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- Class Action Defense Cases-Hall v. County of Los Angeles: Defense Properly Granted Summary Judgment In Sex Discrimination Labor Law Class Action Against County California Court Holds
California Appellate Court Affirms Summary Judgment in Favor of Defense Because no Evidence Supported Class Action Allegations that County Program Discriminated Against Women or Affected Women Disproportionately to Men
Plaintiff filed a putative class action against the County of Los Angeles alleging that it violated the federal Equal Pay Act because it paid female lawyers employed under the County’s “Auxiliary Legal Services” program (ALS) less than it paid male lawyers serving as County Counsel. Hall v. County of Los Angeles, ___ Cal.App..4th ___, 2007 WL 529963, *1 (Cal.App. February 22, 2007). Defense attorneys moved for summary judgment; the trial court granted the defense motion and the California Court of Appeal affirmed. The appellate court held that “the wage disparity between ALS and County Counsel was based on an acceptable business reason, which is a recognized ‘factor other than sex.’” Id., at *4 (citation omitted).
In 1984, in order to address a dramatic increase in juvenile court cases, the County formed ALS to supplement the legal services provided by County Counsel. The ALS attorneys were independent contractors, and by the express terms of their contracts they were employees of ALS, not the County. Hall, at *1. ALS was intended to allow the County to realize cost savings by hiring additional attorneys on “as needed” basis “without increasing the number of permanent classified County employees.” Id. “Similarly situated male and female lawyers at ALS were treated the same in terms of salary and benefits, and similarly situated male and female lawyers at County Counsel were treated the same in terms of salary and benefits.” Id., at *2. The class action complaint alleged, however, that there were more female lawyers at ALS than at County Counsel, and that female lawyers at ALS were not paid comparably with male lawyers at County Counsel. Id.
Tue, 13 Mar 2007 04:29:32 -0800 - TILA Class Action Defense Cases-McKenna v. First Horizon: First Circuit Holds As Matter Of First Impression That Rescission Relief Under Federal Truth In Lending Act (TILA) Not Appropriate For Class Action Treatment
As Matter of First Impression, Class Action Treatment for Rescission Claims Under TILA (Truth in Lending Act) is not Proper First Circuit Holds
Plaintiffs filed a putative class action in Massachusetts federal court against First Horizon Home Loan alleging that it violated the federal Truth in Lending Act (TILA) and its state law equivalent, the Massachusetts Consumer Credit Cost Disclosure Act (MCCCDA) by failing to accurately disclose to borrowers their statutory rescission rights. McKenna v. First Horizon Home Loan Corp., 475 F.3d 418, 420 (1st Cir. 2007). Plaintiffs moved for class certification; defense attorneys objected that class action treatment was inappropriate. Id. The district court certified a class that included borrowers who had refinanced or paid off their loan with First Horizon, id., at 420-21. The First Circuit granted a defense request for interlocutory review of “an appeal that requires us to explore, for the first time, the crossroads at which class-action rules intersect with the rescission provisions of [TILA] and [MCCCDA].” Id., at 420. The Circuit Court concluded that “the district court lacked the authority to certify a class of residential borrowers who might potentially be eligible for rescissionary relief.” Id.
The First Circuit began by summarizing TILA’s and the MCCCDA’s statutory scheme, McKenna, at 421-22, and noted that while the class action complaint sought rescissionary relief under the MCCCDA, the parties agreed that “TILA supplies the applicable rules of decision,” id., at 422. The Circuit Court then addressed the “flagship claim” of defense attorneys that “as a matter of law, class actions for rescission are unavailable under the TILA,” id. The Court noted that central issue before it – “whether TILA claims focused on rescission are maintainable in a class-action format” – is a matter of first impression in the First Circuit. Id., at 423. The Fifth Circuit, however, has held that “rescission class actions are not maintainable under the TILA.” Id. (citing James v. Home Constr. Co. of Mobile, Inc., 621 F.2d 727, 731 (5th Cir. 1980)). The theory behind this line of cases is that “rescission claims, unlike damages claims, are not subject to any aggregate statutory cap and, therefore, rescission class actions, if permitted, could easily render a creditor insolvent.” Id. (citation omitted). The First Circuit recognized that some district courts have certified TILA class actions seeking rescission, but followed James based on its conclusion that “Congress did not intend rescission suits to receive class-action treatment.” Id. The Circuit Court’s statutory intent analysis is well worth reading. See id., at 423-27.
