Vincent Howard and our Murrieta predatory lending attorneys routinely represent people who feel they were misled or deceived when they took out their home loans. One way to challenge a predatory loan is by bringing an action under the Truth in Lending Act, which provides a specific method to cancel the loan if the lender does not provide all required disclosures. Many states enacted similar laws, one of which was at issue in Tellado v. IndyMac Mortgage et al.. The Tellado family attempted to cancel their loan because they negotiated their refinance in Spanish but received English-language loan documents, a violation of Pennsylvania consumer protection law. The Philadelphia district court agreed that the loan should be canceled, but the Third U.S. Circuit Court of Appeals held that the couple must first extinguish their remedies under the federal Financial Institutions Reform, Recovery and Enforcement Act.
In 2007, Jose Tellado heard a Spanish-language ad on the radio for IndyMac and called. He spoke to the representative in Spanish about a refinance, and the representative helped Jose and his wife, Maria, apply for a loan. IndyMac sent a closing agent named Philip Bloom to the closing at the Tellados' home with English-language documents. The Tellados' daughter, Marcelina Fuster, acted as an interpreter for Bloom's instructions and explanations. In 2008, IndyMac failed; in 2009, its assets, including this loan, were transferred to OneWest Bank, which assumed only certain liabilities. In August of 2009, the Tellados sent OneWest's IndyMac Mortgage division a notice of cancellation, arguing that they should have received Spanish-language documents under state law.
When OneWest did not respond, they filed suit in state court. OneWest removed the case to federal court, where the judge ordered OneWest's CEO to appear at trial and, after a bench trial, ruled for the Tellados, canceling their loan and giving them all loan proceeds and equity. It also imposed a $10,000 fine for the CEO's failure to appear.
OneWest's appeal argued that the district court lacked subject matter jurisdiction because the dispute should be governed by FIRREA. FIRREA gives the FDIC authority over failed financial institutions, and creates an administrative claims process for those institutions in receivership. OneWest argued that the Tellados should have been required to use that administrative process, and the Third Circuit agreed. FIRREA says courts don't have jurisdiction over claims related to acts or omissions of depository institutions, which the Third said in this case is IndyMac, and several circuit courts have concluded that this applies when the receiving bank is being sued. It then examined the penalty for the CEO's failure to appear, and concluded that while the court had jurisdiction, OneWest didn't have due process because there was no notice or hearing on the penalty issue. Thus, it reversed both orders.
This is an unusual situation for consumers to be in, because of the failure of IndyMac. Most "failure to give notice" claims handled by the Garden Grove predatory lending lawyers at Howard Law, P.C., will not require borrowers to go through the FIRREA administrative claims process, because most banks did not fail. In California, we have a law similar to the Pennsylvania law at issue here, requiring lenders to provide documents in the same language used to negotiate the loan. This prevents unscrupulous lenders from doing a "bait and switch" in which the borrowers believe they are negotiating a substantially different loan from the one they get. And across the United States, including here in California, the Truth in Lending Act allows cancellation in three years for failure to give proper notice. Vincent Howard and our Chino predatory lending attorneys represent clients seeking to use TILA and other consumer protection laws to cancel or modify unfair loans.
If you believe you were deceived when you took out a home loan or refinance, you may have legal remedies. Call Vincent Howard and the team at Howard Law to discuss your rights and your options. You can reach us through our website or call 1-800-872-5925.