ROSSBACHER & ASSOCIATES
Henry H. Rossbacher, Esq. (SB #060260)
James S. Cahill, Esq. (SB #070353)
445 South Figueroa Street, 24th Floor
Los Angeles, California 90071
Telephone: (213) 895-6500
Fax: (213) 895-6161

LAW OFFICES OF CLIFFORD A. CANTOR
Clifford A. Cantor, Esq.
627 - 208th Avenue SE
Redmond, Washington 98053
Telephone: (425) 868-7813
Fax: (425) 868-7870

SIEGEL, BRILL, GREUPNER, DUFFY
& FOSTER, P.A.
Jordan M. Lewis, Esq.
100 Washington Avenue South
Suite 1300
Minneapolis, Minnesota 55401
Telephone: (612) 339-7131
Fax: (612) 339-6591

Attorneys for Plaintiff and Class Members

CONSOLIDATED SUPERIOR AND MUNICIPAL COURTS

OF THE STATE OF CALIFORNIA FOR THE

COUNTY OF RIVERSIDE

Plaintiff alleges upon personal knowledge as to her own acts and upon information and belief based on investigation by counsel as to all other matters, against defendant Norwest Mortgage, Inc., a California corporation, as follows:

NATURE OF THE ACTION

1. Plaintiff brings this nationwide class action pursuant to the California Unfair Competition Act ("UCA") found at California Business and Professions Code §17200 et. seq. and other laws on behalf of borrowers or prospective borrowers who, based on nondisclosures and false or misleading disclosures of defendant, unwittingly paid inflated charges for credit reports or other loan-related services that exceeded defendant Norwest Mortgage Inc.'s actual cost for those services.

2. Defendant Norwest Mortgage, Inc. ("Norwest") originates, funds, and/or brokers many thousands of loan transactions in California and elsewhere each year. Norwest also accepts a large number of applications from prospective borrowers who ultimately do not close their loans with Norwest. Norwest requires these borrowers or prospective borrowers to pay the cost of certain loan-related services provided by third parties. Those services include but are not limited to the furnishing of credit reports, appraisals, inspections, flood certifications, mortgage insurance, and document delivery.

3. This case arises out of Norwest's practice of (a) failing to inform borrowers or prospective borrowers of the true cost of credit reports and/or other loan-related services; (b) providing half-truths and/or misleading and deceptive information about the cost of such services; and (c) without adequate disclosure, collecting from borrowers and prospective borrowers inflated charges for the services.

4. Plaintiff seeks on behalf of herself and the Class members (a) to enjoin and restrain Norwest from committing violations of California's UCA, including a declaration that the business practices described herein are unlawful, unfair, and deceptive, (b) restitution or disgorgement of all improper charges that Norwest collected from plaintiff and other Class members; and (c) damages and costs from Norwest including reasonable attorneys' fees according to proof at the trial of this action.

PARTIES

5. Plaintiff Norma Breslaw Saunders ("Saunders"), a resident of Mercer Island, Washington, applied for a loan from Norwest in August 1996. The loan closed on or about September 4, 1996. In connection with the loan, Saunders received a closing statement purporting to show "actual settlement costs." The form showed amounts that were "paid from borrower's funds at settlement," including a line item of $26.50 for a "credit report" that the form represented was paid "to Credco."

6. Defendant Norwest Mortgage, Inc. is a California corporation with its principal executive office in Des Moines, Iowa and its California address, as reported to the California Secretary of State, at 1595 Spruce Street, Riverside, California 92507. Norwest has more than 750 branch and regional offices located in all 50 states around the country, including in Riverside County and other counties in California. Norwest does far more lending origination in California than in any other state; indeed, the volume of Norwest's California loan origination is approximately equal to the volume of Norwest's next four busiest states combined . Norwest advertises that it is the nation's leading retail mortgage lender and originated $51.5 billion in loans in 1996. Norwest claims to provide funding for one out of every 15 homes financed in the United States. "Norwest" is specifically defined to include all successor and predecessor entities to which these allegations pertain.

