Tila Compliance & DTPA Guide

8/2/2019 Tila Compliance & DTPA Guide

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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).

Tila Compliance & DTPA Guide

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