Farran v. Penn Mortgage Co., Inc. (In re Farran)

No. 94-50944-JS (Bankr. D. Md. May 22, 1995) ; Clearinghouse Number: 50773

Description

Debtor Argues That Lender Did Not Qualify for Federal Preemption of State Law Limiting Loan Origination Fee

Abstract

The parties have settled this adversary proceeding in which plaintiff-debtor consumer alleged that defendant lender violated the Truth in Lending Act and state law. Debtor had obtained a $10,000 loan from defendant, secured by a deed in trust on her home. At the time of settlement, defendant charged debtor a 3½ point “origination fee.” The broker received an $800 fee. The total charges at settlement were $2,804. Debtor received $7,195. After debtor fell behind on the loan payments, defendant sought to foreclose. Debtor filed for chapter 13 bankruptcy and sought to rescind the loan. Defendant refused to honor the loan cancellation, and debtor brought this adversary proceeding. Debtor alleged that defendant violated state law by charging an excessive origination fee for the loan. Debtor argued that defendant was not a qualified lender under the Depository Institutions and Monetary Control Act of 1980, 12 U.S.C. §§ 1735f-7a(a)(1), 1735-5(b)(2)(D), and therefore was not qualified for federal preemption of the state law limiting the origination fee or points it could charge. Debtor also alleged that defendant violated the federal Truth in Lending Act by failing to disclose accurately the finance charge, amount financed, annual percentage rate, total payments, and each payment amount. On the day of trial, the parties settled. Under the terms of the settlement, defendant agreed to release debtor from any indebtedness, to release the deed of trust, to dismiss the foreclosure action, and to pay debtor’s attorney fees and costs.

Additional Information

Attorney Information
Plaintiff-Debtor represented by Elizabeth Renuart, St. Ambrose Legal Services, 321 E. 25th St., Baltimore, MD 21218, (410) 366-8621.
Docket Date
1995-05-22 00:00:00+00:00