The opinion of the court was delivered by: Ricardo M. Urbina, United States District Judge
DENYING THE PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT;
DENYING DEFENDANT ALTEGRA'S MOTION FOR SUMMARY JUDGMENT;
DENYING AS MOOT THE PLAINTIFFS' MOTION TO STRIKE
The plaintiffs bring this action against various mortgage brokers,
mortgage assignees, and settlement agents. The plaintiffs allege
predatory and fraudulent lending tactics in violation of the District of
Columbia Consumer Protection Procedures Act ("CPPA"), D.C. Code §
28-3901 et seq., the District of Columbia Mortgage Lender and Broker Act
("MLBA"), D.C. Code § 26-1101 et seq. (formerly D.C. Code §
26-1001), the Federal Truth in Lending Act ("TILA"), 15 U.S.C. § 1601
et seq., TILA's corollary District of Columbia statute, D.C. Code §
28-3301, and the Home Ownership and Equity Protection Act ("HOEPA"),
codified as amendments to numerous sections of TILA. The case is before
the court on the plaintiffs' motion for partial summary judgment,
defendant Altegra Credit Corporation's ("Altegra") motion for summary
judgment, and the plaintiffs' motion to strike the errata sheet and
second deposition of Marci Simmons, defendant Chase Title's ("Chase")
corporate designee. For the reasons that follow, the court denies both
motions for summary judgment and denies as moot the motion to strike.
The plaintiffs are a group of homeowners who refinanced their homes
with defendant First Government Mortgage and Investors Corporation
("First Government") as their loan provider. Corrected Fifth Am. Compl.
("Compl.") ¶ 1. The plaintiffs allege that First Government engaged
in a pattern of targeting low-income homeowners and inducing them to
enter illegal, high-cost mortgage loans. Id. ¶ 3. In addition to
First Mortgage, the defendants relevant to the pending motions are
Altegra, a mortgage assignee, and Chase, a settlement agent. Id. ¶¶
One of the plaintiffs, Mrs. Josephine E. Curtis, age 79, bought her
home with her husband in 1951. Id. ¶ 60. Mr. Curtis passed away in
1991 and Mrs. Curtis passed away at some point after the filing of the
complaint. Id.; Altegra Undisp. Facts ¶ 1. Regina Williams, Mrs.
Curtis' granddaughter, was added to the deed of the house without Mrs.
Curtis' knowledge in 1998. Compl. ¶ 61. On January 29, 1999, Mrs.
Curtis and Ms. Williams entered into a mortgage loan ("Curtis loan") for
$61,500.00 with First Government. Pls.' Undisp. Facts ¶ 1. Chase
acted as First Government's settlement agent for the Curtis loan. Id.
¶ 2. The points and fees calculated for this loan, pursuant to HOEPA,
total $4,413.25, or 7.7% of the total loan amount. Id. ¶¶ 19-20; Pls.'
Ex. 9.*fn1 The loan settlement statement lists various fees associated
with the loan including fees for flood certification, a walk-through
affidavit, and a judgment report fee. Pls.' Ex. 3.
Altegra bought the Curtis loan on or about March 25, 1999, thereby
becoming the mortgage assignee. Compl. ¶ 4. On December 6, 2000, Mrs.
Curtis sent a notice of rescission to First Government and Altegra,
pursuant to TILA. Compl. ¶ 68.
The plaintiffs filed their original complaint in this court on March
13, 2000. After filing several amended complaints, the plaintiffs filed a
Corrected Fifth Amended Complaint ("the complaint"). Defendant Altegra
filed a cross claim against defendant Chase and another defendant. The
parties have settled the majority of the claims advanced in the
pleadings. The case is before the court on the plaintiffs' motion for
partial summary judgment, defendant Altegra's motion for summary
judgment, and the plaintiffs' motion to strike Marci Simmons' (defendant
Chase's corporate designee) second deposition and errata sheet. In their
motion for partial summary judgment, the plaintiffs argue that because
the Curtis loan is subject to HOEPA, Altegra is liable for all violations
of law committed by First Government. In contrast, Altegra argues that it
is not liable as the loan assignee. Altegra further argues that it is not
liable for rescission of the Curtis loan. Finally, Altegra argues that it
is not liable pursuant to the CPPA. The court denies all of these
A. Legal Standard for a Motion for Summary Judgment
Summary judgment is appropriate when "the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a
matter of law." FED. R. CIV. P. 56(c); see also Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986); Diamond v. Atwood, 43 F.3d 1538, 1540
(D.C. Cir. 1995). To determine which facts are "material," a court must
look to the substantive law on which each claim rests. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A "genuine issue" is one
whose resolution could establish an element of a claim or defense and,
therefore, affect the outcome of the action. Celotex, 477 U.S. at 322;
Anderson, 477 U.S. at 248.
In ruling on a motion for summary judgment, the court must draw all
justifiable inferences in the nonmoving party's favor and accept the
nonmoving party's evidence as true. Anderson, 477 U.S. at 255. A
nonmoving party, however, must establish more than "the mere existence of
a scintilla of evidence" in support of its position. Id. at 252. To
prevail on a motion for summary judgment, the moving party must show that
the nonmoving party "fail[ed] to make a showing sufficient to establish
the existence of an element essential to that party's case, and on which
that party will bear the burden of proof at trial." Celotex, 477 U.S. at
322. By pointing to the absence of evidence proffered by the nonmoving
party, a moving party may succeed on summary judgment. Id.
