Schuetz V. Banc One Mortg Corp.

Case Study: Schuetz v Banc One Mortg Corp

This case study talks about the difference between legal fees and illegal kickbacks between mortgage barrower, broker, and lender. Bettina J. Scheutz (the barrower) thought it was unfair that she had to pay an additional $516.00 to Home Mortgage Financial Corporation (the mortgage broker) for the yield spread premium. She already paid them $1,661 in direct fees, consisting of $688.00 for loan origination, $688.00 for loan discount, and $285.00 for processing, but Banc One (the mortgage lender) also gave Home Mortgage Financial Corporation a yield spread premium of $516.00 which is paid by the barrower through a higher interest rate. This payment was identified on
That test was applied to the Schuetz v Banc One Mortg Corp case and it found that there is substantial evidence that Schuetz 's mortgage broker provided her a host of compensable goods, facilities, and services. The record demonstrates that Home Financial offered Schuetz the best interest rate it could base upon her situation, the rates available at the time, and its need to be compensated. Home Mortgage Financial Corporation would also not have originated her loan only for the direct fees that she personally paid up front. Therefore, the evidence shows that the broker 's total compensation that consisted of direct fees and indirect fees, was consistent with local practice and it was permissible under Section 8 of