan, Prosperity Mortgage drew on a line of credit with Wells Fargo. At closing, the Appellants paid Prosperity Mortgage the typical lending fees, and after closing, Prosperity Mortgage sold the loan to Wells Fargo.

After discovery was completed, the district court advised the parties that the fees Prosperity Mortgage charged were not “finder’s fees” within the meaning of the Maryland Finder’s Fee Act, unless the fees had been inflated so that the overcharge could be considered a disguised finder’s fee. When the Appellants acknowledged their lack of proof to meet this burden, the district court entered judgment as a matter of law in favor of the Prosperity Mortgage.

The Fourth Circuit reasoned that because Prosperity Mortgage was identified as the lender in the documents executed at closing, it was not a “mortgage broker” as the Maryland Finder’s Fee Act defines that term, and therefore was not subject to the Act’s provisions.

Full Opinion

Grace D. Faulkenberry