7.JURISDICTION AND VENUE

8. This court has jurisdiction over this nationwide class action and all causes of action asserted herein pursuant to the California Constitution, Article VI, §10 and California Business and Professions Code §17204. This court further has personal jurisdiction over Norwest because Norwest is a corporation organized under the laws of the State of California continuously and systematically doing business in California and which intentionally avails itself of the laws and markets of California by maintaining branch offices in California that are continuously open during normal business hours.

9. Venue is proper in Riverside County, California because Norwest's California corporate address is here; Norwest conducts substantial amounts of business in Riverside County; and many of the breaches complained of among the class occurred in Riverside County, California.

FACTUAL ALLEGATIONS

10. Borrowers pay interest in exchange for use of the borrowed money. They may also pay a loan discount or "points," which are equivalent to prepaid interest. Further, borrowers may pay a loan origination fee, which is a fee for processing the loan. These are legitimate ways that lenders such as Norwest earn money.

11. In processing a loan, the lender or loan broker typically engages third parties to perform certain services, such as providing a credit report, an appraisal, or express delivery. The lender or broker pays for those services, and in many or most cases charges the borrower for those payments. Unfortunately, some lenders and brokers mark up the charges for such services and conceal that fact by failing to disclose to borrowers the actual amounts of payments paid to third-party service providers. This is another way that certain lenders and/or brokers make money, although the practice is unfair, unlawful and deceptive.

12. As a matter of practice for certain loan-related services, Norwest negotiates and/or obtains rates from the third-party service providers that it keeps secret from its borrowers and that are considerably less than the amounts it discloses. Norwest engages in that practice to induce borrowers to pay more than the actual cost of the loan-related services, to reap additional profits in a way that is completely hidden from the borrowers.

13. In processing the Saunders loan application, for example, Norwest obtained a "three-bureau merged" credit report from a company called First American Credco ("Credco"). Credco billed Norwest $14 for the Saunders credit report. Norwest, however, did not disclose the actual cost of the credit report. Instead, Saunders's closing statement, prepared at Norwest's direction, showed that $26.50 was to be taken from Saunders' funds at closing to pay for a "credit report":

14. The net result was this: Norwest failed to disclose that the actual cost of the Saunders credit report was $14, which is what Norwest paid to Credco; and for that same credit report misleadingly caused $26.50 to be debited against Saunders' funds as an "actual settlement cost." Norwest covertly kept the remaining $12.50.

CLASS ACTION ALLEGATIONS

15. Plaintiff brings this action as a nationwide class action pursuant to California Code of Civil Procedure §382, on behalf of herself and all others similarly situated. The class is defined as follows:

All borrowers and prospective borrowers who, no earlier than four years before the filing of this action, paid to Norwest inflated charges for loan-related services under circumstances in which Norwest failed to disclose that the amount of the charge was greater than what Norwest actually paid for the services performed (hereinafter "the Class"). Excluded from the Class are defendant's executives, legal counsel, and their immediate families.

16. The Class has at least hundreds if not thousands of members in diverse locations including in California, and therefore is so numerous and geographically dispersed that joinder is impracticable. Although the exact number of Class members is presently unknown to plaintiff, plaintiff through counsel is informed and believes and thereon alleges that the Class will number in at least hundreds if not thousands. The Class members should be readily identifiable from information and records in Norwest's possession or control. The disposition of the claims of plaintiff and other Class members in this action will provide substantial benefits to the parties and the Court.

17. There exists a well-defined community of interest in the questions of law and fact presented by this controversy. These questions of law and fact common to plaintiff and other Class members predominate over questions which may affect only individual members, if any, in that Norwest has acted on grounds generally applicable to the entire Class thereby making appropriate final injunctive relief and corresponding declaratory relief with respect to the Class as a whole. Among the questions of law and fact common to the Class are the following:

a. Whether Norwest has failed to disclose to plaintiff and members of the Class the correct charges for loan-related services and caused excess amounts to be debited against Class members' funds;

b. Whether that practice is misleading or deceptive;

c. Whether Norwest engaged in unlawful, unfair, and/or deceptive business acts and practices in violation of the California UCA;

d. Whether, in the context of originating and/or brokering loans, Norwest owes to the Class members a fiduciary or quasi-fiduciary duty or other duty of disclosure with respect to third-party charges;

e. If so, whether Norwest breached that duty by failing to disclose the true cost of loan-related services and/or that Norwest was making a hidden profit on overcharges;

f. Whether Norwest converted plaintiff's and the Class members' loan proceeds or other funds;

g. Whether Norwest was unjustly enriched from the payment of fees by plaintiff and other Class members for inflated or overcharged loan-related services;

h. The appropriate measure of damages or restitution or disgorgement for Norwest's improper conduct alleged herein; and

i. The nature of the equitable and injunctive relief to which plaintiff and Class members are entitled under the California UCA.

