183 So. 3d 415
Fla. Dist. Ct. App.2014Background
- April 2000: elderly Avedons execute a $37,000 promissory note secured by their home in Katline’s favor; HOEPA applies as a non-purchase money mortgage on the borrower's principal dwelling.
- Loan includes a post-default interest rate increase and a prepayment penalty, violating HOEPA/TILA provisions.
- In late 2005, after defaults, Katline sues for collection/foreclosure while Avedons defend by seeking set-off under HOEPA/TILA damages.
- Katline argued savings clauses in the loan documents cured HOEPA/TILA violations; trial court rejected this argument.
- Court holds HOEPA violations were proven and savings clauses cannot negate mandatory HOEPA disclosures; case is reversed and remanded for proper set-off calculation.
- Court permits set-off considerations to reflect HOEPA damages, including potential credits for taxes, insurance, and attorney’s fees, with a remand for recalculation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HOEPA violations were established | Avedons; HOEPA violations existed due to post-default rate and prepayment penalty. | Katline; savings clauses nullified HOEPA penalties. | HOEPA violations affirmed |
| Effect of savings clauses on HOEPA/TILA liability | Savings clauses did not eliminate HOEPA disclosures. | Savings clauses sever liability. | Savings clauses do not negate HOEPA/TILA liability |
| Proper calculation of set-off under HOEPA penalties | Amount set-off should reflect HOEPA damages; potentially double the finance charge up to statutory cap. | Cap limits set-off to $2,000 for a real property mortgage under 1640(a)(2)(A)(iii). | Remand for proper calculation; capping issue involved |
| Which HOEPA-related damages may be set off against the loan balance | 1640(a)(4) allows recovery of all finance charges and fees; related damages may be set off. | 1640(a)(2)(A) governs damages, with the $2,000 cap; offset limited accordingly. | 1640(a)(4) permits deduction of total finance charges; remand for calculation |
Key Cases Cited
- Koons Buick Pontiac GMC, Inc. v. Nigh, 543 U.S. 50 (2004) (clarifies HOEPA damages framework and open-ended relief implications)
- Beach v. Ocwen Fed. Bank, 523 U.S. 410 (1998) (disclosure purpose of TILA/HOEPA; savings provisions cannot undermine disclosures)
- Jersey Palm-Gross, Inc. v. Paper, 658 So. 2d 531 (Fla. 1995) (discussion of savings clauses in loan transactions)
- In re Williams, 291 B.R. 636 (E.D. Pa. 2003) (statutory damages under 1640(a)(4); consumer may recover total finance charges)