Court says mortgage takers can forget about fee refundsBanks breathed more easily after a local court rejected three separate requests by groups of mortgage holders that would have compelled local banks to refund the fixed fees involved in registering collateral needed to take out the loans.
The Seoul Central District Court ruled against a complaint by 270 mortgage loan borrowers who filed a class-action suit demanding that KB Kookmin Bank return a combined 430 million won ($397,045) in fees.
In two other trials yesterday, the same court also turned down similar pleas from a total of 100 borrowers seeking restitution from six local banks.
In one of its verdicts, the court said “it’s difficult to find that banks’ terms unfairly required customers to automatically pay fixed fees for registering collateral, as customers were given the choice of whether to pay the fees after consulting with banks on the matter.
“This then became a mutual agreement between the banks and customers, and the court doesn’t find that the contract violates the social order as customers were given the choice of either paying the fees and receiving a lower interest rate on their mortgages, or not paying them and having to contend with a higher interest rate,” it added.
The fixed fees include a stamp, registration and education tax, as well as a basic application fee. Market observers said about 700,000 won was paid on average for a mortgage of 100 million won.
A series of class-action suits were filed last year after the Fair Trade Commission ordered banks to refund all of the fees and interest either issued or incurred after July 2011, as well as 50 percent of the stamp tax from the same date.
Banks protested the order but the Supreme Court ultimately ruled in favor of the antitrust watchdog in August of that year.
The suits were filed by borrowers who paid fees before July 2011.
While banks hailed yesterday’s ruling, the Korea Finance Consumer Federation, a civic organization, said it will appeal to a higher court.
“The court has overturned the Supreme Court’s ruling [in August 2011], which found banks’ terms of fixed fees unfair,” said Cho Yeon-haeng, vice chairman of the federation. “The verdict tramples on customers’ rights.”
The federation said banks did not in fact lower the interest rates on mortgages for borrowers who paid the fixed fees, but in fact inflated the normal rates for those who declined to pay.
By Kim Mi-ju [firstname.lastname@example.org]