Download PDF file of McKenna v. First Horizon Home Loan
Mon, 12 Mar 2007 04:23:23 -0800 - Antitrust Class Action Lawsuits Wrest Top Spot From Labor Law Class Action Cases In Weekly California State And Federal Court Class Action Filings
To assist California defense attorneys in anticipating the claims against which they may have to defend, we provide weekly, unofficial summaries of the legal categories for new class actions filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Generally, more employment law class action cases are filed than any other category of cases, often leading other class action filings by a wide margin. This week, however, antitrust class action cases seized the top spot, while new labor law class actions fell to second.
This report covers the time period from March 1 – March 8, 2007. Approximately 58 class action lawsuits were filed in these California state and federal courts during that time period, of which 17 (29%) involved federal antitrust claims. There were 14 new employment law class action filings (24%). Claims under the federal Fair Credit Reporting Act (FCRA) came in third with 9 new filings (16%), almost all of which involved claims under the Fair and Accurate Credit Transactions Act (FACTA). The only other category of cases to break the 10% threshold involved unfair competition claims, which include claims for false advertising, with 8 new filings (14%).
Sun, 11 Mar 2007 19:25:59 -0800 - 24 CFR § 3500.10— One-Day Advance Inspection Of HUD-1 Or HUD-1A Settlement Statement; Delivery; Recordkeeping Under Regulation X (Real Estate Settlement Procedures Act-RESPA)
As a resource for class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The regulations concerning advance inspection of HUD-1 or HUD-1A settlement statements are set forth in § 3500.10, which provides:
§ 3500.10. One-day advance inspection of HUD-1 or HUD-1A settlement statement; delivery; recordkeeping
(a) Inspection one day prior to settlement upon request by the borrower. The settlement agent shall permit the borrower to inspect the HUD-1 or HUD-1A settlement statement, completed to set forth those items that are known to the settlement agent at the time of inspection, during the business day immediately preceding settlement. Items related only to the seller's transaction may be omitted from the HUD-1.
(b) Delivery. The settlement agent shall provide a completed HUD-1 or HUD-1A to the borrower, the seller (if there is one), the lender (if the lender is not the settlement agent), and/or their agents. When the borrower's and seller's copies of the HUD-1 or HUD-1A differ as permitted by the instructions in Appendix A to this part, both copies shall be provided to the lender (if the lender is not the settlement agent). The settlement agent shall deliver the completed HUD-1 or HUD-1A at or before the settlement, except as provided in paragraphs (c) and (d) of this section.
Sun, 11 Mar 2007 07:23:43 -0800 - Defense Attorneys Successfully Stave Off Labor Law Class Action Against Wal-Mart Alleging Failure To Provide Employees Breaks And Pay Overtime In Illinois State Court Case
Trial Court Denies Class Action Certification Motion In Illinois State Court Employment Law Class Action Case Holding that Plaintiffs’ Attorneys Failed to Provide a “Reasonable and Accurate Method of Calculating Damages on a Classwide Basis”
Only a month after the Ninth Circuit upheld certification of a sex discrimination class action against Wal-Mart involving upwards of 2 million class members, see Dukes v. Wal-Mart, Inc., 474 F.3d 1214 (9th Cir. 2007), an Illinois state court has sided with Wal-Mart’s defense attorneys and refused to grant class action status in a labor law cases alleging failure to pay overtime and failing to provide employee breaks. The Chicago Tribune reports that Rock Island County Judge Mark VandeWiele issued a 34-page opinion last Friday, March 9, 2007, denying plaintiff’s motion for class certification. The article quotes the opinion as holding that the plaintiffs “filed to demonstrate the existence of a reasonable and accurate method of calculating damages on a classwide basis.” The ruling is significant for Wal-Mart, particularly in light of substantial adverse jury verdicts in similar cases. In October 2006, a Pennsylvania jury awarded almost $80 million in damages in a rest breaks/overtime class action against Wal-Mart, and in 2005, a California jury awarded more than $170 million in a meal breaks class action against the company.
