Skip to main content

Search

Unfair and Deceptive Acts and Practices: 11.8.1.4 Other Evidence Issues

Statements made to a detective as part of a plea bargain in a criminal case are admissible in a UDAP enforcement action.1326

Ownership of the vehicle may be an issue in automobile repair cases. The safest course is to comply with state law requirements that the certificate of title be produced. One court has held such formal proof unnecessary, however, in the absence of competing claims to ownership.1327 Requests for admissions prior to trial should eliminate these issues.

Unfair and Deceptive Acts and Practices: 11.8.2.1 Strategic Considerations

One of the greatest resources an attorney has in consumer cases is a jury. It is difficult to pick a jury where at least one member has not had some consumer problem or felt that they had been taken advantage of or defrauded. This is why juries are usually sympathetic to the consumer. Juries have awarded substantial punitive damages in UDAP cases.1328

Unfair and Deceptive Acts and Practices: 11.8.2.3 Questions of Law vs. Questions of Fact

The question whether a practice is deceptive or unfair is generally treated as one of fact for the fact finder, not a question of law for the judge.1355 Whether an insurer had a “reasonable basis” under a state UNIP statute for denying a claim is a jury question.1356 It is for the jury to make the judgment whether an item sold as new was actually used, even where the basic facts are undisputed.1357 Where willfulness is an element of a UDAP cl

Unfair and Deceptive Acts and Practices: 11.8.2.4 Voir Dire, Opening and Closing Arguments, Jury Instructions, and Trial Strategy

If all or part of a UDAP case is tried to a jury, jury instructions must be drafted with care, and should clearly set forth all of the elements of each of the plaintiff’s legal theories.1370 One court ruled that the trial judge erred by using broad general language such as “unconscionable commercial practices” in the jury instructions, without explaining the relevance of this standard to the facts of the case.1371 The judge’s general language could have led the jury to impose liability witho

Unfair and Deceptive Acts and Practices: 11.9.2.2 Unfair Commercial Speech

As long as it is not deceptive, commercial speech is protected by the First Amendment, but it is entitled to considerably less protection than noncommercial speech.1389 The Supreme Court recognizes the common sense distinction between commercial and noncommercial speech, terming commercial speech “a hardy breed of expression that is ‘not particularly susceptible to being crushed by overbroad regulation.’”1390

Unfair and Deceptive Acts and Practices: 11.9.2.3 Determining Whether Speech Is Commercial or Political

Courts cannot restrict even false political or “core” speech,1418 and advertisers sometimes argue that their claims are political, not commercial speech. (The issue generally raised is not whether a consumer can seek damages for false political speech, but whether the state can enjoin such speech.) Unfortunately, since no clear-cut standards exist to determine whether speech is commercial or political, there is some uncertainty in borderline cases.1419

Mortgage Lending: 4.2.2.5 RESPA Preemption

RESPA only preempts state laws that are inconsistent with the Act and Regulation X and thereby give consumers less protection than provided by the Act and the regulation.97 State laws providing a private enforcement mechanism for RESPA violations or similar state law requirements are also not preempted.

Mortgage Lending: 11.8.4 The SAFE Act

Sellers who enter into land installment contracts may be “loan originators” required to be licensed or registered under the federal Safe and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) and the corresponding state licensing law.417 The Act applies to mortgage brokers or loan officers who originate loans secured by a dwelling, as defined by the Truth in Lending Act.418 Therefore, the same analysis contained in

Mortgage Lending: 5.6 State Mortgage Broker Laws

Fourteen states have adopted statutes defining a mortgage broker’s duty to residential borrowers. The majority impose a duty of good faith and fair dealing on mortgage brokers. Several expressly impose a fiduciary duty, using the term “fiduciary,” though in Nevada the duty is particularly narrow. Several other states declare that the broker is the borrower’s agent or define duties that are similar to those of a fiduciary.

Mortgage Lending: 4.2.2.2.1 Units in cooperative apartment buildings

RESPA and Regulation X define a “federally related mortgage loan” to include loans secured by cooperative shares.61 Ownership of a unit in a cooperative apartment building takes the form of shares in a cooperative association, rather than a traditional interest in real property evidenced by a deed.

Mortgage Lending: 9.9.4 HOEPA

The federal Home Ownership and Equity Protection Act (HOEPA)409 subjects a subset of high-cost mortgage loans to special regulation.410 The Act prohibits negative amortization for covered loans.411

Mortgage Lending: 9.11.3 HOEPA

The federal Home Ownership and Equity Protection Act (HOEPA)546 subjects to special regulation a subset of high-cost non-purchase-money mortgage loans,547 including a prohibition against balloon payments.548 Prior to passage of the Dodd-Frank Act, the prohibition applied only to loans with terms of less than five years,549 and the regulation implementing the HOEPA balloon payment prohibition m

Mortgage Lending: 9.13.2 High-Rate Mortgage Loans

The federal Home Ownership and Equity Protection Act (HOEPA) restrictions apply to a subset of high-cost mortgage loans.598 One of those restrictions is a prohibition of default interest rates.599 In addition, as amended by the Dodd-Frank Act in 2010, HOEPA caps late fees at four percent of the past-due payment, and requires a grace period of at least fifteen days, or in some circumstances thirty days.600 The effective date of the Consumer Fi

Mortgage Lending: 13.8.6.1 General

The holder-in-due-course doctrine does not apply to Home Ownership and Equity Protection Act (HOEPA) loans. The definition of a HOEPA loan is summarized in § 4.6, supra, and explored in detail in NCLC’s Truth in Lending.346

Mortgage Lending: 4.5 Higher-Priced Mortgage Loans

A “higher-priced mortgage loan”367 is a first mortgage with an annual percentage rate (APR) at least 1.5 percentage points over the “average prime offer rate” or a second mortgage that is at least 3.5 percentage points over the average prime offer rate.368 The higher-priced loan category is designed to match the subprime market and uses rate triggers lower than high-cost loans regulated under the Home Ownership and Equity Protection Act (HOEPA).369

Mortgage Lending: 5.10.3 Loan Churning (Flipping) and Other Equity Stripping Manipulations

Loan churning and other hard to detect methods of increasing the cost of credit have also been challenged successfully on fraud theories.431 Loan churning (also known as flipping) is the practice of frequently refinancing debt, particularly debt laden with points, broker fees, and other up-front costs. 432 This practice insidiously ratchets up the cost of credit in a manner that works mostly outside the interest rate disclosure. As a result, it is an almost inherently deceptive practice.

Mortgage Lending: 13.8.11.7 What If the Electronic Note Does Not Qualify As a Transferable Record?

An electronic note may not qualify as a transferable record. Among other requirements, transferable records must meet the Article 3 requirements for negotiable instruments if the electronic records are in writing.458 Thus not only paper but electronic notes evidencing home equity lines of credit (HELOCs), payment-option ARMs, reverse mortgages, and land installment contracts are not negotiable instruments.459

Mortgage Lending: 13.11.2 Make Sure the Agreement Is Enforceable

Everything agreed upon must be reduced to writing. Most servicers and lending institutions are big, complex organizations, and any individual representative, lawyer, chief executive officer, frontline worker, or general counsel has only a limited ability to control the other pieces of the organization. That means commitments and understandings that are not reduced to writing will be difficult to enforce.