Freitags' class action against Option One in court

By Steve Gonzalez | Oct 18, 2004

Plaintiffs Larry and Brandi Freitag's three-count class action suit against Option One Mortgage, will go before Circuit Judge Nicholas Byron Oct. 27 for a case management conference.

The Freitags, of Troy, filed suit July 28 alleging Option One charged them interest after the couple's loan with the mortgagor had been paid off during a home loan refinance.

In May of 2001, Larry and Brandi Freitag refinanced their home mortgage with Union Planters Bank. The Option One Mortgage, a subsidiary of H&R Block, originated in January 2000.

Seeking damages to be determined by the court, the Freitags are represented by the The Lakin Law Firm of Wood River.

Prior to closing on the new loan, the Freitags had Option One prepare a payoff statement detailing the “total amount to pay loan in full." The amount indicated in a statement sent to the loan broker for Union Planters was $31,310.87.

The statement also provided, “If funds remitted are short, the funds will be returned.” Per diem or daily interest charges were $9.46. The figures were good through May 4, 2001.

When closing with Union Planters on May 18, 2001, the settlement agent collected and disbursed the new loan proceeds to various parties, including Option One. Option One received $31,497.57 which reflected the amount Option One listed as the "total amount to pay loan in full" as of May 4, 2001, plus $16.42 for the "late charge amount" and an additional 18 days of interest worth $170.28.

The Freitags do not know the precise date Option One received the payoff, but the title company sent the check on May 21, 2001, by UPS Next Day Air, presuming it was received and paid off on May 22, 2001.

Interest on conventional mortgage loans and VA-guaranteed loans accrues until the day the loan is paid off. For conventional and VA loans, per diem interest accrues up to, but not including the day a mortgagor receives a payoff, according to the complaint.

The complaint states that the Federal National Mortgage Association commonly known as “Fannie Mae” explains and constructs, “Conventional loans and VA require interest paid for each day of the month up to, but not including the day of payoff.”

The Freitags allege that since that they assume the loan was paid off no later than May 22, no interest should have accrued past May 21, and that Option One owes them at least $9.46 since no loan contract permits them from keeping any anticipated per diem interest.

Option One is represented by the St Louis firm of Herzog Crebs.

A similar class action suit filed by Thomas and Rebecca Hogle in May 2003, against Wachovia Mortgage Corp., is set for a case management conference on Oct. 27 before Judge Byron. The Hogles are represented by the Lakin Law Firm.

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