The news article, entitled “Judge denies Illinois Wal-Mart workers’ class action,” may be found in the Business Section of the March 10, 2007 edition of the Chicago Tribune.
Sat, 10 Mar 2007 13:36:33 -0800 - 24 CFR § 3500.9—Reproduction of Settlement Statements Under Regulation X (Real Estate Settlement Procedures Act-RESPA)
As a resource for class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The regulations concerning the reproduction of settlement statements are set forth in § 3500.9, which provides:
§ 3500.9. Reproduction of settlement statements
(a) Permissible changes--HUD-1. The following changes and insertions are permitted when the HUD-1 settlement statement is reproduced:
(1) The person reproducing the HUD-1 may insert its business name and logotype in Section A and may rearrange, but not delete, the other information that appears in Section A.
(2) The name, address, and other information regarding the lender and settlement agent may be printed in Sections F and H, respectively.
(3) Reproduction of the HUD-1 must conform to the terminology, sequence, and numbering of line items as presented in lines 100-1400. However, blank lines or items listed in lines 100-1400 that are not used locally or in connection with mortgages by the lender may be deleted, except for the following: Lines 100, 120, 200, 220, 300, 301, 302, 303, 400, 420, 500, 520, 600, 601, 602, 603, 700, 800, 900, 1000, 1100, 1200, 1300, and 1400. The form may be shortened correspondingly. The number of a deleted item shall not be used for a substitute or new item, but the number of a blank space on the HUD-1 may be used for a substitute or new item.
(4) Charges not listed on the HUD-1, but that are customary locally or pursuant to the lender's practice, may be inserted in blank spaces. Where existing blank spaces on the HUD-1 are insufficient, additional lines and spaces may be added and numbered in sequence with spaces on the HUD-1.
Sat, 10 Mar 2007 07:21:57 -0800 - Class Action Defense Cases-In re New Century Mortgage: Judicial Panel On Multidistrict Litigation (MDL) Denies Defense Request To Centralize Class Action Litigation In The Central District of California
Class Action Lawsuits did not Warrant Pretrial Coordination Pursuant to 28 U.S.C. § 1407 Judicial Panel on Multidistrict Litigation (MDL) Holds
Three class action lawsuits were filed in Indiana and California against New Century Financial, New Century Mortgage and Home123; Indiana plaintiffs' lawyer moved the Judicial Panel on Multidistrict Litigation (MDL) to centralize the lawsuits for pretrial purposes in the Northern District of Indiana, but then moved to withdraw the request "asserting that they have reached an agreement with plaintiff in [one of] the Central District of California [cases] . . . that negates their need for transfer." In re New Century Mortgage Corp. Prescreening Litig., ___ F.Supp.2d ___, 2007 WL 473684, *1 (Jud. Pan.Mult.Lit. February 7, 2007). Defense attorneys opposed withdrawal of the motion and requested that the cases transferred to Indiana; plaintiffs in both Central District of California cases opposed centralization. Id. The Panel denied the motion, concluding that centralization was not warranted. The Panel explained, "In this docket containing just three actions pending in two districts, which were originally filed over a year ago, the proponents of centralization have failed to persuade us that any common questions of fact and law are sufficiently complex and/or numerous to justify Section 1407 transfer in this docket at this time. Alternatives to transfer exist that can minimize whatever possibilities there might be of duplicative discovery and/or inconsistent pretrial rulings." Id. (citations omitted).
Fri, 09 Mar 2007 11:06:59 -0800 - Bluetooth Class Action Defense Case—In re Bluetooth Headset: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff Motion Joined In By Defense Attorneys To Centralize Class Action Litigation In The Central District Of California
Judicial Panel Agrees Pretrial Coordination Pursuant to 28 U.S.C. § 1407 is Warranted for Class Actions Involving Bluetooth Headsets and Grants Request, Supported by Defense and Plaintiffs in Other Class Actions, to Centralize Litigation in Central District of California
Numerous class action lawsuits – seeking both statewide and nationwide class certification – were filed in several states against Motorola, Plantronics, GN Jabra North America and GN Netcom, “seek[ing] relief under various theories of liability, such as unjust enrichment, breach of express and/or implied warranties, and strict products liability” based on the central allegation that use of Bluetooth headsets may cause hearing loss. In re Bluetooth Headset Prods. Liab. Litig., ___ F.Supp.2d ___, 2007 WL 603063, *1 (Jud. Pan.Mult.Lit. February 20, 2007). Plaintiffs in a California class action filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) to centralize the lawsuits for pretrial purposes in the Central District of California, where four of the class action cases already were pending and where Plantronics is headquartered; defense attorneys and plaintiffs’ lawyers supported the request. Id. The Judicial Panel agreed that pretrial coordination under 28 U.S.C. § 1407, and further agreed to the transferee location recommended by the moving plaintiffs.
