Are Fax and Statement Fees Charges With Respect to but Not Exclusively Related to Prepayment of a Loan ?

Are Fax and Statement Fees Charges for Special Services Provided to the Borrower by the Lender With Respect to But Not Exclusively Related to Prepayment of a Loan ?

In Cappellini v. Mellon Mortgage Co., 991 F. Supp. 31 (D. Mass. 1997), plaintiff claimed that a $ 15 fax fee and a $ 25 duplicate statement fee for a payoff statement should be classified as a prepayment fee.

The fees in Capellini were not contained in the plaintiffs mortgage or note and were paid when plaintiff paid off the loan.

Rejecting the plaintiffs argument that the fees constituted a prepayment penalty, the court found that the fees are not assessed only in the context of prepayment but are routinely assessed in other circumstances unrelated to prepayment. Cappellini, 991 F. Supp. at 38.

The court concluded that "fax and statement fees are not prepayment charges, but are rather charges for special services outside of the basic service agreement provided to the borrower by the lender with respect to-but not exclusively related to the prepayment of-a loan." Cappellini, 991 F. Supp. at 38.

the court, in Colangelo v. Norwest Mortgage, Inc., 598 N.W.2d 14 (Minn. App. 1999), reached the same conclusion with respect to a $ 10 fax charge.

It found that the borrower is not required to pay the $ 10 fee as a condition of paying off the mortgage loan because the borrower does not even need to acquire a payoff statement to pay the loan in full and because the fee could be assessed outside the context of prepayment. Colangelo, 598 N.W.2d at 16-17.

The court held the charge was a permissible fee for special services. Colangelo, 598 N.W.2d at 17.