Back in August, this blog discussed the case of Greenbrier Circuit Court Judge James Rowe, who sued Aurora Commercial Corp. and Nationstar Mortgage, LLC after the rate on his mortgage loan rose from 4.625 to 6.625 percent. Recently, Aurora and Nationstar sought to have the case dismissed from federal court in the Southern District of West Virginia.
Judge Rowe and his wife had purchased a property in South Carolina in 2005. Before doing so, they entered into an adjustable rate note with TM Capital Inc. for $626,250. Later, Aurora became the loan holder and transferred the loan and the right to collect payments to Nationstar in 2012. In March 2012, Nationstar allegedly informed the Rowes that the rate had changed, from the agreed-upon 4.625 percent to 6.625 percent. The Rowes then sent a letter in May 2012 to Nationstar requesting an audit and a recalculation of the interest rate since 2010. In June 2012, Nationstar sent the Rowes a notice of default.
Judge Rowe then filed a lawsuit, claiming that under the federal Truth in Lending Act (TILA), lenders who regularly extend consumer credit with a finance charge must disclose certain key loan terms. Since Nationstar allegedly failed to do so, the Rowes had the right to rescind their mortgage loan, which they did in their May 2012 letter.
Recently, Aurora and Nationstar sought to dismiss the lawsuit by arguing that TILA does not apply to loan servicers, so they are not “creditors” within the meaning of TILA; the claim for relief under TILA is time-barred because the statute of limitations is just three years; and that the Rowes failed to allege intent or ability to tender loan proceeds, which was required to have the loan rescinded under TILA. Aurora and Nationstar also argued that South Carolina law, not West Virginia law, governed the breach of contract claim; that the Rowes failed to read the second note; and that the Rowes’ unconscionability argument failed because Judge Rowe did not experience a “gross inadequacy in bargaining power,” as he has served on the board of directors of several banks. Finally, Aurora and Nationstar argued that the Rowes’ fraud claim was time-barred, that Aurora and Nationstar never made any misrepresentations that the Rowes relied upon, and that the Rowes failed to include TM Capital as a party.
Even if the district court judge ends up dismissing some of the Rowes’ claims, he or she could still allow some claims to proceed. The situation reflects the often harsh reality of dealing with lenders and loan servicers. Besides predatory lending, lenders have often confused their customers by repackaging their mortgage loans and selling them to other lenders. The customers then pick up their loan statements and see names that are unfamiliar. As a result of the perpetual harassment many customers face from these lenders, they end up hiring a West Virginia bankruptcy attorney and file for Chapter 7 or Chapter 13 bankruptcy. It will be interesting to see whether the district court judge allows Judge Rowe’s case to move forward.
The Wolfe Law Firm has been providing legal services for nearly 25 years. Located in Elkins, West Virginia, the firm provides services in the areas of personal injury, criminal defense, bankruptcy, and mediation. If you are looking for an experienced West Virginia attorney, contact us today.