Weintraub, et al. v. Quicken Loans, Inc., No. 1:2008cv00278 - Document 39 (E.D. Va. 2009)
Court Description: MEMORANDUM OPINION Re: 20 MOTION for Summary Judgment by Quicken Loans, Inc. and 23 MOTION for Partial Summary Judgment by Rita Weintraub, Barry Weintraub. Signed by District Judge Claude M. Hilton on 2/5/2009. (stas)
Download PDF
<![CDATA[
IN THE UNITED FOR THE STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA Alexandria Division RITA WEINTRAUB and BARRY WEINTRAUB, Plaintiffs, Civil v. QUICKEN LOANS, Action No. 08-278 INCORPORATED, Defendant. MEMORANDUM OPINION This matter comes before the Court on Plaintiffs' Motion for Partial Summary Judgment and Defendant's Motion for Summary Judgment. Plaintiffs, Rita Weintraub and Barry Weintraub, remitted to Defendant, Quicken Loans, Inc., a deposit in connection with their application for refinancing of their principal residence. Plaintiffs claim that Defendant's failure to refund that deposit in full, within 20 calendar days of receiving Notices of Right to Cancel executed by Plaintiffs, violates 15 U.S.C. ("TILA"). In 15 § U.S.C. February 1635(b) of the Truth in Lending Act §§ et 2008, 1601 seq. Plaintiffs, refinance their principal residence They applied for a home whose business a married couple, sought in Stafford County, loan with Defendant, to Virginia. a mortgage lender includes refinancing existing home loans. Plaintiffs sought to borrow $218,000.00 which would have resulted in a first for the refinancing, lien mortgage on Plaintiffs' residence. On or about February 1, interview to gather 2008, financial following a telephone information for the proposed Defendant generated and provided to Plaintiffs related to the refinancing application and a document titled two documents a Good Faith Estimate "Interest Rate Disclosure and Deposit Agreement" loan, - (Not Locked) ("Interest Rate Disclosure Agreement"). The Good Faith Estimate stated that for 3 0 years at a fixed interest rate. the proposed loan was Based on information provided to Defendant by Plaintiffs, Defendant estimated the value of $340,000.00. Plaintiffs' The year the residence to be Interest Rate Disclosure Agreement also referenced a 30- loan, but it did not interest rate. would be fixed provide a state either Although the for the "locked-in" life of interest final the the amount of the loan or interest rate on the loan, loan Defendant did not rate during the application process. Included in the Deposit Agreement. of Interest Rate Disclosure Agreement was Defendant required a the application for Plaintiff deposit remitted this and stated: refinancing, fee. $500.00 deposit and on February 5, a as part 2008, The Deposit Agreement governed this If your application is will credit approved: At the closing, Lender the amount of your deposit on your closing statement toward your closing costs. If your application is denied: Lender will refund the deposit less the actual amount of out-of-pocket costs incurred on your behalf for, among other items, the cost of an appraisal and/or credit report. A conditional approval or request for additional information is not a denial. The deposit will not be cooperate refunded if you don't fully in or complete the application process (including submitting all required documentation in a timely manner), choose to withdraw your application, or choose not to close the transaction for any reason (including changing interest rates). The Deposit Agreement concluded with the reminder that Agreement is not a commitment to "[t]his lend by lender or an underwriting approval of your loan application." (capitalization and emphasis removed). On February 4, these documents. for Plaintiffs fixed interest 2008, Defendant rate. complete appraisal of application, approved, the of $220,000.00 for 30 years Defendant communicated this That Plaintiffs' loan at a approval to letter also informed Plaintiffs application Defendant residence. would obtain a Following Defendant would conduct a final that third party completion of review and, the if schedule a closing. On February 7, service, Weintraub electronically signed then conditionally approved a in the amount Plaintiffs by letter. to Mr. 2008, Appraisal One, conducted an appraisal Defendant's request. Plaintiffs' house of a third party appraisal Plaintiffs' residence at Appraisal One estimated the value of to be $308,000.00. This estimate was $32,000.00 less than the value assumed in the Good Faith Estimate. After this lower-than-anticipated appraisal, a half-point adjustment this half-point loan. in the original proposed loan of $34 0,000.00 to the $220,000.00 initial Defendant had not loan documents because was less estimate of the house's value. however, exceeded 70 percent of the appraised value of loan, the the proposed Following the loan of $220,000.00 the house securing and Defendant added this half-point adjustment. February 18, 2008, Settlement this half-point Statement, labeled a closing was Defendant for adjustment. included it "Loan Discount scheduled On or about On Defendant provided Plaintiffs with closing documents reflecting Charge," included than 70 percent of the third party appraisal, the Defendant added Fee" as payable a In the "Settlement to Defendant. February 18, February 26, The Defendant also provided 2008 