Andrews v. Chevy Chase Bank, FSB (2007 WL 112568, E.D. Wisconsin,
January 16, 2007).

Plaintiff filed a class action against Chevy Chase Bank alleging various violations of the federal Truth-in-Lending Act (TILA).

Borrowers alleged that the lender:

(1) failed to properly disclose the paymentschedule because the schedule did not reflect that the required payments were duemonthly;

(2) did not clearly disclose the APR and variable rate feature, based in part on disclosures reflecting a note rate of 1.950% and a five year fixed period that applied to the payment and not the rate;

(3) added information to the TILA disclosure that was not directly related to the information required to be disclosed (i.e., the initial discounted interest rate of 1.950% set forth as the note rate); and

(4) failed to properly disclose the possibility of negative amortization.

Ultimately, the district court extended by three years the borrowers’ rescission period based on its finding that the bank materially violated TILA, and certified the litigation as a class action “leaving the decision as to whether to actually seek rescission to each individual class member.

The federal district court agreed with the first three allegations and determined that the loan was rescindable because of the violations. The court further determined that this matter was appropriate for class certification, finding nothing in the language of the TILA that precludes the use of the class action mechanism to obtain a judicial declaration of whether a TILA error entitles each member of the classindividually to seek rescission.

__________________
Moe Bedard
Founder & President

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