Opinion ID: 1384611
Heading Depth: 2
Heading Rank: 2

Heading: Credit Services Organization

Text: The trial court concluded that Washtenaw was entitled to summary judgment on the Herrods' claim that First Securities failed to comply with the credit services organizations (CSO) provision of the West Virginia Consumer Credit and Protection Act (the Act). [34] Under West Virginia Code § 31-17-8(k), it is provided that [n]o licensee shall charge a borrower or receive from a borrower money or other valuable consideration as compensation before completing performance of all services the licensee has agreed to perform for the borrower unless the licensee also registers and complies with all requirements set forth for credit service organizations in article six-c [§§ 46A-6C-1 et seq.], chapter forty-six-a of this code.... In Brown v. Mortgagestar, Inc., 194 F.Supp.2d 473 (S.D.W.Va.2002), the district court held that the CSO provisions of the Act will only apply to a mortgage broker if that mortgage broker charges or receives money from the borrower before completing performance of all services that the mortgage broker has agreed to perform for that borrower. Id. at 476, n. 4. The district court further determined that where the broker fee is paid at the loan closing, the CSO provisions are inapplicable. Id. Applying Brown, the trial court concluded that because First Securities did not collect a fee from the Herrods prior to the loan closing it was not required to comply with the CSO provisions of the Act. The Herrods were seeking to rely on the Act to hold Washtenaw liable for the alleged failure of First Security to provide the Herrods with a copy of a broker agreement setting forth their fees and a right to cancel the agreement. [35] The trial court ruled that even if First Security was required to comply with the CSO provisions of the Act, there is no legal duty or obligation which requires Washtenaw to ensure First Security's compliance with the CSO Provisions of the WVCCPA [the Act]. We agree. Because there is no basis for imposing liability on Washtenaw under this theory, we affirm the trial court's grant of summary judgment on this issue.