18. Plaintiff is a member of the Class. Plaintiff's claims is typical, if not identical, to the claims of the other Class members because plaintiff and all Class members were injured by the same wrongful practice in which Norwest engaged, as alleged herein. The only difference is the monetary impact on each member, which will be readily determinable from Norwest's records and does not bar class certification.

19. Plaintiff will fairly and adequately protect the interest of members of the Class. The interest of plaintiff is coincident with, and not antagonistic to, the interests of the Class. Plaintiff has retained attorneys experienced in the prosecution of class actions. Neither plaintiff nor her attorneys has any conflict in undertaking this representation.

20. A Class action is superior to the alternatives, if any, for the fair and efficient adjudication of the controversy alleged herein because such treatment will permit a large number of similarly situated persons residing in all 50 states including California to prosecute their common claims in a single forum simultaneously, efficiently, and without duplication of evidence, effort, and expense that numerous individual actions would engender. This action will result in the orderly and expeditious administration of Class claims. Uniformity of decisions will be assured, thereby avoiding the risk of inconsistent and varying determinations.

21. Since the damages and injuries suffered by individual Class members or the amount of restitution or disgorgement to each borrower may be relatively small, the expense and burden of individual litigation make it virtually impossible for the members of the Class effectively to seek redress individually for defendants' alleged wrongful conduct.

22. Plaintiff knows of no difficulty that will be encountered in the management of this litigation which would preclude its maintenance as a class action.

FIRST CAUSE OF ACTION

UNLAWFUL, UNFAIR, AND DECEPTIVE BUSINESS PRACTICES

23. Plaintiff repeats and realleges all allegations in paragraphs 1 through 21, inclusive, as if fully set forth herein.

24. At all relevant times, a substantial amount of Norwest's business practices and acts as alleged herein occurred in California.

25. Under California Business and Professions Code §17204, plaintiff has standing to assert this claim on behalf of herself as well as the members of the Class.

26. As described herein, Norwest committed unlawful, unfair, and deceptive business acts and practices, obtaining unlawful profits and injuring plaintiff and the members of the Class within the meaning of the California Unfair Competition Act (California Business and Professions Code § 17200, et. seq.), thereby entitling plaintiff and the members of the Class to relief in the form of an order (a) enjoining such wrongful acts and practices and (b) restoring to plaintiff and Class members by restitution or disgorgement all improperly imposed loan-related charges collected by Norwest plus attorneys' fees pursuant to inter alia California Code of Civil Procedure § 1021.5.

27. Norwest committed unlawful business acts and practices in charging plaintiff and other Class members fees for loan-related services in excess of the amounts that Norwest actually paid to third parties for the services performed.

28. Norwest committed unfair business acts and practices in imposing upon borrowers like plaintiff and other Class members, without the borrowers' knowledge, consent, or agreement, inflated charges for credit reports, real estate appraisals, express delivery and/or other loan-related services that exceeded Norwest's actual cost for those services.

29. Norwest business practices and acts had a tendency to deceive borrowers, such as plaintiff and other Class members, in that loan closing documents informed plaintiff and other Class members that fees charged to them in order to close their loans were the "actual settlement costs" when such charges were inflated and in excess of the actual cost for services performed.

30. Plaintiff is informed and believes and thereon allege that the business acts and practices described herein continue to be a threat to Class members as well as future borrowers and prospective borrowers.

SECOND CAUSE OF ACTION

BREACH OF DUTY TO DISCLOSE

31. Plaintiff repeats and realleges all allegations in paragraphs 1 through 29, inclusive, as if set forth herein.

32. Norwest caused or allowed representations to be made to plaintiff and other Class members that a particular charge for a loan-related service was to be paid from the borrowers' funds. For example, the charge to Saunders for a "credit report" was $26.50, supposedly to be paid to a third-party vendor. Norwest may have intended those charges to Saunders to include (a) the cost of the third-party service plus the cost for Norwest to process the information received, or (b) the cost of the third-party service plus a covert profit to Norwest. Regardless of Norwest's intent, representations to Saunders that a particular charge - e.g., $26.50 - was for a particular service - e.g., a "credit report" - were deceptive and ambiguous at best.