Fri, 09 Mar 2007 05:13:46 -0800 - Carnival Class Action Defense Case-Borcea v. Carnival: Florida Federal Court Approves Settlement Of Employment Law Class Action
Terms of Proposed Class Action Settlement of Employee Claims Against Carnival Found to be Fair, Adequate and Reasonable by Florida Court
Putative class actions were filed against Carnival by former employees on behalf of several thousand workers alleging that Carnival manipulated employee time records and deprived employees of wages due; the class actions sought unpaid wages, attorney fees and costs, penalty wages, and injunctive relief. Borcea v. Carnival Corp., 238 F.R.D. 664, 667-68 (S.D. Fla. 2006). After extensive motion practice, and while one of the class actions was on appeal following a district court order dismissing the class action with prejudice, the parties agreed upon terms for a settlement and presented the proposal to the district court for approval. Id., at 668. The district court approved the proposed settlement, finding the terms to be fair, adequate and reasonable. The terms of the class action settlement are extensive and detailed. We summarize here only the district court's legal conclusions in approving the resolution of the class actions; the reader is encouraged to review the opinion itself for details of the settlement. See id., at 668-72.
In considering the motion, the district court observed that while any proposed class action settlement requires court approval, see FRCP Rule 23(e), there is "a strong judicial policy in favor of settlement" and in the Eleventh Circuit a settlement "should be approved as long as it is 'fair, adequate and reasonable and it is not the product of collusion between the parties.'" Borcea, at 672 (quoting Bennett v. Behring Corp., 737 F.2d 982, 986 (11th Cir. 1984)). The district court summarized the factors it considers in determining whether the proposed class action settlement is fair, adequate and reasonable as follows: "(1) the likelihood of success at trial; (2) the range of possible recovery; (3) the point on or below the range of possible recovery at which a settlement is fair, adequate and reasonable; (4) the complexity, expense and duration of litigation; (5) the substance and amount of opposition to the settlement; and (6) the stage of proceedings at which the settlement was achieved. Id., at 672-73 (citation omitted).
Thu, 08 Mar 2007 05:05:58 -0800 - FDCPA Class Action Defense Cases-Rivera v. Amalgamated Debt Collection Services: Florida Federal Court Holds Debt Collector Violated § 1692g Of Fair Debt Collection Practices Act But Issues Of Fact Exist As To § 1692e Claims
Debtor need not Pay Debt to have Standing to Prosecute Federal Fair Debt Collection Practices Class Action and Debtor Entitled to Summary Judgment on § 1692g Claim because Collection Letter did not Track Statute but Triable Issues of Fact Existed as to Alleged Violations of § 1692e(5) and (10) as the Language in Collection Letters was Subject to Reasonable and Different Interpretations Florida Court Holds
Plaintiff filed a putative class action against a debt collector, Amalgamated Debt Collection Services, for violations of the federal Fair Debt Collection Practices Act (FDCPA) and various state laws arising out of its efforts to collect $39.32. Rivera v. Amalgamated Debt Collection Services, Inc., 462 F.Supp.2d 1223, 1225-26 (S.D. Fla. 2006). Plaintiff moved for partial summary judgment as to defendant's liability for violating the FDCPA, id., at 1225; defense attorneys argued that triable issues of fact exist, and that plaintiff lacked standing, id., at 1227. The district court granted the motion in part, but agreed with defense attorneys that triable issues of fact existed as to interpretation of certain language in debt collection letters.
