The Court declined to dismiss a mortgagors’ claim against mortgagee in Reyes v. Downey Savings and Loan Ass’n, F.A., No. SACV 07-0615-AG (March 29, 2008 C.D.Cal.) alleging that mortgagee violated the California Unfair Competition Law (UCL) by promising them a lower interest rate than was delivered, misrepresenting the loan terms, and breaching the loan contract. The court ruled the claim was not preempted by the Home Owners’ Loan Act (HOLA). The mortgagors alleged that the mortgagee promised them a lower interest rate than was delivered. They also alleged that the mortgagee misrepresented the contract terms and breached the contract. By these allegations the court concluded that the mortgagors were seeking to use the UCL to apply general contract law. The principles of breach of contract and fraud in the inducement are not specific to lending activities. Further, application of these principles requires no affirmative action or representation by a lending institution. Thus, HOLA did not preempt this claim.
Author
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Solomon has nearly two decades of experience representing financial institutions, real estate investors and privately owned business entities. Solomon concentrates his practice in the areas of banking, consumer financial services, real estate, business law and related litigation and appellate practice.
