Consumer Law

Homecomings Financial loses (part of) its motion to dismiss consumer fraud claims

By Sam Glover

In a class-action lawsuit against Homecomings Financial, consumers alleged that Homecomings would charge borrowers for unnecessary homeowner’s insurance, fail to process payments on time, forcing borrowers to pay “Speedpay” fees of up to $12.50. One plaintiff says Homecomings charged him with six property-inspection fees in a 10-day period, apparently because Homecomings wanted to make sure he was really living there (and charge him for their trouble).

Interestingly, the lawsuit frames the issue, in part, under the Fair Debt Collection Practices Act, which turns out not to have worked. U.S. District Court Judge Richard Kyle tossed the FDCPA claim because Homecomings, for all its apparent failings, is not a debt collector.

The other part of the lawsuit concerns the Truth-in-Lending Act, and Judge Kyle let that one survive, because Homecomings may have violated its disclosure obligations under TILA and Regulation Z.

There were some other claims that were dismissed, and an unjust enrichment claim survived the motion to dismiss, as well.

Read the decision in Motley, et al., v. Homecomings Financial, LLC.

Full post as published by Caveat Emptor on June 02, 2008 (boomark / email).