A unit of Fleet Financial Group Inc. that buys home loans made to borrowers with damaged credit has stopped a controversial practice of paying mortgage brokers above-normal fees.

Option One Mortgage Co., Santa Ana, Calif., no longer compensates mortgage brokers for charging fees higher than what the borrower would normally pay. These charges are known as overages.

A number of lenders across the country have been reexamining their use of overages in the face of mounting pressure from banking regulators and others. The fear is that lower-income, minority consumers are often the target of the higher fees.

Patrick H. Rank, president of Option One, said the company discontinued overages in response to suits filed recently against Ford Motor Co.'s Dallas-based consumer lending unit, Associates Corporation of America, and GE Capital Mortgage Co., Elkins Park, Pa.

The suits allege that lenders are encouraging brokers to abandon their responsibility of getting the best prices for borrowers.

Mr. Rank said Option One is currently making the transition away from "premium pricing," as overages are sometimes called.

"Most of our competition have not gotten through to the fact that (overages) is an albatross," he said.

In its place, Option One has introduced a comprehensive new pricing scheme. SumOne, the new program, pays mortgage brokers a flat rate for their loans - most of which are made to borrowers with damaged credit histories.

Mr. Rank said all "junk fees" have been eliminated. To insure no overages are taken, Option One requires that brokers disclose any points charged before the closing.

The next public blast against overages could come from the federal government. Sources have said the Justice Department is investigating possibly discriminatory pricing practices by several lenders.

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