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MILLS v. HOME EQUITY GROUP

December 30, 1994

VIRGINIA E. MILLS, Plaintiff,
v.
HOME EQUITY GROUP, INC., et al., Defendants.



The opinion of the court was delivered by: STANLEY SPORKIN

 This matter comes before the Court on Defendant Arthur Bennett's motion to dismiss and Plaintiff's motion for partial summary judgment. This case was originally filed in the Superior Court of the District of Columbia and was removed to this Court. Plaintiff borrowed $ 33,500 from Defendant Bennett, a mortgage lender. The loan was secured by a Deed of Trust on her residence. Defendant Home Equity brokered the loan between Plaintiff and Defendant Bennett. Home Equity has neither made nor responded to any motions.

 Plaintiff's complaint seeks relief on the basis of the following claims: 1) Violation of the Truth in Lending Act ("TILA"); 2) Violation of Maryland Finder's Fee Law; 3) Violations of Maryland's usury laws; 4) Unconscionability of the mortgage transaction 5) Breach of Fiduciary Duty; 6) Violation of the D.C. Consumer Protection Procedures Act; and 7) Application of Invalid Foreclosure Procedures.

 In his motion to dismiss with respect to claims 1, 3, 4 and 6, Defendant Bennett asserts that if, in fact, they do state a cause of action, Plaintiff has settled and compromised these disputed claims. With respect to the 7th claim, Defendant Bennett asserts that it is moot since foreclosure has not occurred due to the TRO which is now in place.

 Plaintiff, in opposition to Defendant Bennett's motion, moves for partial summary judgment with respect to claims 1 and 3. No damage issues have been addressed.

 STATEMENT OF FACTS

 On December 20, 1991, Plaintiff, who had a poor credit history, entered into a loan agreement with Defendant Bennett. The loan was brokered by Larry Leftowitz of Defendant Home Equity Group, Inc. Plaintiff's loan of $ 33,500 was secured by a Deed of Trust on her residence located in the District of Columbia. The loan was a one year loan with the principal balance to be paid in a lump sum at the end of the year. The annual effective rate of simple interest was 24%. Each month, interest payments of $ 670 were to be made.

 Plaintiff did not meet her monthly obligations and in August 1992 Defendant Bennett initiated collection proceedings against Plaintiff. In March 1993, Plaintiff, represented by pro bono counsel, and defendant entered into a purported settlement agreement which restructured the loan as follows:

 1. The monthly payments were reduced to $ 300;

 2. The term of the loan was extended 2 years to March 1, 1995;

 3. The prospective interest rate on the loan was reduced from 24% to 15%; and

 4. The new principal amount of the loan was increased to $ 41,352 to reflect the unpaid principal and accrued interest at the original interest rate of 24% and penalties and late charges.

 Plaintiff signed a "release" which in part reads:

 
Pursuant to this Amendment and for and in consideration of Lender's Release, Borrowers individually and for their heirs, next of kin, executors, partners, agents, associates, affiliates, administrators, successors or assigns, hereby release, acquit, and forever discharge Lender and his heirs, executors, administrators, representatives, successors and assigns from any and all claims, demands, damages, losses, liabilities, rights, causes of action, and suits, whatsoever that Borrowers had, have or might have against Lender arising out of or relating to the Original Loan documents, including but not limited to any claims of lender liability, usury, Regulation Z, *fn1" or any other violation of law knowingly or unknowingly committed.

 Plaintiff defaulted on the restructured loan and Defendants commenced foreclosure proceedings in May 1994. On June 9, 1994, Plaintiff represented by new counsel sent Defendants a notice of rescission pursuant to the Truth in Lending Act, 15 U.S.C. Section 1635, Regulation Z, Section 226.23. When defendant Bennett's counsel informed ...


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