Legal Question in Consumer Law in Maryland

Adding binding arbitration agreement after colleting lock deposit

I applied for a conventional mortgage. The Broker faxed my a ''financing agreement'' which stated terms of the loan he would attempt to lock for me. I signed the agreement and gave my credit card number (with authorization to charge the appraisal and a $325 deposity refundable after the loan proceeds were disbursed). Later the broker confirmed I got the rate and terms locke in.

Two days later the application package arrives. Within the package is an ''arbitration agreement'' that would bar me from suing the broker, any lender, or servicer or participating in any class action. There was no mention of such a provision before he collected my money.

If the broker insists that he will not get me a loan without my signing the arbitration agreement, do I have a right to demand a refund of all money he withdrew from my card. Would I likely prevail in small claims court if it went that far. I would argue that collecting the lock fee without disclosing a substantial provision, such as the arbitration restriction, was a deceptive business practice.

Finally, would presenting the arbitration clause AFTER locking the rate make it unenforcable


Asked on 6/15/03, 10:31 am

2 Answers from Attorneys
G. Joseph Holthaus III Law Offices of G. Joseph Holthaus

Re: Adding binding arbitration agreement after colleting lock deposit

Although arbitration clauses are fully enforceable in a bargained for agreement, if you were not notified of this clause in any signed agreement then the agreement is without merit. You should review all documents and if no clause exists and a demand for payment persists, then you should consider contacting an attorney.

Read more
Answered on 6/20/03, 5:37 pm
Michael Worsham Michael C. Worsham, Esq.

Re: Adding binding arbitration agreement after colleting lock deposit

An arbitration agreement taking away your right to go to court is certainly a substantive and material issue that you should have been notified about. You have to read carefully anything you signed with the company before bringing your small claims suit. Also read their web site to see if they mentioned arbitration there, especially if you applied on line. Your case will be harder if an appraisal was already performed, because you have something of value to show for your money.

Read more
Answered on 6/15/03, 1:29 pm


Related Questions & Answers

More Consumer Law questions and answers in Maryland