The opinion of the court was delivered by: JAMES B. ZAGEL
MEMORANDUM OPINION AND ORDER
This cause is rooted in a class action suit brought against Lomas Mortgage USA, Inc. (counterplaintiffs here), a mortgage service company. Plaintiffs (counterdefendants here) hold mortgages that are owned or serviced by Lomas.
The mortgages require class members to deposit 1/12 of annual taxes and insurance in a non-interest bearing escrow account each month. In their complaint plaintiffs allege that Lomas requires the class members to deposit escrow accounts in excess of the amount required by their mortgages, thereby obtaining the use of large amounts of money to which Lomas is not entitled.
Lomas has filed a class action counterclaim. The counterclaim seeks a declaration (1) that Lomas is entitled to impose a 4% late charge for delinquent payments on federally guaranteed mortgage loans calculated on the entire past due amount, including principal, interest, taxes and insurance; and (2) that imposing late charges does not violate the Illinois Consumer Fraud and Deceptive Business Practice's Act, Ill. Rev. Stat. ch. 121-1/2, para. 262 (the "Illinois Consumer Fraud Act"). The Washingtons and the class members contest Lomas' entitlement to assess late charges on delinquent payments of principal and interest and taxes and insurance. They contend that late charges should be assessed only on delinquent monthly payments of principal and interest.
This case is presently before the Court on Lomas' motion for summary judgment on its counterclaim. For the following reasons Lomas' motion is granted.
The Washingtons have a fixed-rate mortgage and note written on standard printed forms issued by the Department of Veterans Affairs ("VA"). The VA guaranteed the mortgage. Lomas, or its predecessor, the Lomas & Nettleton Company, has serviced the Washingtons' mortgage since at least 1980. The mortgage provides that Lomas may assess a late charge of no more than 4% for delinquent mortgage payments. Lomas computes late charges on delinquent payments calculated on the aggregate past due amount for principal, interest, taxes and insurance ("PITI") under VA-guaranteed mortgages.
The "whereas" clause at the beginning of the mortgage states:
That whereas the Mortgagor is justly indebted to the Mortgagee, as is evidenced by a certain promissory note executed and delivered by the Mortgagor, in favor of the Mortgagee . . . in the principal sum of Twenty One Thousand Four Hundred and 00/000 Dollars ($ 21,400.00) payable with interest at the rate of Eight and 50/100 per centum (8.50) per annum on the unpaid balance until paid, and made payable to the order of the Mortgagor . . . the said principal and interest being payable in monthly installments of One Hundred Sixty-Five and 21/100 Dollars ($ 165.21) . . .
As to the language in the mortgage authorizing the assessment of late charges, the mortgage provides:
Together with, and in addition to the monthly payments of principal and interest payable under the terms of the note secured hereby, the Mortgagor will pay to the Mortgagee as Trustee . . . the following sums:
(b) The aggregate of the amounts payable pursuant to subparagraph (a) and those payable on the note secured hereby shall be paid in a single payment each month . . .
Any deficiency in the amount of any such aggregate monthly payment shall, unless made good prior to the due date of the next payment, constitute an event of default under this Mortgage. At Mortgagee's option, Mortgagor will pay a "late charge" not exceeding four per centum (4%) of any installment when paid more than fifteen (15) days after the due date thereof to cover the extra expense involved in handling delinquent payments, but such "late ...