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Bennett v. Mortgage Electronic Registration Systems, Inc.

Florida Court of Appeals, Third District

September 6, 2017

John M. Bennett and Nancy L. Bennett, Appellants,
Mortgage Electronic Registration Systems, Inc., Home Loan Alliance, LLC f/k/a Leverage Financial, LLC d/b/a LF Loans, Jamal M. Wilson, and GTE Federal Credit Union, Appellees.

         Not final until disposition of timely filed motion for rehearing.

         An Appeal from the Circuit Court for Miami-Dade County Lower Tribunal No. 12-41600, Michael Hanzman, Judge.

          Rex E. Russo, for appellants.

          Scott Jay Feder, P.A. and Scott Jay Feder, for appellees.

          Before SALTER, FERNANDEZ and LUCK, JJ.

          LUCK, J.

         The ancient Greek playwright Sophocles asked in one of his best known dramas, Antigone, "what prowess is it to slay the slain anew?"[1] (Nowadays we would ask, "why beat a dead horse?") Congress must have had Sophocles in mind when it drafted the truth-in-lending act. Section 1640(b) of the act shields creditors from liability if they fix disclosure errors and pay back debtors within sixty days of discovering the error. Why allow a federal cause of action where the clerical error has been timely corrected?

         John and Nancy Bennett sued Mortgage Electronic Registration System, Inc., LF Loans, LF Loan's president, Jamal Wilson, and GTE Federal Credit Union for fraud, declaratory relief, and violating the truth-in-lending act because the defendants failed to disclose at closing that the Bennetts would have to pay for private mortgage insurance as part of the refinance on the couple's home. Because there was no genuine issue of material fact that the defendants fixed the mortgage insurance discrepancy and paid back the Bennetts for the premiums they paid within sixty days of discovering the error, there was no liability under the truth-in-lending act, no damages for fraud, and no present need for declaratory relief. We, therefore, affirm the trial court's summary judgment for the defendants.

         Factual Background and Procedural History

         In April 2012, the Bennetts were looking for assistance to refinance the mortgage on their home. They learned of a government program, the Home Affordable Refinance Program, intended to assist borrowers whose mortgages exceeded the value of their home. The Bennetts completed a loan application with their broker, Advance Mortgage. With the assistance of their broker, on April 17, 2012, they applied for a HARP II loan from LF Loans. The truth-in-lending act disclosure statement attached to the application form estimated a monthly payment of $1, 345.68, which included $237.60 in escrow for taxes, property insurance, and private mortgage insurance. The loan was closed on June 12, 2012 by Stewart Title Company, at which time the Bennetts initialed and signed several documents, including a payment letter and an initial escrow account disclosure statement. At closing, the estimated monthly payment was $1, 237.96 and did not include private mortgage insurance.

         After closing, the Bennetts' loan was assigned to GTE Federal Credit Union. Prior to the first payment due in August 2012, the Bennetts received a monthly payment statement from GTE. Mr. Bennett noticed that the monthly payment listed on the statement was less than the estimated monthly payment he received at closing. Mr. Bennett called GTE to avoid future issues with the loan. A few days later GTE called back and told Mr. Bennett the correct payment amount; however, this time the amount was greater than the amount he was told at closing. Mr. Bennett asked GTE to send him a copy of the documents he signed agreeing to the higher payment. Within a week he received several documents, including a payment letter and initial escrow account disclosure statement, which the Bennetts contend were forgeries. Unlike the Bennetts' copies of the closing documents, the documents sent to Mr. Bennett by GTE included a $100.92 charge for private mortgage insurance.

         On July 10, 2012, the Bennetts' counsel sent a demand letter to GTE with copies to LF Loans and Stewart Title. The letter informed GTE: of the discrepancy; the Bennetts had no obligation to pay private mortgage insurance on the loan; and the Bennetts would be paying the insurance under protest until GTE corrected its records. The letter also stated:

we demand that this matter be fully rectified within 60 days. Failure to fully rectify this matter within that time will lead to the filing of legal action. In order to fully rectify this matter you must not only correct your Loan Statement and purge all the fraudulent documents in order to avoid a repetition of the fraud through further transfer of the mortgage instruments, but you must also pay compensation for fees and costs suffered by the borrowers, as well as credit back to them the overpayments for the improperly charged PMI.
To date the borrowers attorney's fees paid are $200.00 with an anticipated additional amount of $300.00 to become due. Accordingly, you should issue a payment or credit to the borrowers of $200 and a send a separate check for $300 payable to me . . . .

         On July 16, 2012, LF Loans electronically mailed the Bennetts' counsel the following message:

The issue with the documents being falsified lies at the feet of the title company. We sent out a final package with [private mortgage insurance] on all loan documents. I don't have corroboration from the title company but my thought process is that they mistakenly got the initial documentation signed realized ...

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