Option ARMs The Target Of Homeowners' "Truth In Lending" Lawsuits

Buried in a recent column appearing in the San Francisco Chronicle is a mention of attorney Jeffrey Berns, of Tarzana, California (Los Angeles County) who is preparing to file Federal Truth In Lending Act lawsuits on behalf of hundreds of borrowers who took out option ARMs. According to the column:

• "Berns says he is going to file cases in state court alleging violations of federal truth-in-lending laws as well as deceptive practices, fraud and negligent or intentional misrepresentation."
• "Berns, who is working on a contingency basis, says many lawyers are not willing to take on these cases. They can be difficult to win because "the disclosures are there, they're just buried in more than 100 pages of documents.""

According to Tom Pool, spokesman for the California Department of Real Estate, "State courts have found that mortgage brokers are fiduciaries in these types of transactions."

Reportedly, a state judge in Wisconsin recently ruled in favor of borrowers who had taken out option ARMs offered by Chevy Chase Bank that violated three provisions of the Federal Truth in Lending Act. The case was ultimately certified as a class action lawsuit. According to Milwaukee attorney Kevin Demet, who represented the homeowners, the size of the class could reach 7,000 to 8,000 people nationwide who took out the Chevy Chase option ARM in the year leading up to April 2005.

For more, see Subprime crisis offers a chance to step up.

For stories on the Chevy Chase, option ARM class action lawsuit, see:

• The Washington Post: A Fight Over the Fine Print (Chevy Chase Bank Faces Suit Over Adjustable-Rate Mortgages),
• Milwaukee Journal Sentinel: Mortgage lawsuit may have big effect (Couple's low interest rate lasted a month).

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