Pub. 9 2018 Issue 3

Fall 2018 27 West Virginia Banker received independent counseling. The court ultimately refused to allow this claim to proceed. II.Reverse Mortgage Enabling Act Borrowers also have argued that the Reverse Mortgage Enabling Act gives them an independent ground on which to attack reverse mortgages. In Woods v. Reverse Mortgage USA, Inc., et al., a borrower argued that fees and charges on her loan violated the Enabling Act. Likewise, in Boster v. Live Well Finan- cial, Inc., the plaintiff argued that the Enabling Act was violated because the loan documents gave the lender a security interest in an inflated amount. The court in both cases held that the Enabling Act contains no provision permitting a borrower to sue to enforce it. Without this so-called “private right of action,” a borrower simply cannot sue under that act. III.West Virginia Residential Mort- gage Lender, Broker and Servicer Act This statute permits a court to cancel a loan “made in willful violations of [its] provisions.” Courts are allowing bor- rowers to sue to enforce this statute’s provisions. However, the time period in which they must bring suit may be short — the law places a time limit, known as the statute of limitations, on when a person may bring a lawsuit. In Woods, the borrower argued that a 10-year statute of limitations applied to this claim, while the lender argued that a two-year statute of limitations should apply. The court conducted a lengthy analysis and agreed with the lender. The borrower in Woods tried to save her claims from dismissal by arguing that the limitations period had not began to run because the fees and charges she complained of did not have to be paid until she died. The court was not persuaded. It found that the fees and charges were imposed at the loan closing, and her claim accrued at that time. In the Boster lawsuit, the plaintiff asserted an identical claim for allegedly illegal fees and charges. Like in Woods, the court easily found that such a claim accrues at the loan closing and must be brought within two years. IV.West Virginia Consumer Credit and Protection Act Courts are permitting West Virginia Consumer Credit and Protection Act (“CCPA”) claims in connection with reverse mortgages. However, they have imposed significant limitations. One limitation is that the prohibition in the CCPA against collecting “any interest or other charge, fee or expense incidental to the principal obligation” not authorized by both the loan docu- ments and statute will not apply to fees and charges imposed at loan closing. Another limitation relates to who can bring a CCPA claim. Broadly speaking, only a person who meets the definition of a “consumer” may bring a claim under the CCPA. In the Boster lawsuit, the plaintiff was not the borrower on the loan. He was the son of the borrower. The court conducted a lengthy analysis of whether the plaintiff qualified as a consumer who could assert a CCPA claim. The borrower claimed that he was a consumer because he was forced to pay the mortgage to keep the property. The court disagreed, holding that “[t]he option to pay money to retain collateral is not equivalent to a personal obliga- tion to repay” a debt. Nicholas P. Mooney II is a Member attorney in Spilman Thomas & Battle’s Charleston, West Virginia office. His primary area of practice is consumer financial services litigation in federal and state courts. He has devoted all of his time for the past 17 years to that practice area. He can be reached at 304.340.3860 or nmooney@spilmanlaw.com V.Rescission of a loan under the Truth In Lending Act The federal Truth in Lending Act (“TILA”) gives a borrower the right to re- scind a transaction if certain criteria are met. Borrowers in reverse mortgages have attempted to rescind transactions under TILA’s provisions. However, TILA requires the borrower to tender back the loan proceeds to the lender. This is an impediment to the borrower since he or she rarely has enough spare cash on hand. However, one decision may make it easier for borrowers to rescind. In Lavis, the court agreed with the borrower that she should be permitted to prosecute her claims first, obtain a monetary award from the jury, and use that money to tender the loan proceeds. Conclusion Litigation over reverse mortgages is increasing in our state. Borrowers are copying-and-pasting successful claims from conventional mortgage litigation. As shown by three recent decisions, courts are taking a hard look at reverse mortgages and the documents involved to determine whether to let those claims proceed.  Borrowers also have argued that the Reverse Mortgage Enabling Act gives them an independent ground on which to attack reverse mortgages. In Woods v. Reverse Mortgage USA, Inc., et al., a borrower argued that fees and charges on her loan violated the Enabling Act.