The Truth in Lending Act regulations can force banks to play by the rules

It looks like there is a way to fight the banks by following the law. The Marr vs.Bank of America case is a recent example showing that summary judgements can be reversed, when brought under the federal Truth in Lending Act or TILA.

TILA requires a borrower to receive two copies of a notice of this rights at the end of a closing to rescind a loan within three business days, otherwise the rescission period extends to three years.

Richard Marr refinanced his loan with Countrywide, which was later acquired by Bank of America. A title insurance company Countrywide’s partner in this deal closed the loan.

As the TILA rules say, the creditor needs to give two copies but Marr received only one copy somewhere near the beginning or in the middle of the closing, not at the end as required by law, he recalls. Marr’s lawyer has learned the absence of the second copy two years after Summit Title Servicers LLC, the title insurance company, closed the loan.

Marr decided to sue the bank in March 2009 seeking an award of about $17,000 for reimbursement of his interest payments, statutory damages for the bank’s failure to rescind and attorney fees, Law.com has learned.

Judge Diane Wood wrote when the ruling was announced: “although the difference between one and two copies may seem to be an empty formality, Regulation Z demands two copies”, which means that the bank did not play by the rules, so Marr can proceed with his lawsuit to rescind the loan.

The ruling of the US Court of Appeals for the 7th Circuit is a great and justified victory, according to E. Michelle Drake, partner of Nichols Kaster, who has filed TILA cases against Bank of America and many other banks.

“This case was a real invitation to the 7th Circuit to engage in a substantial compliance analysis, or no-harm, no-foul analysis, and the court rejected that invitation,” Drake said. “The court held Bank of America’s feet to the fire as it should have and said, ‘If you are going to engage in meaningful, potentially life-changing mortgage transactions with individual borrowers than you have to comply with every aspect of the law.”