Eight Washington residents sued NovaStar Mortgage, of Kansas City, Mo., claiming the lender paid mortgage brokers an extra fee to arrange loans with higher interest rates. The lawsuit says NovaStar notified the borrowers of the "yield spread premium" arrangement the day of closing, or not at all, despite federal and state laws requiring such disclosure within three days of a loan application.

"They could have gotten a lower interest rate loan if they bargained for it either with NovaStar or with some other lender," said one of the lawyers representing the plaintiffs.

The case is scheduled for trial in February.

The plaintiffs are Cameron and Patricia Pierce of Enumclaw, Karen Kirby of Olympia, Mary Ray of Tacoma, Gregory and Paula Sherman of Chattaroy, and Michael and Gertrude LePage of Addy. The case could affect borrowers across the state.

Lawyers randomly reviewed 153 loan files and found nearly 70 percent did not properly disclose yield spread premiums. Based on this, they estimate at least 1,000 people across Washington, and possibly several thousand, were affected from July 30, 1999, to now, which is the period of the case.

Judge Robert Bryan in the U.S. District Court in Tacoma Tuesday approved the plaintiffs' move to make the case class action, meaning everyone who did not get proper disclosure of yield spread premiums NovaStar paid to their brokers would be eligible for damages. Geyman estimated borrowers generally paid about $3,000 more than they should have, from their first payment until they could refinance without a penalty.