33. Under these circumstances, Norwest owed a duty to exercise reasonable care to disclose to the borrowers, like plaintiff and other Class members, the truth of the matter to prevent partial or ambiguous statements from being misleading; and/or, upon learning the actual cost of the loan-related services, to correct untrue or misleading prior representations before final adjustments were made to the parties' accounts.

34. Norwest knew that representations to plaintiff and other Class members regarding charges for loan services would induce borrowers to allow the stated charges to be debited against borrowers' funds at closing. Borrowers, like plaintiff and other Class members, had no independent way to verify the accuracy of the described charges and had to depend on Norwest to be forthright.

35. Norwest breached its duty of disclosure to plaintiff and Class members by allowing representations that were at best deceptive and ambiguous to stand without correction.

36. As a direct and proximate result of Norwest's conduct aforementioned, plaintiff and the Class members have been damaged in an amount according to proof at the trial of this action.

THIRD CAUSE OF ACTION

BREACH OF FIDUCIARY OR QUASI-FIDUCIARY DUTY

37. Plaintiff repeats and realleges all of allegations in paragraphs 1 through 35, inclusive, as if fully set forth.

38. Norwest is in a unique position vis à vis its borrowers like plaintiff and Class members to bargain with loan service providers due to its market penetration and superior knowledge and information concerning loan services. Plaintiff and the Class lacked Norwest's knowledge and experience; depended entirely on Norwest to provide correct information regarding the amount of any payments that Norwest made in processing the loan applications; and had no practical independent ability either to negotiate or even determine providers' true charges other than by relying on Norwest.

39. Plaintiff and the Class reposed complete confidence in Norwest, which Norwest invited by the use of advertising slogans such as "your lending partner," to obtain and make payment for various services associated with getting a loan. Accordingly, plaintiff and the Class justifiably relinquished to Norwest all control over payment for loan-related services and accurate disclosure of the correct amounts of those payments; and Norwest accepted control knowing that, at closing, the escrow agent would debit borrowers' funds to Norwest in amounts that Norwest informed them were due for loan-related services.

40. By virtue of the above, and by assuming the role of obtaining loan-related services, negotiating payments, and purporting to disclose to plaintiff and the Class the charge for those services, Norwest accepted fiduciary and/or quasi-fiduciary duties to plaintiff and the other Class members.

41. Norwest's fiduciary and/or quasi-fiduciary duties include, without limitation, (a) a duty of good faith; (b) a duty of loyalty; (c) a duty to disclose any information that would aid plaintiff and the Class members to protect their interests; and (d) a duty not to misrepresent any fact or omit material facts.

42. Norwest breached its fiduciary and/or quasi-fiduciary duties to plaintiff and the Class by failing to disclose the correct cost of loan-related services; suppressing and misrepresenting the actual cost of those services; charging more than the services actually cost without adequate disclosure to plaintiff and the Class, and improperly retaining funds of plaintiff and the Class members, thereby becoming unjustly enriched.

43. As a direct and proximate result of Norwest's business acts, practices and breaches aforementioned, plaintiff and the Class are entitled to an accounting of Norwest's overcharge; restitution of such overcharges plus prejudgment interest and/or disgorgement of the Norwest's unjust enrichment; damages; the costs of suit including reasonable attorneys fees; and reimbursement of all compensation paid to Norwest during the period of its breaches aforementioned.

FOURTH CAUSE OF ACTION

CONVERSION

44. Plaintiff repeats and realleges all allegations in paragraphs 1 through 42 inclusive, as if fully set forth.

45. Plaintiff and the Class had personal property interests and a right of immediate possession in funds that they brought with them to closing and/or the proceeds of their loans, to the extent those funds were not properly due and payable to another party. Norwest, by improperly deducting from funds (belonging to plaintiff and other Class members) excess amounts for loan-related services and/or improperly failing to return such excess amounts, willfully interfered with and deprived plaintiff and other Class members of immediate possession of their personal property.

