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Decided: July 10, 2014

The Fourth Circuit held that the Defendant, Nutter, was not a “mortgage broker” under Maryland Finder’s Fee Act, Md. Code Ann. § 12-804(e), and so he could not be liable for conspiring to charge an illegal finder’s fee in a mortgage transaction.

In 2008, Marshall entered into a reverse mortgage agreement with Savings First Mortgage, LLC (Savings First). Under a prior agreement, Nutter table funded the loan between Marshall and Savings First—meaning he provided to Savings First the actual funds that it loaned to Marshall, and Savings First’s agreed to assign the note to Nutter at closing. The note between Marshall and Savings First included a prohibited “loan origination fee” and “correspondent fee.” Based on those two fees, Marshall brought a class action lawsuit against Nutter for conspiring to charge a finder’s fee on a mortgage transaction in violation of the Maryland Finder’s Fee Act.

The Court reasoned that Nutter was not liable for conspiring to violate the Maryland Finder’s Fee Act because, according to the Maryland common law of conspiracy, he was not “legally capable” of violating the Act. Nutter was not legally capable of violating the Act because the Act was silent about liability for conspiring to charge a finder’s fee. The Act only imposed liability on “a mortgage broker,” and Nutter was not a mortgage broker.

Full Opinion

James Bull Sterling