Opinion ID: 2821408
Heading Depth: 2
Heading Rank: 2

Heading: Community Bank I

Text: On July 14, 2003, the Original Plaintiffs and certain defendants, including CBNV, Guaranty, and Residential Funding, proposed a nationwide class action settlement, which was approved by the District Court. Under the terms of the settlement, the maximum total payout to the approximately 44,000 member class was $33 million. The settlement payouts ranged from $250 to $925 per borrower depending on the borrower’s residence and the date on which the loan was entered. In exchange, the borrowers were to release any and all state or federal claims that they might have relating to the mortgage loans at issue, including the right to use a violation of federal or state law as a defense to any foreclosure action. Because CBNV supported the settlement, 6 RICO makes it “unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity.” 18 U.S.C. § 1962(c). “Any person injured in his business or property by reason of a violation of section 1962 … may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney’s fee.” Id. § 1964(c). 10 it did not contest the requirements for class certification. 7 The order approving the settlement was appealed by a group of plaintiffs (the “Objector Plaintiffs”) who argued that claims under the Truth in Lending Act (“TILA”)8 and the 7 Defendants may engage in settlement negotiations and become parties to a class action settlement agreement without giving up the ability to contest class certification requirements later should the settlement fall apart. In re Gen. Motor Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 786 (3d Cir. 1995). 8 “TILA is a federal consumer protection statute[] intended to promote the informed use of credit by requiring certain uniform disclosures from creditors.” Community Bank I, 418 F.3d at 303. “Among other things, creditors who make loans secured by a borrower’s principal dwelling are required to provide all borrowers with ‘material disclosures,’ including ‘the annual percentage rate, the finance charge, the amount financed, the total payments, [and] the payment schedule.’” Id. at 304 (quoting 12 C.F.R. § 226.23) (alteration in original) (footnote omitted). “If ‘material disclosures’ are not provided or inaccurately provided, the creditor is strictly liable and a borrower has the right to rescind the loan up to ‘3 years after consummation, upon transfer of all of the consumer’s interest in the property, [or] upon sale of the property, whichever occurs first.’” Id. (quoting 12 C.F.R. § 226.23) (alteration in original) (footnote omitted). “In addition to the right of rescission, an aggrieved borrower may, within one year of the date of the violation, seek ‘actual damage[s] sustained … as a result of the failure,’ and statutory damages, which cannot exceed $500,000 or one percent of the creditor’s net worth (whichever is less) in the case of a class action.” Id. (quoting 15 U.S.C. 11 Home Ownership and Equity Protection Act (“HOEPA”)9 should also have been asserted on behalf of the putative class. § 1640(a)(1),(2)(B)) (alteration in original) (footnote omitted). 9 “HOEPA, enacted as an amendment to TILA, creates a special class of regulated loans that are made at higher interest rates or with excessive costs and fees” than those regularly covered by TILA. Community Bank I, 418 F.3d at 304. HOEPA protections apply if a loan meets one of two high-cost loan triggers: (1) the annual percentage rate (“APR”) exceeds by more than 6.5 percent or 8.5 percent, depending on the value of the transaction, the yield on Treasury securities having comparable periods of maturity for first-lien loans, or above ten percent for subordinate-lien loans; or (2) the total of all the loan’s points and fees exceed eight percent of the loan total or $400 (adjusted for inflation), whichever is greater. 15 U.S.C. § 1602(bb)(1) & (3); 12