The opinion of the court was delivered by: Justice Bilandic
-Agenda 36-September 1998
The issues presented in this appeal center on whether a lender violated the Illinois Consumer Fraud and Deceptive Business Practices Act (hereinafter Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 1992)) by charging loan applicants a mortgage assignment recording fee and a tax escrow suspension fee.
In October of 1992, plaintiffs, Phyllis J. Weatherman, Ruth A. Russell, and Ronald D. Vega, applied to defendant, Gary-Wheaton Bank of Fox Valley, for a mortgage to refinance residential property.*fn1 At the time that plaintiffs applied for the loan, defendant provided them with a document entitled "Good Faith Estimate of Charges." That document disclosed certain estimated charges relating to closing, including the sum of $80 for recording fees and a real estate tax escrow in the amount of $2,664. Defendant also informed plaintiffs when they applied for their loan that it sells all of its loans into the secondary mortgage market and that their loan would be sold and transferred at or after closing. Plaintiffs accepted these terms. Defendant approved a $137,250 loan and issued its loan commitment. Plaintiffs signed the loan commitment and gave defendant approximately $1,400 as a "lock-in fee," which was refundable upon closing of the loan.
Before closing, defendant chose to assign plaintiffs' mortgage to Midwest Mortgage Services, Inc. (Midwest), a wholesale mortgage banking company that buys and then sells mortgage loans into the secondary mortgage market. Defendant and Midwest have had a contract with each other since 1987 regarding the sale and purchase of mortgage loans. Also prior to closing, plaintiffs requested that defendant suspend the tax escrow. Defendant agreed and informed plaintiffs they would be charged a $343.13 fee to "control their own escrow."
At closing, defendant provided plaintiffs with a "Settlement Statement" containing an itemized breakdown of all closing costs. That statement indicated that plaintiffs would be charged $77 in recording fees, which included a $15 fee to record the assignment of the mortgage to Midwest.
Defendant paid that fee to the title company, which was paying for the recording. The "Settlement Statement" further indicated that plaintiffs would be charged a $343.13 escrow suspension fee. Plaintiffs paid these fees at closing, but claim that they did so only to complete the refinancing, control their own escrow by paying their property taxes themselves, and avoid losing their lock-in fee.
Plaintiffs thereafter filed a class action complaint in the circuit court of Cook County against defendant, the First National Bank of Chicago, and First Chicago Corporation. Acting on behalf of a putative class comprised of all mortgage borrowers to whom defendant charged either a mortgage assignment recording fee or an escrow suspension fee within the applicable limitations period, plaintiffs allege that defendant failed to inform them of the mortgage assignment recording fee until closing and failed to inform them of the escrow suspension fee until just a few days before closing. Plaintiffs claim that they received no benefit as a result of either the mortgage assignment recording fee or the escrow suspension fee and that, had they known before paying their lock-in fee that defendant would charge them these two fees, they "would have pursued refinancing with other lenders who did not require payment of these fees." In addition, plaintiffs claim that defendant misrepresented that the fees were required and necessary charges to close and fund the loan. Plaintiffs further allege that they relied on defendant's omissions and misrepresentations. Based on these allegations, plaintiffs claim that defendant violated the Consumer Fraud Act by engaging in unfair, unauthorized and deceptive lending practices.
Defendant moved to dismiss plaintiffs' complaint, asserting that First Chicago Corporation, as the parent company of the First National Bank of Chicago, is a separate entity and therefore should be dismissed. The motion also asserted that the complaint failed to state a claim upon which relief may be granted.*fn2 The circuit court initially dismissed First Chicago Corporation from the case. The court then denied that portion of the motion requesting dismissal of the mortgage assignment recording fee claim. The court, however, dismissed that portion of plaintiffs' complaint charging that the imposition of the escrow suspension fee violated the Consumer Fraud Act. The court ruled that plaintiffs had been notified in advance of the escrow suspension fee and agreed to that fee.
Defendant next filed a motion to dismiss the mortgage assignment recording fee claim under section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 1992)), which the court denied. The court also refused plaintiffs' request to decide the issue of class certification at that time. On defendant's request, however, the circuit court certified the following question of law for interlocutory appeal pursuant to Supreme Court Rule 308 (155 Ill. 2d R. 308):
"A. Whether a lender violates the Illinois Consumer Fraud and Deceptive [Business] Practices Act by giving an applicant for a loan, at the time a loan is applied for, a gross estimate of the recording fees to be paid at closing and not telling the loan applicant until closing that one of the fees included in the gross estimate was a fee to cover the cost of recording the assignment of the mortgage securing the loan. B. In this case, the assignee of the assignment is a wholly-owned affiliate of the defendant."
