A suit filed last week in a Baltimore federal court charges Countrywide Funding conspired with a local savings bank to rip off mortgage borrowers by charging them undisclosed broker and title insurance fees.

If class-action status were granted and the plaintiffs won, the defendants would be liable for about $100 million, the plaintiffs' attorney said. The plaintiffs claim Pasadena, Calif.-based Countrywide bought the hundreds of loans with the hidden fees from Severn Savings Bank of Annapolis.

Severn is also named as a defendant along with a broker, Mortgage Funding, and a title company, Major Title Group Inc., both of Baltimore.

Attorneys who represent lenders denounced the suit as another example of class-action lawyers leaping on the litigation bandwagon.

"They're piranha, like I've always said," said Paul Mondor, director of regulatory compliance for the Mortgage Bankers Association of America.

In the past 18 months, mortgage lenders have been hit by a wave of class actions charging them with illegally paying third parties.

But this suit goes further than previous ones in charging defendants not only under the Real Estate Settlement Procedures Act, which governs disclosure of fees, but also under the Truth-in-Lending Act and the Racketeer Influenced and Corrupt Organizations Act.

The Department of Housing and Urban Development is revamping the real estate settlements act to clarify the rule, and a class-action moratorium bill is pending in Congress.

The $100 million in damages would include $54 million for the racketeering act violations. Fines for violations of the racketeering law can be as high as three times damages.

The initial plaintiffs in the case are Stephen and Deborah Kerby, who refinanced their mortgage in the summer of 1993, after receiving a phone call from a mortgage broker promising them "the best rate possible."

The couple did not receive a good-faith estimate in advance, and payments to brokers and title agencies were rolled into their loan without disclosure, said plaintiff's attorney Jerald J. Oppel, with Ober, Kaler, Grimes & Shriver.

Overall, the Kerbys wound up paying more than $4,000 in undisclosed fees to third parties, the suit says.

A Countrywide spokeswoman said the lender could not comment on pending litigation.

Mr. Mondor claimed the plaintiffs are unlikely to win on the merits of the suit and are probably "just looking for settlements."

In the past year, two lenders have settled out of court when faced with similar suits.

Severn president Alan Hyatt called the suit a "slap in the face." There is "not one drop of evidence," he said, that fraud was committed. Severn funded about $100 million in mortgages last year, holding some in its portfolio and selling some to Freddie Mac.

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