The facts are straight-forward: In an effort to collect a debt, Amalgamated sent plaintiff two letters, each of which stated in pertinent part, "unless this matter can be resolved within 30 days of the above date, it will be necessary to consider the institution of legal procedures against you" and that she had 30 days from the date of the letters to dispute the validity of the debt, Rivera, at 1225-26; it was undisputed, however, that Amalgamated had never commenced legal proceedings in an effort to collect a debt, id., at 1226. Amalgamated also sent plaintiff a letter stating "that her failure to remit payment within 15 days would result in the 'nationwide reporting' of her debt as a 'bad debt.'" Id. Plaintiff moved for partial summary judgment.
Wed, 07 Mar 2007 05:08:31 -0800 - Class Action Defense Cases-Bishop's v. Protective Life: Georgia Federal Court Denies Defense Motion To Dismiss Class Action Based On Defense Tender Of Damage Check To Class Representative
Post-Class Action Complaint Tender of Amount Sought by Class Action Plaintiff does not Render Claim Moot or Deprive Federal Court of Subject Matter Jurisdiction Georgia Court Holds
Plaintiff filed a putative class action against his credit insurance coverage carrier, Protective Life, alleging that it refused to refund unearned premiums for early termination of insurance coverage. Bishop's Prop. & Investments, LLC v. Protective Life Ins. Co., 463 F.Supp.2d 1375, 1376 (M.D. Ga. 2006). The credit insurance in question involved vehicle loans: in return for a single premium, Protective Life promised to make the loan payments in the event of the insured's death or disability. In plaintiff's case, he purchased a vehicle with a 72-month loan term, but he paid off the loan in only 11 months. Id. Because the loan had been paid in full, the insurance policy terminated. The class action alleged that insureds who paid off their loans early were entitled to refunds of the "unearned premiums." Id., at 1376-77. After the filing of the class action complaint, defendant tendered a refund to plaintiff, which he refused to accept. Id., at 1376. Defense attorneys then moved for summary judgment arguing that, despite his refusal to accept the check, the tender mooted plaintiff's claim thereby depriving the court of subject matter jurisdiction over the class action. Id. Under the defense theory, Protective Life "issued a check for the total amount of unearned premiums owed to Plaintiff under its credit insurance policy," and that tender divested the federal court of jurisdiction because "Plaintiff's personal claims became moot the moment [Protective Life] 'refunded in full the unearned premiums that [Plaintiff] claims are due.'" Id., at 1377. The district court denied the motion.
The district court phrased the issue at page 1377 as follows: "Under what circumstances does a legal controversy for Article III purposes continue to exist in a class action after the named plaintiff's individual claims become moot?" The court recognized that generally the claims of the class representative must be "live" not only at the time the class action is filed but at the time of class certification as well; if it is not, then "the court lacks a justiciable controversy" and the class action must be dismissed. Id. (citation omitted). The district court provided a concise explanation behind the purpose of the rule at pages 1377 and 1378:
Tue, 06 Mar 2007 04:54:50 -0800 - American Express Class Action Defense Case—Berry v. American Express: As Matter Of First Impression California Court Holds Issuance Of Credit Card Falls Outside Scope Of Consumer Legal Remedies Act (CLRA)
Act of Extending Credit “Separate and Apart from any Sale or Lease of Goods or Services” Falls Outside the Scope of California’s Consumer Legal Remedies Act (CLRA) California Court Holds
Plaintiff filed a putative class action against various American Express entities seeking injunctive relief under California’s Consumer Legal Remedies Act (CLRA) in connection with arbitration clause contained in his American Express cardholder agreement. Berry v. American Express Publishing, Inc., __ Cal.App.4th __, 54 Cal.Rptr.3d 91, 92 (Cal.App. January 31, 2007). Defense attorneys demurred to the complaint, arguing that issuing a credit card does not fall within the scope of the CLRA. The trial court agreed with the defense arguments and sustained the demurrer to the class action complaint without leave to amend. The appellate court affirmed, concluding that “the extension of credit, such as issuing a credit card, separate and apart from the sale or lease of any specific goods or services, does not fall within the scope of the act.” Id.
