Following a telephone interview to gather financial information for a proposed loan, the Defendant in Weintraub v. Quicken Loans, Inc., No. 08-278 (E.D.Va., Feb. 5, 2009) provided the Plaintiffs a Deposit Agreement which required the Plaintiff to make a $500.00 deposit as part of the application for refinancing. Plaintiff paid the fee, signed all of the closing documents, but when the appraisal came back lower than expected the Plaintiff decided not to go through with the loan. The Defendant denied the Plaintiff’s refund request as the Deposit Agreement did not provide for a refund. Plaintiffs sued under TILA. The parties filed cross motions for summary judgment. Plaintiffs claim that Defendant’s failure to refund violated the rescission rules found in TILA. The threshold question was whether there was a consumer credit transaction that would give rise to the right to rescind. The court found that under TILA, Regulation Z, the Staff Commentary, and applicable case law, the right to rescind under TILA requires a consummated consumer credit transaction. TILA’s explanation of the effect of a rescission on the legal obligations of the parties shows that only completed credit transactions are eligible for rescission. In this case, where a refinancing application was withdrawn prior to closing, there was no completed credit transaction to unwind. Consequently, Plaintiffs had no right to rescind under TILA. Nor do they have a right to have their deposit returned.
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.
