A new federal court ruling focuses attention on a question that potentially touches millions of American consumers: When you get a home mortgage, should your lender be free to mark up your fees without limit?

When your lender spends just $3 checking your credit electronically, should you have to pay a $65 credit-check line item on your settlement sheet?

When your mortgage company pays $25 for an electronic valuation of the house you're purchasing, should it be permitted to turn around and whack you for $500 for your "appraisal" charge at closing?

Does federal law allow a lender -- or any other service provider -- to add all sorts of extra charges to your settlement costs without performing additional services to justify the markup?

The agency charged with overseeing the federal law in this arena, the Department of Housing and Urban Development, says that all markups are illegal absent extra services. But lenders, title agencies and other industry groups have fought HUD's ban, arguing that it goes beyond the intent of the Real Estate Settlement Procedures Act.

Earlier this month, a federal appellate court in Philadelphia sided with HUD, and became the third straight court to do so. Normally that would put the issue to rest, but not this time. That's because three other federal appellate courts, covering 15 states, have ruled the opposite, sanctioning markups without limit within their jurisdictions.

The effect of this split in the appellate courts is to strip home buyers and owners refinancing their homes in those 15 states of any federal legal protections against markup gouging on settlement sheets. Consumers in nine other states are specifically protected against markups. The rest of the country is in legal limbo, with HUD banning markups but lenders and title agencies under no specific court mandate to obey.

Here's the state-by-state division at the moment:

* Unlimited markups allowed: Residents of Maryland, Virginia, North and South Carolina, West Virginia, Illinois, Iowa, Wisconsin, Indiana, Minnesota, Missouri, Arkansas, Nebraska and North and South Dakota have no federal legal protections against markups. No matter how little your mortgage company paid for documents, tax services, appraisals, messenger services, etc., it is free to charge whatever it thinks it can squeeze out of you.

* No markups allowed: Residents of Florida, Georgia, Alabama, New York, Connecticut, Vermont, Pennsylvania, New Jersey and Delaware live in the current no-markup zone. They can sue lenders and other service providers for markups and expect to prevail, based on appellate court decisions covering their jurisdictions.

* Limbo-zone states: All of the rest of the states, as well as the District of Columbia, are a legal gray zone when it comes to markups. HUD says its rules prevail and you cannot have fees marked up by a lender or title agency unless additional services are rendered to justify the extra costs. But no cases have been decided by the highest federal court in your area, and therefore neither you nor your loan and settlement service providers know whether markups are legal.

The latest case, handed down Aug. 4 by the U.S. Court of Appeals for the 3rd Circuit (Santiago v. GMAC Mortgage Group Inc.), involved a class-action suit against GMAC, one of the country's highest-volume home lenders. A GMAC Mortgage customer alleged that the company marked up various fees in connection with the closing of his loan, and thereby violated HUD's ban. Citing earlier federal appellate court rulings that HUD lacked statutory authority to ban markups, GMAC asked the district court to throw out the suit. It did. The home buyers then took the case to the appellate level, where HUD's position on markups was affirmed. The 3rd Circuit covers Pennsylvania, New Jersey, Delaware and the U.S. Virgin Islands.

Neither GMAC nor HUD had immediate comment. Because the appeals court sent the case back to the district court for a possible trial, GMAC could choose to fight it out there. Or it could appeal directly to the U.S. Supreme Court, thereby opening the door to a final, national answer. With a 3-3 division among federal appellate courts, citizens are treated differently under the law based on where they live, so the high court would be highly likely to accept a case to resolve the issue.

But unless GMAC takes its case to the Supreme Court, the issue will continue to sizzle -- costing unsuspecting consumers hundreds of dollars in needless expenses at the very moment their finances already may be stretched to the max.

Kenneth R. Harney's e-mail address is KenHarney@earthlink.net.