Court Ruling Could Shock Entire U.S. Mortgage Industry

nygirl at 09:19 2008-07-01 said:

Well, there must be more to this story than what's in that article. Who, in their right mind, actually believes they were getting 1.95% fixed for 5 years? Permalink

Milstar at 10:38 2008-07-01 said:

Specifically they are focusing on the verbage within the forms. In this case:

U.S. District Judge Lynn Adelman ruled that the disclosure statement about the loan terms was confusing. The words "five-year fixed" in the statement referred to minimum payments but not to the interest rate, the Journal reported.

Five years fixed payment was never in anyway possible, and if it was there were certain conditions that needed to be met in order to achieve that payment. Another words the only way they will have 5 yrs fixed neg am payment, is if they pay a fully indexed interest only which is more than the minimum payment. Otherwise the minimum payment actually grows larger each month as it's an amortized payment.

Though I agree with you on people believing these rates were for real. Permalink

Aristotle at 11:36 2008-07-01 said:

"The Andrews filed the case seeking class action status; and in early 2007, U.S. District Judge Lynn Adelman ruled that the bank had violated the Truth in Lending Act, or TILA, and that thousands of other Chevy Chase borrowers could join them as plaintiffs.

The judge transformed the case from a run-of-the-mill class action to a potential nightmare for the U.S. banking industry by also finding that the borrowers could force the bank to cancel, or rescind, their loans. That decision was stayed pending an appeal to the 7th U.S. Circuit Court of Appeals, which is expected to rule any day."

TRUTH IN LENDING COMPLIANCE IS NOT MY FORTE. BUT I ONCE MET THE LAWYER WHO WAS DOING ALL OF THE TRUTH IN LENDING COMPLIANCE WORK FOR ALL OF TOYOTA MOTOR CREDIT. THEY ARE VERY CAREFUL NOT TO VIOLATE TIL BECAUSE OF THEIR HUGE VOLUME OF LOANS AND PROMINENCE IN THE AUTO INDUSTRY.

THAT LAWYER TOLD ME ABOUT ALL OF THE CONSEQUENCES OF VIOLATING THE LAW. WHAT SHE TOLD ME IS THE SAME AS THE REMEDY DESCRIBED BY THE TRIAL JUDGE IN THE CASE SUMMARIZED ABOVE: CANCELLATION, RECISSION, REFUND. SO THE LEAD PLAINTIFFS SHOULD GET THEIR REMEDY.

THE ONLY REAL QUESTION HERE IS WHETHER THE CASE SHOULD BE A CLASS ACTION, I.E. ARE ALL OF THE FACTS OF THE CLASS MEMBERS' CASES SO SIMILAR THAT THEY CAN BE DISPOSED OF WITHOUT INDIVIDUAL TRIALS.

IF CHEVY CHASE BANK WAS DOING EXOTIC LOANS AND NOT HAVING ONE OF WASHINGTON'S MANY BIG TIME BANKING LAW FIRMS CHECK OVER THEIR TRUTH IN LENDING DISCLOSURES, IT'S THEIR OWN STUPID FAULT IF THEY GET HIT WITH RECISSIONS AND REPAYMENTS TO A WHOLE RAFT OF BORROWERS. PENNY WISE AND POUND FOOLISH. Permalink

nicmarlo at 11:38 2008-07-03 said:

The following may be of interest concerning this lawsuit, which concerns the "appropriateness" of filing a class action lawsuit; this matter alleges that Chevy Chase did not disclose CLEAR information to the borrowers as to the terms. I believe what they are focusing on is the lack of clarity in meaning concerning "5-year fixed" and "adjustable," terms which appear to be incongruent in meaning.

07-1326 Andrews, Bryan v. Chevy Chase Bank

Oral Argument before Seventh Circuit: http://www.ca7.uscourts.gov/fdocs/docs.fwx

Briefs Filed with Seventh Circuit Court of Appeals: http://www.ca7.uscourts.gov/briefs.htm

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Related Articles: Mortgage ruling could shock U.S. banking industry | June 30, 2008 http://www.reuters.com/article/newsOne/idUKN2634924420080630

In their 2005 lawsuit, the couple said the loan's interest rate had more than doubled by their second monthly payment from the 1.95 percent rate they thought was locked in for five years. The interest rate rose well above the 5.75 percent fixed-rate loan they had refinanced to pay their children's college tuition.

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The Truth in Lending Act, a 1968 federal law designed to protect consumers against lending fraud by requiring clear disclosure of loan terms and costs, lets consumers seek rescission, or termination, of a loan and the return of all interest and fees when a lender is found in violation.

Chevy Chase Takes a Hit - TILA Violations in Option ARMs | Jan. 17, 2007 http://lawprofessors.typepad.com/banking/2007/01/chevy_chase_tak.html Permalink