2008. Plaintiffs with a Federal Truth-in-Lending Statement and Notices of Right to Cancel. reminder LEND." that The Truth-in-Lending Statement began with a "[t]HIS The Notices IS of NEITHER A CONTRACT NOR A COMMITMENT TO Right You are entering to Cancel stated: into a transaction that will result in a mortgage/lien/security interest on/in your home. You have a legal right under federal law to cancel this transaction, without cost, within THREE BUSINESS DAYS from whichever of the following events occurs last: (1) The date of the transaction, February 26, (2) 2008; The received your date you which is or Truth in Lending disclosures; (3) or The date you received this right to notice of your cancel. If you cancel the transaction, the mortgage/lien/security interest is also cancelled. Within 20 we must CALENDAR DAYS take the steps after we necessary that the mortgage/lien/security home has been cancelled, receive your notice, to reflect the fact interest on/in your and we must return to you any money or property you have else given to us or to anyone in connection with this transaction. On February 18, to Cancel, 2008, following receipt of Plaintiff, with Defendant about Barry Weintraub, the Dissatisfied with this Right to Cancel. Weintraub, sent change, spoke the Notices that on the telephone adjustment Plaintiffs On or about February 20, accompanied by a cover $500.00 deposit half-point these Notices of Right to Plaintiffs for a loan. signed the Notices of 2008, to Defendant by mail letter asking the full Plaintiff, Rita and fax, refund of the remitted with their original application. On February 20, for a full not provide or failure subtracting $20.59 2008, refund of Defendant denied Plaintiffs' their deposit. The Deposit Agreement did for a refund in the event to close $350.00 the transaction. for the cost of of a withdrawn application Nonetheless, the for a third party credit report, Plaintiffs with a partial Summary judgment issue as is to any material request after third party appraisal and Defendants did provide refund of $129.41. appropriate where fact. See Fed. R. there Civ. is P. no genuine 56 (c). Once a motion for summary opposing party has judgment is properly made the burden of showing exists. See Matsushita Elec. Indus. 475 574, A material U.S. 586-87 (1986). Co. that v. and supported, a genuine the dispute Zenith Radio Corp., fact in dispute appears when its existence or non-existence could lead a jury to different outcomes. U.S. 242, 248 See Anderson v. (1986). Summary judgment after discovery, a party has to establish the existence party's proof at (1986). case, trial." Celotex When a motion be See 672, 1996) (4th Cir. are Plaintiffs an element Corp. taken facts judgment U.S.C. that TILA does withdrew that was never their a 477 is U.S. 317, made, light most in dispute the 322 evidence favorable to the 84 F.3d to Court in this that case. they properly transaction covered under TILA, failing the loan to calendar days 1635(a)-(b). not apply Plaintiffs there § the burden of Commonwealth Univ.. from this deposit within 20 15 bear to that (en bane). that Defendant violated TILA by Notices. Va. 477 "showing sufficient essential Catrett. in the Smith v. rescinded a consumer credit Plaintiffs' a summary judgment no material seek a v. Inc.. appropriate when, failed to make of for non-moving party. There is and on which that party will presented must always 675 Liberty Lobby, return all of Defendant facts of this receipt of of those seeks a judgment case, that application prior consummated consumer and to closing, transaction, and which is a condition precedent TILA promotes an awareness 1601(a). of for TILA to the the "informed use of cost thereof TILA's purpose to assure that apply. credit by consumers." To credit is that U.S.C. §§ a meaningful end, disclosure TILA regulates through a 1603(1), numerous of security interest has significant of the the purposes" of U.S.C. TILA. 15 enacted regulations pursuant commonly referred In addition to its Official Staff as Supplement The source Credit Servs., (2004). I to as of consumer financing property. these Court has held Reserve 15 regulations 1604(a). ("Staff C.F.R. that The unless v. MBNA Am. regulations Board has Bank. C.F.R. C.F.R. Commentary") Pt. the Board N.A.. 12 12 § the Board publishes 226, is interpretation and application of Inc. (the to carry out statutory duty, regulations, 12 System for enforcing TILA. "Regulation Z." Interpretations The Board's "dispositive" § to this to Regulation Z. Supreme for the so to him and avoid the in real responsibilities "prescribe 226.1(a). terms residential Federal the Board to 226, § (3) . TILA requires Pt. credit types including those where The Board of Governors "Board") 15 U.S.C. the consumer will be able to compare more readily transactions, secured from is: the various credit terms available uninformed use of credit .... Id. result[ing] of Supp. TILA I. the primary TILA. 541 U.S. Household 232, 238-39 and Staff Commentary are "demonstrably irrational." Cades v. H & R Block. Inc.. 43 F.3d 869, U.S. 1103 (1995) U.S. 555, 565 875 (4th Cir. 1994), (citing Ford Motor Credit Co. cert, 515 Milhollin. v. denied, 444 (1980)) . Plaintiffs' claim relies on a provision of TILA establishing a right under certain circumstances transaction." 