tila compliance & dtpa guide
TRANSCRIPT
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MBA REGULATORYCOMPLIANCE
RECENT TRENDS IN TILA ANDSTATE UNFAIR AND DECEPTIVETRADE PRACTICES ACT CLAIMS
Reid S. Manley, Esquire
Birmingham, Alabama
Burr Forman LLP
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Relief under TILA Focus on rescission
what constitutes a violation
Tender requirement
Tolerances
Unfair & Deceptive TradePractices Act claims
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RELIEF UNDER TILA FORPRIVATE LITIGANTS
Damages
Attorneys Fees Rescission
Statutory Cap for class actions
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STATUTE OF LIMITATIONS
FOR TILA CLAIMS
DAMAGES
RESCISSION
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RESCISSION
Material disclosures
APR
Finance charge
Amount financed
Total of payments Payment schedule
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WHAT CONSTITUTES AVIOLATION
Can borrower rescind loan if there is atechnical violation?
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COURTS ARE SPLIT
Melfi v. WMC Mortgage Corp., 568 F.3d 309 (1st Cir.2009)
Vs. Hamm v. Ameriquest Mort. Co., 506 F.3d 525 (7th
Cir. 2007)
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Melfi
technical deficiencies do not matter if theborrower receives a notice that effectivelygives him notice as to the final date ofrescission and has the three full days to act
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HAMM
We have held that, when it comes
to TILA, hypertechnicality reigns.
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Semar v. Platte Valley Federal Savings &Loan Ass., 791 F.2d 699 (9th Cir. 1986)Technical or minor violations of TILA or
Reg. Z, as well as major violations, imposeliability on the creditor and entitle theborrower to rescind.
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RESCISSION
15 U.S.C.A. SECTION 1635
3 step process
Regulation Z: Within 20 calendar daysafter receipt of notice of rescission,creditor shall return money andterminate security interest.
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RESCISSION
Requirement of Tender.
Some courts require tender (or demonstration
borrower has ability to tender) before lenderreleases lien:
Utilize courts equitable powers.
Moore v. Wells Fargo, 597 F. Supp. 2d 612(E.D. Va. 2009).
American Mortg. Network v. Shelton, 486 F.3d815 (4th Cir. 2007).
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RESCISSION
Requirement of Tender.
Some courts hold that tender is only
necessary after lender releases lien. Lippner v. Deutshe Bank Nat. Trust
Co., 544 F. Supp. 2d 695 (N.D. Ill.
2008). Velzquez v. HomeAmerican Credit,
Inc., 254 F. Supp. 2d 1043, 1045-1046
(N.D. Ill. 2003).
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RESCISSION & TENDER
IN BANKRUPTCY If termination of security interest is required
first, lenders end up as unsecured creditors. In re Jaaskelainen, 391 B.R. 627 (Bankr. D.
Mass. 2008), overruled byWells Fargo v.Jaaskelainen, 407 B.R. 449 (D. Mass. 2009).
Clay v. Johnson, 77 F. Supp. 2d 879 (N.D. Ill.1999).
In re Williams, 291 B.R. 636 (Bankr. E.D. Pa.2003).
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RESCISSION & FORCLOSURE
Rescission is complete defense to
foreclosure. Interplay between:
15 U.S.C. 1605(f) (1/2 of 1 percent)
& 15 U.S.C. 1635(i)(2) ($35).
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RESCISSION & FORCLOSURE
When does foreclosure process begin?
McCutcheon v. Americas Servicing, 560 F.3d143 (3rd Cir. 2009).
Letter warning of foreclosure does not beginprocess.
Glucksman v. First Franklin Fin. Corp., 601 F.Supp. 2d 511 (E.D.N.Y. 2009).
Letter stating loan in special status and report to
CRAs that foreclosure initiated may begin process.
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Unfair & Deceptive Trade Practice Laws
Application to mortgage loans
States are split
Some hold exempt from UDTPA laws due to deference tofederal statutes and regulations controlling the generalarea.
Jordan v. NovaStar Mortgage, No. 1:080-cv-3587-CAP (N.D. Ga.Sept. 1, 2009).
Virginia Va. Code Ann. 59.1-199 (2006).
West Virginia W. Va. Code Ann. 46A-1-105 (2005).
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Unfair & Deceptive Trace Practice Laws
Some states permit UDTPA claims againstmortgage lenders:
Williams v. Countrywide Home Loans, Inc.,504 F. Supp. 2d 176 (S.D. Tex. 2007).
Cole v. Echevarria, McCalla, Raymer, Barrett
& Frappier, 965 So. 2d 1228 (Fla. Dist. Ct.App. 2007).
In re Russell, 72 B.R. 855 (Bankr. E.D. Pa.1987).