For weeks the Consumer Financial Protection Bureau has been advertising the pending release of its proposed mortgage loan disclosures that “are easier for both consumers and lenders to understand and use.” Alas, await no more. The CFPB released its proposed mortgage loan disclosures today. The purpose of the new, supposedly friendlier disclosures, is for the CFPB to meet the requirement under the Dodd-Frank Act that the Truth in Lending Act (commonly referred to as TILA) and the Real Estate Settlement Procedures Act (commonly referred to as RESPA) disclosures be combined into one easy-to-read disclosure. If adopted, the new rule will modify the rules commonly known as Regulations X and Z.Continue reading this entry
In Estate of Davis v. Wells Fargo Bank, 2011 WL 93030 (7th Cir. Jan. 12, 2011), the plaintiff asserted claims arising from her 1999 mortgage loan refinancing which, in a prior action against the original defunct lender, was determined to have been fraudulent. In 2002, the plaintiff defaulted on her loan and Wells Fargo Bank, as the ultimate assignee of the loan, made various attempts, in conjunction with the loan servicer, Litton Loan Servicing, to obtain repayment of the loan from the plaintiff. In one such attempt, in 2005, the loan servicer sent the plaintiff a loan modification proposal on behalf of Wells Fargo.
Recently-filed complaints reflect disputes between borrowers and mortgage servicers over loan modification programs. Mortgage servicers may provide loan modifications to borrowers through their own programs. Some mortgage servicers may provide loan modifications to eligible borrowers through the Home Affordable Modification Program (“HAMP”), an Obama administration program.
In lawsuits currently pending in the federal courts, borrowers allege miscommunication and misunderstanding over loan modification programs. For example, some plaintiffs have alleged that they relied on statements made by representatives of loan servicers that no further payments needed to be made during the loan modification process, and that their reliance on those statements caused them to become delinquent on their loan. One plaintiff has alleged that he was told that the sale of a property would be postponed because of the loan modification process, and he seeks to have the court set aside the foreclosure of that property. The loan servicers will have a chance to respond to these allegations and other complaints alleging problems with loan modification programs.
In Swanson v. Citibank, N.A., 2010 WL 2977297 (7th Cir. May 26, 2010), the Seventh Circuit applied the pleading requirements under Twombly, Iqbal and Erickson to Fair Housing Act claims. The plaintiff in Swanson sued Citibank (as well as an appraisal company and its employee) for violation of the Fair Housing Act alleging that Citibank turned down her application for a home-equity loan on the basis of her race (African-American). The plaintiff also brought a fraud claim against Citibank alleging that Citibank falsely announced its plans to make federal funds available in the form of loans to all customers, when it actually intended to exclude African-American customers. The district court dismissed all of the plaintiff’s claims.
The Seventh Circuit applied the federal pleading requirements as clarified by the United States Supreme Court in Twombly, Iqbal and Erickson, requiring a plaintiff to "give enough details about the subject-matter of the case to present a story that holds together." The Seventh Circuit instructed that the court should ask itself could these things have happened, not did they happen.