Consumers Take It On The Chin With Recent Federal Appeals Court "Truth In Lending" Rulings

1) Law.com reports:

• A provision in the Truth in Lending Act that excuses minor inaccuracies on the part of lenders is not an "affirmative defense" that must be specifically raised by the defendant, but instead is a "general defense" that cannot be waived, the 3rd U.S. Circuit Court of Appeals has ruled.

• The ruling in Sterten v. Option One Mortgage Corp. could prove to be a significant boon to banks by relaxing the rules for reaping the benefits of a TILA amendment that was designed to prevent creditors from being subject to "extraordinary liability" for small disclosure discrepancies.

For more, see 3rd Circuit: Truth in Lending Act Provides Unwaivable Defense (Panel rules 'tolerances for accuracy' provision is not an affirmative defense).

For the court ruling, see Sterten v. Option One Mortgage Corp. (3rd Cir., 11-4-08).

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2) Jurist's Paper Chase (University of Pittsburgh School of Law) reports:

• The US Court of Appeals for the Ninth Circuit [recently] ruled that the federal Truth in Lending Act does not provide for statutory relief for a lender's failure to conspicuously disclose certain information about a loan to the borrower and to give the borrower certain information before offering the loan.

For more, see Ninth Circuit rules subprime borrower due no damages for lender disclosure failures.

For the court ruling, see McDonald v. Checks-N-Advance, Inc. (in re Ferrell) (9th Cir., 8-22-08).

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3) In a story posted here in October, the National Law Journal reported:

• In a boon for the mortgage lending industry, a federal appeals court has said the Truth in Lending Act does not allow for rescission of mortgages on a class action basis. The 7th U.S. Circuit Court of Appeals, in a 2-1 decision [...], averts the potential of significant damages for creditors accused of violating disclosure requirements in some of the exotic mortgage vehicles that exacerbated the mortgage market meltdown and has Congress contemplating ways to restore credit market confidence.

• The Circuit decision joins an earlier ruling by the 1st and 5th Circuits and one California state appellate court that have held that the Truth in Lending Act (TILA) does not allow claims for rescission in a class action format.

For more, see Mortgage Lenders Fight Off Rescission Class Action in 7th Circuit.

For the court ruling, see Andrews v. Chevy Chase Bank (7th Cir., 9-24-08). UndoMortgageLoans TILAdelta