15 U.S.C. Except as § to rescind a "consumer credit 1635{a). TILA states: otherwise provided in this case of any consumer credit section, in the in which a security interest ... is or will be retained or acquired in any property which is used as the principal dwelling of the person to whom credit is extended, the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction transaction or information and rescission forms section together with a the ... delivery of required under this statement containing the material disclosures required under this title . . whichever is later, by notifying the creditor, in accordance with regulations of the Board, of his intention to do Id. The right to rescind. that a loan to be the that transaction" right, completed credit rise there was, need not be and applicable right consummated consumer credit with the that would give "consumer to the arguing a consummated interpretation is contrary to TILA, the , for rescission under TILA. Staff Commentary, demonstrate case Plaintiffs contend that eligible Plaintiffs' Z, in this "consumer credit . so. threshold question is whether there was a credit transaction" the case law, Regulation all of which to rescind under TILA requires transaction. TILA provides under certain circumstances, transaction. In this 8 case, a consumers to unwind a where a refinancing application was withdrawn prior completed credit to closing, transaction to unwind. had no right to rescind under TILA. have their deposit TILA defines was no Consequently, Plaintiffs Nor do they have a right to returned. "credit" as "the right granted by a creditor to a debtor to defer payment of a debt or to its payment." there 15 U.S.C. actual granting of § 1602(e). incur debt and defer For TILA, "credit" means an credit as opposed to the proposed granting of credit. TILA does not define used, however, each of as part the of transaction" "transaction." two other defined these defined terms consummated event. term treats a For example, a terms The word is in TILA, "transaction" as and a "residential mortgage means a transaction in which a security interest created or retained against a consumer's dwelling to finance acquisition or initial construction of § a 1602(w). Similarly, nonrecourse "mortgage, security interest consumer's principal dwelling TILA's explanation of the . . . ." transactions 1635(b). Following a rescission, U.S.C. is a trust, or created against the 15 U.S.C. effect of a are eligible deed of the is legal obligations of the parties also shows credit 15 "reverse mortgage transaction" transaction in which a equivalent consensual such dwelling." "is § 1602(bb). "rescission" on the that only completed for rescission. 15 U.S.C. § any security interest given by the borrower becomes void and the borrower is no for any finance charges or other charges. 15 U.S.C. The lender, meanwhile, longer liable § 1635{b). must return any down payment and take steps to terminate the security interest in the property. Given the parties, impact of the terms a rescission on the obligations of "rescind" and "rescission" for TILA a completed transaction is Id. the again confirm that a precondition for rescission. Federal courts, including this Circuit, consummated loan transaction is essential liability. 123 Nigh v. (4th Cir. N.H. Baxter v. Sparks to the creation of TILA Koons Buick Pontiac GMC. 2003), Harman v. have held that a Sav. Inc.. rev'd on other grounds, Bank. 638 Oldsmobile. F.3d 119, 543 U.S. 50 282 (1st Cir. 1981); F.2d 863, 864 F.2d 280, Inc.. 319 579 (2004); (4th Cir. 1978) . For example, transaction" borrower. the in Baxter the required Baxter. Plaintiff the 579 Court held that a actual F.2d at extension of 864 (4th Cir. signed a purchase order "credit credit 1978). to the In Baxter, for a car and the parties "contemplated that credit would be arranged through a third party order, . . . ." Id. Even there was no actual held that "the Truth credit in fact is though there was extension of in Lending Act does extended." Id. 10 a signed purchase credit, not and the Court impose penalty until This Circuit has held that a consumer credit transaction is consummated under TILA when there the is a contractual obligation by lender to lend and the borrower to borrow, state law. 1994). Cades v. H & R Block, Inc.. 43 as determined by F.3d 869 (4th Cir. In Cades the Court noted that pursuant to Regulation Z, TILA disclosures had to be given to the consumer before "consummation of § 226.17(b)). the transaction." Id. at 876 (citing 12 C.F.R. The Court then held that merely signing a loan application did not consummate a transaction and trigger TILA's disclosure the requirements. consumer "becomes transaction." Id. Under TILA, formed. to borrow the cmt. 1-2)). word "consummate" "plain, I § 226.2(a)(13)). the applicable state loan application did not funds. Supp. C.F.R. law determines whether a contract has under the consummation occurs when contractually obligated on a credit state 226, Rather, (citing 12 In Cades, determined that Id. Cades, (Official Staff 43 F.3d at 876 as used with a contract, ordinary meaning," GSHH-Richmond, Inc. v. commit the Court the applicant (citing 12 Interpretations The Supreme Court of Virginia, law, to para. C.F.R Pt. 2(a)(13), in construing the has applied its which is "to bring to completion." Imperial Assocs.. 