Raymond Lee, Jr. v. Countrywide Home Loans, Inc.
692 F.3d 442
6th Cir.2012Background
- Lees refinanced their Ohio home in 2006 with Countrywide via Stonefire; Winke (Stonefire) convinced them to refinance to reduce payment and consolidate debt.
- The Mortgage Brokerage Business Disclosure stated that the broker would be paid a fee and that the exact amount of additional compensation would be disclosed at closing, revealing Yield Spread Premium (YSP) terms.
- Countrywide paid Stonefire a 3.5% YSP, which increased the Lees’ loan rate by 2.75% and resulted in the Lees receiving $162,000 at a high variable rate.
- Closing occurred December 20, 2006 with Trident Title handling closing services; the HUD-1 and closing package described the YSP in cryptic terms, and the Lees claim they were not told the YSP amount.
- The Lees filed suit in Ohio state court, which Countrywide removed to federal court; after partial summary judgment for Countrywide, the remaining claims were appealed, and the case was remanded for trial on the civil conspiracy claim while fraud and TILA rescission claims were affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Civil conspiracy between lender and broker | Lees allege a malicious common design to conceal YSP | Countrywide contends no knowledge of concealment; no conspiracy | Question of fact; reverse and remand for trial on conspiracy |
| Common law fraud through concealment or misrepresentation | Countrywide concealed YSP or aided Stonefire’s breach | No fiduciary duty owed by lender; no concealment by Countrywide | Grant of summary judgment affirmed for fraud against Countrywide (no misrepresentation proven) |
| Rescission under Truth in Lending Act (TILA) | Three-year rescission window extended due to missing notices | Presumption of delivery established by signed Notice; evidence insufficient to rebut | Affirm summary judgment for Countrywide; no extension under TILA |
| Misrepresentation in settlement statement | Settlement statement incorrectly described YSP | Trident Title prepared the statement; no agency relationship shown with Countrywide | Affirm district court on this claim (no sufficient agency theory shown) |
Key Cases Cited
- Myer v. Preferred Credit, Inc., 766 N.E.2d 612 (Ohio Ct. Comm. Pl. 2001) (fiduciary duties require advance disclosure of higher-rate terms)
- Glover v. Standard Fed. Bank, 283 F.3d 953 (8th Cir. 2002) (Yield spread issues and disclosures relevant to lending practices)
- Williams v. Aetna Fin. Co., 700 N.E.2d 859 (Ohio 1998) (lender liability where fiduciary duties are implicated)
- Gosden v. Louis, 687 N.E.2d 481 (Ohio Ct. App. 1996) (civil conspiracy requires underlying tort and aiding in breach)
- LeFort v. Century 21-Maitland Realty & Co., 512 N.E.2d 640 (Ohio Ct. App. 1987) (definition of civil conspiracy and elements)
- Sibby v. Ownit Mortg. Solutions, Inc., 240 F. App’x 713 (6th Cir. 2007) (envelope theory for notices; post hoc denial insufficient to rebut presumption of delivery)