A barrage of lawsuits that South Carolina solicitors filed against LendingTree has yielded a $3 million settlement with the online mortgage broker, with more than $400,000 going to Charleston and Berkeley counties.
Ninth Circuit Solicitor Scarlett Wilson announced financial terms of the deal Wednesday. Her complaint was dismissed in late December, local court records show.
Wilson and 15 other South Carolina prosecutors separately sued LendingTree in 2008, saying the company and several affiliates failed to make the required disclosures for mortgage brokers that operate within the state.
LendingTree, which had denied the allegations and filed a countersuit, did not admit to any liability. It also said there were no findings of wrongdoing.
"LendingTree and the solicitors settled to avoid expensive litigation," the company said in a statement Wednesday.
Wilson had sought penalties of up to $7,500 for each violation in her jurisdiction and the forfeiture of any fees from those transactions.
"LendingTree misrepresented to consumers their mortgage applications would be competitively shopped for the best rates," she said in a statement Wednesday. "This led consumers to believe that LendingTree was working for them and not against them."
The exact number of mortgage loans in question was not known, but the company estimated in a court document that the statewide total exceeded 650.
Charlotte-based LendingTree solicits online requests from borrowers and circulates the applications among multiple financiers that compete for the business. The company said it maintains a customer satisfaction rate of 89 percent.
Wilson alleged that LendingTree had violated state law by failing to tell borrowers about payments it receives from lenders. South Carolina-licensed mortgage brokers are required to provide a "good faith estimate" of any fees, "whether paid by the borrower, the institutional lender, or both," according to a legal statute cited in her lawsuit.
Another issue was a notice on LendingTree's website stating that the company "is not an agent" of the borrower. State law requires that every "loan agreement with a mortgage broker or originator must contain an explicit statement that the mortgage broker or originator is acting as the agent of the borrower in providing brokerage services to the borrower," according to Wilson's lawsuit.
The company filed a counterclaim, saying prosecutors did not have the legal authority to bring the complaints. A judge in 2010 denied a request by LendingTree to dismiss the cases.
Under the terms of the settlement, the company will pay $284,447 and $121,904 to resolve the Charleston and Berkeley cases, respectively. Wilson could not be reached for comment about where the money will go.
Reach John P. McDermott at 937-5572.