Travis and Jolene Bonte own a home in Wisconsin. In 2005, they took out a third mortgage with US Bank on their home and used the money, in part, to pay off their other mortgage debt. A few years later, the Bontes sued to rescind the third mortgage. The Bontes alleged that US Bank failed to accurately disclose certain terms of their mortgage, as required by the Federal Truth in Lending Act (“TILA”). US Bank filed a motion to dismiss the lawsuit. In its motion, US Bank argued that none of the alleged errors related to “material” disclosures required by TILA. The trial court ruled in favor of the Bank and dismissed the Bontes’ lawsuit. The Bontes appealed, and the appellate court also ruled in favor of US Bank.
The appellate court agreed with US Bank that homeowners cannot rescind their mortgage more than three days after the mortgage closes unless the lender fails to disclose a “material” term. A lender is required to make 18 disclosures, but only 5 of them are considered “material”: (1) the APR, (2) the finance charge, (3) the amount financed, (4) the total of payments, and (5) the payment schedule.
The Bontes’ complaint alleged that the errors listed on their TILA disclosure statement were related to the finance charge, the APR, and the amount financed. But the Bontes never explained how the alleged errors were related to those “material” terms.
In its Motion, US Bank explained how the alleged errors did not relate to the APR, finance charge, or the amount financed. In other words, US Bank showed how the errors were not “material”. For example, four of the alleged errors related to disbursement of loan proceeds (i.e., how the Bontes used their loan to pay off other mortgages). But the court found that those terms did not relate to the APR, finance charge, or the amount financed.
The Bontes also alleged a discrepancy in the disclosure of property taxes. But the court also found that property taxes are not related to the APR, finance charge, or the amount financed.
In its Motion, US Bank further explained that four more of the alleged errors – title insurance, ARM endorsement, recording service fees, and courier fees – relate to charges paid to a title company, not a creditor. TILA specifically exempts fees payable to third parties such as title companies.
The Bontes also alleged that US Bank overstated their settlement fees. But the court found that TILA only prohibits the understatement of required disclosures. In other words, TILA protects consumers only when the disclosed amount is less than the amount required to be disclosed. For the appellate court’s full opinion, click here: http://caselaw.findlaw.com/us-7th-circuit/1541485.html
The DeBlasio Law Group is experienced in litigating TILA claims. Call us to determine what rights you may have against a lender under TILA.