After plaintiff began receiving an Amex publication called “Travel + Leisure” and noticed a $43 charge on his credit card statement for the magazine, he telephoned American Express Centurion Bank and American Express Publishing, the subscription was canceled, and the charge was reversed. Berry, at 93. Plaintiff then filed a putative class action against various American Express entities alleging that defendants charged customers for magazines that they never ordered. Id. Ultimately, the class action complaint was amended to contain but a single cause of action for declaratory relief “which alleged the arbitration clause and class action waiver in the cardholder agreement violated CLRA.” Id. Thus, the complaint sought solely to prohibit enforcement of the arbitration clause in the cardholder agreement. Defense attorneys demurred and the trial court sustained the demurrer without leave to amend, dismissing the class action complaint with prejudice. Id.
Mon, 05 Mar 2007 04:28:03 -0800 - 24 CFR § 3500.8—Use Of HUD-1 Or HUD-1A Settlement Statements Under Regulation X (Real Estate Settlement Procedures Act-RESPA)
For class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The regulations provide for the use of HUD-1 or HUD-1A settlement statements in § 3500.8, which provides:
§ 3500.8. Use of HUD-1 or HUD-1A settlement statements
(a) Use by settlement agent. The settlement agent shall use the HUD-1 settlement statement in every settlement involving a federally related mortgage loan in which there is a borrower and a seller. For transactions in which there is a borrower and no seller, such as refinancing loans or subordinate lien loans, the HUD-1 may be utilized by using the borrower's side of the HUD-1 statement. Alternatively, the form HUD-1A may be used for these transactions. Either the HUD-1 or the HUD-1A, as appropriate, shall be used for every RESPA- covered transaction, unless its use is specifically exempted, but the HUD-1 or HUD-1A may be modified as permitted under this part. The use of the HUD-1 or HUD-1A is exempted for open-end lines of credit (home-equity plans) covered by the Truth in Lending Act and Regulation Z.
(b) Charges to be stated. The settlement agent shall complete the HUD-1 or HUD-1A in accordance with the instructions set forth in Appendix A to this part.
Sun, 04 Mar 2007 07:20:21 -0800 - Labor Law Class Action Filings Top New Class Action Cases Filed In California State And Federal Courts With Antitrust Class Action Lawsuits Coming In Second
To allow class action defense lawyers anticipate claims against which they may have to defend, we provide weekly, unofficial summaries of the legal categories for class actions filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. This report covers the time period from February 23 – February 28, 2007, and employment law class action cases held their familiar grip on the top spot in weekly class action filings.
As in the past, we include only those categories that include 10% or more of the class action filings during the relevant timeframe. Approximately 39 class action lawsuits were filed in these California state and federal courts during that time period, of which 12 (31%) involved employment-related claims. New antitrust class action cases came in second with 9 new filings (23%). The only other categories to break the 10% threshold consisted of 5 new unfair competition claims (13%), and 4 new securities laws class action cases (10%)
Sat, 03 Mar 2007 23:27:10 -0800 - 24 CFR § 3500.7—Good Faith Estimates Required By Regulation X (Real Estate Settlement Procedures Act-RESPA)
For the class action defense attorney who defends against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The regulations provide for good faith estimates to be provided to borrowers in § 3500.7, which provides:
§ 3500.7. Good faith estimate
(a) Lender to provide. Except as provided in this paragraph (a) or paragraph (f) of this section, the lender shall provide all applicants for a federally related mortgage loan with a good faith estimate of the amount of or range of charges for the specific settlement services the borrower is likely to incur in connection with the settlement. The lender shall provide the good faith estimate required under this section (a suggested format is set forth in Appendix C of this part) either by delivering the good faith estimate or by placing it in the mail to the loan applicant, not later than three business days after the application is received or prepared.
(1) If the lender denies the application for a federally related mortgage loan before the end of the three-business-day period, the lender need not provide the denied borrower with a good faith estimate.
(2) For "no cost" or "no point" loans, the charges to be shown on the good faith estimate include any payments to be made to affiliated or independent settlement service providers. These payments should be shown as P.O.C. (Paid Outside of Closing) on the Good Faith Estimate and the HUD-1 or HUD-1A.
(3) In the case of dealer loans, the lender is responsible for provision of the good faith estimate, either directly or by the dealer.
(4) If a mortgage broker is the exclusive agent of the lender, either the lender or the mortgage broker shall provide the good faith estimate within three business days after the mortgage broker receives or prepares the application.
Sat, 03 Mar 2007 07:12:38 -0800
