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Daily Real Estate News | July 1, 2008 |
Mortgage Ruling Could Have Big Impact
The 7th U.S. Circuit Court of Appeals is expected to rule sometime this month on a case that could force the U.S. banking industry to cancel or rescind loans if borrowers prove that their lenders violated a federal lending disclosure law.
The decisions stems from a lawsuit filed by a Wisconsin couple who last year sued their bank and sought class action status. The judge not only agreed to that but also ruled that borrowers could force the bank to rescind their loans as a class remedy.
Should the 7th U.S. Circuit Court of Appeals agree that rescission be a class remedy, banking industry analysts predict "confusion and market disruption" as banks curtail lending further.
"If class treatment is found to be available for rescission ... the result all over the country could be massive class suits," says Christine Scheuneman, a partner at Pillsbury Winthrop Shaw Pittman LLP, which represented Chevy Chase Bank in the initial lawsuit.
Supporters of rescission as a remedy say the banking industry is overstating the results of such a ruling.
Both sides agree that the U.S. Supreme Court will likely decide the case.
Source: Reuters News, Gina Keating (06/30/08)
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