Reiser v. Residential Funding Corporation
By In the United States Court of Appeals for the Seventh Circuit
- Release Date: 2004-08-19
- Genre: Law
Description
After denying a motion to dismiss the complaint under Fed. R. Civ. P. 12(b)(6), the district court certified its order for interlocutory appeal under 28 U.S.C. §1292(b). Defendant has filed the necessary petition, which we grant in part and summarily reverse so that the remainder of the suit may proceed without delay. Plaintiffs, who secured second mortgages from Mortgage Capital Resources Corp., contend in this suit that the lender violated two federal statutes (the Truth in Lending Act and the Real Estate Settlement Procedures Act) plus the Illinois Interest Act. The federal claims assert that Mortgage Capital charged excessive closing fees and engaged in forbidden fee splitting. The state claim is that by charging more than three points at closing Mortgage Capital exceeded a limit set by 815 ILCS 205/4.1a. Neither Mortgage Capital nor any other participant in the extensions of credit has been named as a defendant; instead plaintiffs seek relief from Residential Funding Corporation, which purchased the plaintiffs notes as part of larger pools. Normally the holder-in-due-course doctrine would foreclose litigation against the purchaser, but a portion of the Home Ownership and Equity Protection Act overrides this doctrine for highinterest mortgage loans, providing that a person "who purchases or is otherwise assigned a mortgage referred to in [15 U.S.C. §1602(aa)] shall be subject to all claims and defenses with respect to that mortgage that the consumer could assert against the creditor of the mortgage". 15 U.S.C. §1641(d)(1). The complaint alleges, and Residential Funding does not deny, that the loans are high-interest mortgages covered by §1602(aa).
