Kahraman v. Countrywide Home Loans, Inc.
886 F. Supp. 2d 114
E.D.N.Y2012Background
- Kahramans refinanced their Countrywide loan in July 2006, with new loan amount $424,000 but payoff on the prior loan $341,682.44; the new loan was used partially to pay the old loan; at closing they signed a loan application stating Servet’s monthly income as $8,000; the Kahramans allege Countrywide added the $8,000 figure without their knowledge prior to closing; they received two Notices of Right to Cancel but now allege they only received one copy; in 2008 Servet’s income declined and the loan later went into default; in July 2009 they sent a notice of rescission just before the three-year anniversary; they underpin federal and state claims arising from alleged TILA disclosures, CROA violations, NY Deceptive Practices Act, and common-law fraud.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| TILA rescission timeliness | Kahramans seek extended 3-year rescission period | Only three-day period applies given refinance with same creditor | TILA rescission claim untimely; only 3-day period applicable |
| TILA rescission amount limit | They seek rescission of entire refinanced loan | Right to cancel limited to amount exceeding prior balance plus costs | Rescission limited to excess over prior balance and refinancing costs; full loan not rescindable |
| CROA claim viability | Countrywide misrepresented income in loan process | CROA generally not applicable to a lending institution; misuse not shown | CROA claim dismissed; misrepresentation not actionable under CROA here |
| Supplemental jurisdiction over state-law claims | State-law claims should proceed alongside federal claims | Court should decline supplemental jurisdiction after dismissing federal claims | Court declines supplemental jurisdiction; state-law claims dismissed without prejudice |
Key Cases Cited
- Gambardella v. G. Fox & Co., 716 F.2d 104 (2d Cir.1983) (TILA disclosure sufficiency; not perfect disclosure required)
- Turner v. General Motors Acceptance Corp., 180 F.3d 451 (2d Cir.1999) (meaningful disclosure, not necessarily more disclosure)
- Santos-Rodríguez v. Doral Mortg. Corp., 485 F.3d 12 (1st Cir.2007) (H-8 form proper for notices; can meet disclosure requirements with substantially similar notice)
- Veale v. Citibank, 85 F.3d 577 (11th Cir.1996) (rescission notice ambiguity; current transaction may be cancelled without extinguishing prior mortgages)