Mortgage Daily Logo
mortgage news from industry experts

Couple Exploits Minor TIL Discrepancy

Couple Exploits Minor TIL DiscrepancyLawsuit claims TIL disclosure omitted ‘monthly’ from payment frequency

October 26, 2007

By JERRY DeMUTH

An Indiana couple has sued to rescind a subprime home equity loan and recover damages because, they claim, the Truth in Lending Act disclosure did not explicitly state monthly payments were required — though it did state “periodic” payments were required and other loan documents clearly stated that monthly payments were required. Attorneys for the plaintiffs are seeking class action certification.

The servicer and “beneficial owner of plaintiffs’ loan,” Barclays Capital Real Estate Inc., which operates in the name of HomEq Servicing, has been named as a defendant. Also named in the suit as holder of the title to the mortgage is Mortgage Electronic Registrations Systems Inc.

New Century Financial Corp., which is currently in Chapter 11 bankruptcy, is mentioned only as the originator and cited for not properly disclosing the loan’s financial schedule.

New Century was not named as a defendant because it is in bankruptcy, Daniel Edelman, the attorney for the plaintiffs, told MortgageDaily.com. HomEq was named a defendant because it is “named on the face of the disclosure statement and the claim to rescission is good for whoever has the paper.”

In addition to rescission of the $126,000 loan, which was closed on Jan. 31, the suit seeks statutory damages, attorney fees, litigation expenses, costs of the suit and “such other or further relief as the court deems proper.”

However, the suit’s only claim against MERS involves rescission, according to the complaint, which was filed in U.S. District Court in Hammond, Ind., on Oct. 18.

The suit, which was filed by Kerry A. and Susan E. Burke of Lowell, Indiana, also seeks class action status on behalf of all persons who received mortgages on one- and two-unit properties from New Century after Jan. 30, 2006, in which “the Truth in Lending disclosures provided did not state that the payment interval was monthly.”

However, the suit notes that the basis for its motion for rescission under TILA does not apply to loans “entered into for purposes of the initial acquisition or construction” of a home.

The TILA disclosure provided to the Burkes with their loan stated only that they have “promised to pay this debt in regular periodic payments and to pay the debt in full not later than 03/01/2037.” The mortgage note itself states, “I will pay principal and interest by making a payment every month.”

The Burke’s loan carried an initial interest rate of 9.20 percent for the first 24 months and could go no higher than 11.20 percent and no less than 9.20 percent on the first change date after which it could go up or down as much as 150 basis points every six months, but with the rate capped at 16.20 percent.

Barclays Capital could not immediately provide comment when contacted by MortgageDaily.com.


next story

back to current headlines

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...

Newsletter

Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI

Related Posts

THE TRUSTED PROVIDER OF ACCURATE RATES AND FINANCIAL INFORMATION