480 S.E.2d 482, 485 (Va. 1997). It is clear from TILA, law interpreting it, that as well the right 11 as the regulations and case to rescind under 15 U.S.C. § 1635(b) requires a consummated consumer credit transaction. In the context of an application for refinancing of a home loan, consummation occurs at closing, borrow and lend arises. when a contractual obligation to There was no closing in this case. Plaintiffs withdrew their application prior to the extension of credit and Defendant never filed any papers, claiming a lien on the property, prerequisites including papers with any court. One of the for a rescission under TILA - a consummated consumer credit transaction - is absent in this case. Plaintiffs argue that consummation of a credit transaction is not a precondition for rescission and interpret TILA as establishing a right to rescind following either a consummated credit transaction or the creditor's delivery of a Notice of Right to Cancel and Truth in Lending Disclosures to the borrower. Plaintiffs contend, therefore, that they properly rescinded by transmitting Notices of Right to Cancel to Defendant before midnight of the third day following their receipt of those notices. This interpretation of the timing o'f a rescission is inconsistent with TILA, which clearly states that the three day rescission period begins after consummation of the transaction, delivery of the Notice of Right to Cancel, Truth in Lending Disclosures, 1635(a). "whichever is or delivery of the later." 15 U.S.C. § Each of these three events must occur before the three- 12 day rescission period begins to run. Mortgage 14 Corp.. 485 F.3d 12, rescission period begins Santos-Rodriguez v. (1st Cir. {"This three-day to run when the transaction is consummated or upon delivery of notice of rescind, 2007) whichever occurs the consumer's right three events, occur before the with the clause, 226.23(a)(3). right to later."). Regulation Z and the Staff Commentary confirm TILA's that all Doral intent including consummation of the transaction, to rescind begins. "whichever occurs Regulation Z does last." 12 C.F.R. The Staff Commentary clearly states, this § n[t]he period within which the consumer may exercise the right to rescind runs for 3 Pt. business days 226, Supp. 23(a)(3), cmt. I the Staff 3 events . . Interpretations . ." 12 C.F.R. to para. It then provides several examples of these in different orders to explain how to calculate three day rescission period in these different situations. In each of the (Official 1). events happening from the last of last of the examples, these the rescission period starts only after three events has happened. Regulation Z's Model Form, Id. Finally, with which Defendant's Notice of Right to Cancel complied in all respects, demonstrates the necessity of consummation by stating that rescission is permitted "within three business days last . . . ." 12 The Board's from whichever of C.F.R. Pt. 226, App. the following events occurs H-8. interpretation of TILA is consistent with TILA's 13 pro-consumer purposes. Under TILA, if the required disclosure and documents are not provided to the consumer, the rescission period may not start for up to three years after the transaction. 15 U.S.C. § 1635(f). Having determined that a consumer credit transaction is a precondition for exercising the right to rescission under TILA and that no such transaction existed here, arguments are moot. their agreement, deposit, Plaintiffs that once other they rescinded Defendant was obligated to return the entire including any § 1635{b); argue Plaintiffs' 12 C.F.R. "appraisal fee," within 20 days. Pt. Interpretations to para. 226, Supp. 23(d)(2)). I. 15 U.S.C (Official Staff They also argue that the Interest Rate Disclosure Agreement did not modify or waive their rescission rights since under TILA the right agreement cannot be wavied except financial emergency" for a to rescind a loan "bona fide personal and with a properly signed and dated declaration describing the emergency and waiving the right to rescind. 15 U.S.C. § 1635(d); 12 C.F.R. § 226.23(e). Absent a consummated consumer credit transaction to rescind, however, these questions - whether appraisal fees are refundable following a rescission and whether Plaintiffs waived rescission rights - are moot. Staff Commentary TILA, as well as the Board's regulations and interpreting and enforcing it, all demonstrate that a consummated consumer credit transaction is a prerequisite 14 for a rescission under 15 U.S.C. 1635(a). There is no such transaction here since Plaintiffs withdrew their application prior to closing, credit was never extended by Defendant, contemplated refinancing of Plaintiffs' Without these conditions and the home never took place. for a rescission, obligations associated with a rescission do not the legal exist. Plaintiffs do not have a right to a full refund of their deposit, and Defendant did not violate TILA by failing to return all of Plaintiffs' deposit within 20 calendar days of receipt of those Notices. For the reasons stated above, Defendants are entitled to summary j udgment. /s/ Claude M. Hilton Alexandria, February United States District Judge Virginia £T , 2009 15
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