46. Norwest failed and refused and continues to fail and refuse to remit to plaintiff and other Class members the balance of the loan proceeds remaining after deduction of the correct charges for the aforementioned loan-related services of Norwest in an amount presently unknown to plaintiff but subject to proof at the trial of this action and have thereby converted for defendants' own use and benefit such balances.

47. As a direct and proximate result of defendant's conversion of part of the loan proceeds belonging to plaintiff and other Class members, plaintiff and other Class members have been damaged in an amount according to proof at the trial of this action including prejudgment interest.

FIFTH CAUSE OF ACTION

UNJUST ENRICHMENT

48. Plaintiff repeats and realleges all allegations in paragraphs 1 through 46, inclusive, as if fully set forth herein.

49. Norwest has been unjustly enriched at the expense of plaintiff and other Class members by imposing and collecting inflated charges for loan-related services that exceeded Norwest's actual cost for such services.

50. As a direct and proximate result of Norwest's business acts and practices aforementioned, plaintiff and other Class members have been damaged and/or are entitled to restitution in an amount according to proof at the trial of this action.

SIXTH CAUSE OF ACTION

MONEY HAD AND RECEIVED

51. Plaintiff repeats and realleges all allegations in paragraphs 1 through 49, inclusive, as if fully set forth herein.

52. Within the past four years Norwest became indebted to plaintiff and the Class members in an unknown amount for money had and received by Norwest for the use and benefit of plaintiff and the Class members.

53. Neither the whole nor part of the amount has been paid to plaintiff and the Class members and there is now due, owing, and unpaid to plaintiff and the Class members an amount according to proof at the trial of this action plus interest thereon as provided by law.

PRAYER FOR RELIEF

WHEREFORE, plaintiff on behalf of herself and all Class members prays for judgment against defendant Norwest Mortgage, Inc. as follows:

1. For an order certifying that this action may be maintained as a nationwide class action and directing that reasonable notice of this action be given to Class members;

2. For a decree that Norwest's wrongful business acts and practices alleged herein violate the California Unfair Competition Act (California Business and Professions Code §17200 et. seq.);

3. For compensatory damages sustained by plaintiff and each Class member plus pre-and post-judgment interest as provided by law in an amount according to proof at trial of this action.

4. For a permanent injunction enjoining Norwest, its officers, directors, employees, agents, partners, representatives, successors, assignees and transferees, and any and all persons acting in concert or in participation with Norwest from directly or indirectly committing unlawful, unfair and deceptive business acts and practices (a) in charging and collecting from borrowers and prospective borrowers amounts for loan-related services in excess of the amounts which defendants actually pay for the services performed and (b) in failing to disclose or in deceptively or misleadingly disclosing to borrowers and prospective borrowers the true costs of the loan-related services.

5. For an order directing restitution or disgorgement of all improperly collected sums, including interest herein, by Norwest and imposition of a constructive trust over such amounts for the benefit of plaintiff and the members of the Class.

6. For an order requiring Norwest (a) to render to plaintiff and Class members an accounting of Norwest's overcharges and (b) to pay over to plaintiff and Class members the amount due from Norwest as a result of the accounting.

7. For an award to plaintiff and the Class members of their costs and expenses incurred in this action including reasonable attorneys' fees and expert fees as provided by law; and

8. For such other and further relief as the court may deem necessary and proper.

DATED: July 27, 1998          Respectfully submitted,
                             ROSSBACHER & ASSOCIATES

                             By:___________________________
                                    James S. Cahill

                             LAW OFFICES OF CLIFFORD A. CANTOR

                             SIEGEL, BRILL, GREUPNER, DUFFY
                             & FOSTER, P.A.

                             Attorney for Plaintiff and
                             Class Members

DEMAND FOR JURY

Plaintiff demands trial by jury for all issues so triable.

DATED: July 27, 1998          Respectfully submitted,
                             ROSSBACHER & ASSOCIATES

                             By:___________________________
                                    James S. Cahill

                             LAW OFFICES OF CLIFFORD A. CANTOR

                             SIEGEL, BRILL, GREUPNER, DUFFY
                             & FOSTER, P.A.

                             Attorney for Plaintiff and
                             Class Members

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