Wednesday, August 10, 2011

Consumer Protection/UDAP - Pa. CPL not pre-empted by federal law - lender failed to give notice of right to cancel

Tellado v. IndyMac Mortgage Services - ED Pa. - July ___, 2011

Plaintiffs, Spanish-speaking homeowners, got a loan with Defendant in a transaction that took place at their home. They were not given a notice of their right to cancel the transaction, required under the Pennsylvania Consumer Protection Law, 73 P.S. sec. 201-7, nor were they given any documents in Spanish, their primary language.

The court held that the state CPL claim was not pre-empted by

- the federal Home Owners Loan Act (HOLA) and regulations, 12 CFR 545.2, citing Binetti v. WAMU, 446 F.Supp. 2d 217 (SDNY 2006), Poskin v. TD Banknorth, N.A., 687 F. Supp. 2d 530 (W.D. Pa. 2009), and Reyes v. Premier Home Funding, Inc., 640 F. Supp. 2d. 1147 (N.D.Cal. 2009)

- the federal Truth in Lending Act, citing Jamal v. WMC Mort. Corp., 2005 US Dist. Lexis 5076 (ED Pa. 2005)

The court held that plaintiffs stated a claim under the Pa. Consumer Protection Law and that, because of the lack of notice of right to cancel, the court orded the contract canceled, directed defendants to refund all payments made by Plaintiffs, and directed defendants to terminate any security interest they had taken in the home.