A Truth In Lending Act (TILA) lawsuit alleges mortgage company NewRez, LLC has failed to refund amounts or charges paid by consumers for title searches and appraisals in the event of the lawful rescission of a real estate transaction.
The 12-page proposed breach-of-contract class action alleges more specifically that NewRez failed to refund the plaintiff, an Irvington, New York resident, origination and appraisal fees the man paid in connection with a refinanced loan that he rescinded the following day after discovering he was charged a nearly $7,700 origination fee, far more than what was supposedly disclosed in a loan estimate roughly three months prior.
According to the lawsuit, the TILA provides consumers with the right to rescind any transaction in which a security interest is or will be retained or acquired in any property that’s to be used as a primary residence until midnight of the third business day following the consummation of the transaction. If a consumer exercises their right of recision, they are entitled to a full refund of any amounts or charges paid, including fees for a title search or appraisal, the suit says.
“Pursuant to TILA, Plaintiff’s rescission letter voided the security deed and canceled the refinance transaction, entitling him to a reimbursement of all costs incurred, including the $475 appraisal fee, within 20 days after Plaintiff’s receipt of the notice of rescission,” the complaint says. “To date, Defendant has yet to return the original Note to Plaintiff nor were any funds paid by Plaintiff in connection with the transaction ever returned by Defendant, including the appraisal fee of $475.”
Per the lawsuit, the plaintiff began looking into refinancing his primary home mortgage sometime prior to October 2020. In July, the man received from NewRez a loan estimate that included estimated costs for refinancing, including a $995 origination fee and $475 appraisal fee, the case states. The lawsuit adds the plaintiff was instructed in his closing disclosure to compare NewRez’s numbers to those listed on the loan estimate.
NewRez hired a third-party appraisal firm to produce a property valuation report for the defendant’s sole use and interests in connection with the plaintiff’s mortgage refinancing transaction, the lawsuit goes on. The plaintiff, the suit says, was instructed to directly pay the third party $475 for the appraisal, which the case says the man did on July 15.
On October 12, the plaintiff closed on the real estate refinance loan with NewRez, who provided the man with a closing disclosure and notice of his right of rescission at the closing, and collected “a fully executed Receipt of Notice of Right of Rescission from the Plaintiff,” the lawsuit says.
While comparing his loan estimate with the closing disclosure shortly after signing the loan, however, the plaintiff noticed he was charged “a $7,699.68 loan origination fee,” as opposed to the $995 fee disclosed on the earlier estimate, the complaint says. The following day the plaintiff timely mailed a fully executed notice of rescission letter that indicated clearly his intent to cancel the loan, according to the suit.
The case claims that despite the plaintiff’s clear and timely rescission of the loan, he has yet to be refunded fees paid in connection with the transaction.
The case looks to represent all individuals in the United States who entered into a non-purchase-money residential real estate transaction with NewRez within one year of the filing of the suit, who timely sent a notice of rescission but were not returned all of their out-of-pocket fees and costs within 20 days after NewRez’s receipt of the notice of rescission.
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