The circuit court also found that, pursuant to Supreme Court Rule 304(a) (155 Ill. 2d R. 304(a)), there was no just reason to delay the appeal of its decision dismissing the escrow suspension fee claim, and stayed further proceedings pending appellate review.
The appellate court accepted defendant's petition for leave to appeal on the Rule 308 certified question, and consolidated that appeal with plaintiffs' Rule 304(a) appeal from the circuit court's dismissal of the escrow suspension fee claim. The appellate court majority answered the certified question affirmatively on the basis that such conduct amounted to a deceptive and unfair practice. 286 Ill. App. 3d at 59-62. The appellate court rejected defendant's argument that conduct by a lender as set forth in the certified question complies with a federal statute such that it constitutes a defense to liability under the Consumer Fraud Act. 286 Ill. App. 3d at 55-58. The appellate court also held that plaintiffs failed to state a cause of action under the Consumer Fraud Act based on the escrow suspension fee. 286 Ill. App. 3d at 63-65. The Dissent agreed with the majority's dismissal of the escrow suspension fee claim, but argued that disclosing the mortgage assignment recording fee under the circumstances in the certified question did not violate the Consumer Fraud Act. 286 Ill. App. 3d at 66-70 (DiVito, J., Concurring in part & Dissenting in part).
Both parties filed petitions for leave to appeal to this court. We denied defendant's petition for leave to appeal and entered a supervisory order remanding the cause to the appellate court for reconsideration of its denial of defendant's petition for rehearing regarding the mortgage assignment recording fee. Plaintiffs' petition for leave to appeal, asserting that the circuit and appellate courts erred in dismissing the escrow suspension fee claim, was denied by this court without prejudice, so as to allow plaintiffs the opportunity to refile. On remand, the appellate court denied defendant's petition for rehearing, and defendant filed a new petition for leave to appeal to this court on the mortgage assignment recording fee issue. This court allowed defendant's petition for leave to appeal (166 Ill. 2d R. 315). We also allowed the Illinois Bankers Association and the Illinois Mortgage Bankers Association to submit briefs as amicus curiae in support of defendant. 155 Ill. 2d R. 345.
I. Mortgage Assignment Recording Fee
We first review the question of law certified by the circuit court pursuant to Rule 308. As noted, the circuit court certified the question of law concerning the mortgage assignment recording fee following its denial of defendant's section 2-619 motion to dismiss plaintiffs' mortgage assignment recording fee claim. The standard of review on appeal is therefore de novo. See In re Chicago Flood Litigation, 176 Ill. 2d 179, 189 (1997).
The Consumer Fraud Act is "a regulatory and remedial statute intended to protect consumers, borrowers and business persons against fraud, unfair methods of competition, and other unfair and deceptive business practices." Cripe v. Leiter, 184 Ill. 2d 185, 190-91 (1998). The Consumer Fraud Act contains an exemption from liability for conduct authorized by federal statutes and regulations. Section 10b(1) provides that the Consumer Fraud Act does not apply to "[a]ctions or transactions specifically authorized by laws administered by any regulatory body or officer acting under statutory authority of this State or the United States." 815 ILCS 505/10b(1) (West 1992). Defendant argues that a lender that charges a mortgage assignment recording fee under the circumstances in the certified question is exempt from liability under section 10b(1) of the Consumer Fraud Act because the fee is disclosed in compliance with a federal statute.
The federal statute relied on by defendant is the Real Estate Settlement Procedures Act (RESPA) (12 U.S.C. §2601 et seq. (1994)). RESPA sets forth various requirements regarding the residential real estate settlement process. One of Congress' stated purposes for enacting RESPA was to provide more effective advance disclosure to home buyers and sellers of settlement costs, i.e., the costs associated with residential real estate closings. 12 U.S.C. §2601(b)(1) (1994). RESPA effectuates this purpose by requiring disclosure of settlement costs both before and at closing. More specifically, RESPA requires that, when a mortgage lender prepares a written loan application, it must also distribute to the borrower a booklet, prepared by the Secretary of Housing and Urban Development (HUD), designed to help the borrower better understand the nature and costs of real estate settlement services. 12 U.S.C. §§2604(a), (d) (1994). RESPA also requires that, at the time of application, the lender must provide the borrower with a good-faith estimate of settlement charges. 12 U.S.C. ...