In addition, the nonmoving party may not rely solely on allegations or
conclusory statements. Greene v. Dalton, 164 F.3d 671, 675 (D.C. Cir.
1999); Harding v. Gray, 9 F.3d 150, 154 (D.C. Cir. 1993). Rather, the
nonmoving party must present specific
facts that would enable a
reasonable jury to find in its favor. Greene, 164 F.3d at 675. If the
evidence "is merely colorable, or is not significantly probative, summary
judgment may be granted." Anderson, 477 U.S. at 249-50 (internal
B. The Court Denies the Plaintiffs' and Defendant Altegra's
Motions for Summary Judgment on the HOEPA Claims in Count Six
In count six, the plaintiffs claim that the Curtis loan qualifies as a
HOEPA loan and assert that Altegra is liable as an assignee of the Curtis
loan for all violations of law asserted against the original lender,
First Government. Both Altegra and Mrs. Curtis move for summary judgment
on count six. The court denies the motions for the following reasons.
In 1968, Congress enacted TILA, a federal statute that governs the
terms and conditions of consumer credit by, inter alia, requiring lenders
to disclose certain details about loans and loan fees and costs.
15 U.S.C. § 1601 et seq.; In re Crisomia, 2002 WL 31202722, at *3
(Bankr. E.D. Pa. Sept. 13, 2002). Congress intended TILA to assure a
meaningful disclosure of credit terms so that consumers will not be
misled as to the costs of financing. Id.
Faced with increasing reports of abusive practices in home mortgage
lending, Congress enacted HOEPA in 1994 as an amendment to TILA. Pub.L.
103-325 (amending TILA at 15 U.S.C. § 1601-02, 1604, 1610, 1639-41,
1648); see also Jackson v. US Bank Nat'l Ass'n Trustee, 245 B.R. 23, 25
(Bankr.E.D.Pa. 2000); Vandenbroeck v. Contimortgage Corp.,
53 F. Supp.2d 965, 968 (W.D.Mich. 1999). HOEPA requires lenders to
provide borrowers with additional disclosures, "in conspicuous type size,"
with respect to certain home mortgages. 15 U.S.C. § 1639(a)(1).
Congress intended HOEPA to result in greater disclosure to borrowers
involved in "high cost" loans and to stop certain loan terms and
practices. 15 U.S.C. § 1639; In re Crisomia, 2002 WL 31202722, at *3.
In order to implement TILA and HOEPA, the Board of Governors of the
Federal Reserve System introduced Regulation Z. 12 C.F.R. § 226.1 et
seq.; Lopez v. Delta Funding Corp., 1998 WL 1537755, at * 7 (E.D.N.Y.
Dec. 23, 1998). HOEPA defines certain mortgages as high cost when the
mortgage reaches a "points and fees" trigger. 15 U.S.C. § 1602(aa);
12 C.F.R. § 226.32(a). More specifically, a high cost or HOEPA loan
1) a consumer credit transaction
3) that is secured by the consumer's principal dwelling
4) and is a second or subordinate residential
mortgage, not a residential mortgage transaction, a
reverse mortgage transaction, or a transaction under
an open credit plan
5) and that satisfies either of the following two tests:
(a) the annual percentage rate ("APR") of interest for
the loan transaction exceeds certain levels; or
(b) the total "points and fees" payable by the
borrower at or before closing will exceed the greater
of (i) 8% of the total loan amount; or (ii) $400.00.
b) Assignee Liability for HOEPA Loans
TILA protects borrowers from predatory lending tactics by providing a
cause of action against creditors and assignees of creditors who engage
in such tactics. 15 U.S.C. § 1601 et seq. TILA imposes two different
standards of care for assignees. 15 U.S.C. § 1641. Assignee liability
regarding non-HOEPA transactions under TILA is limited to violations that
are "apparent on the face of the disclosure statement."
15 U.S.C. § 1641(a), (e); Bryant v. Mortgage Capital Res. Corp.,
197 F. Supp.2d 1357, n. 22 (N.D.Ga. 2002) (quoting
15 U.S.C. § 1641(a)); In re Murray, 239 B.R. 728, 733 (E.D.Pa.
1999). Congress has provided a definition of "apparent on the face":
For the purposes of this section, a violation is
apparent on the face of the disclosure statement if
— (A) the disclosure can be determined to be
incomplete or inaccurate by a comparison among the
disclosure statement, any itemization of the amount
financed, the note, or any other disclosure of
disbursement; or (B) the disclosure statement does not
use the terms or format required to be used by this
15 U.S.C. § 1641(e)(2) (emphasis added).
In contrast to the "apparent on the face" standard, Congress intended
to subject high cost mortgage (HOEPA loan) assignees to a more expansive
standard of liability than provided pursuant to TILA. Bryant,
197 F. Supp.2d at 1364. The legislative history of HOEPA demonstrates that
Congress enacted HOEPA to force the high cost mortgage market to police
itself. Id. (citing S. Rep. No. 103-169, at 28 (1993), reprinted in
1994 U.S.C.C.A.N. 1881, 1912, and 1993 WL 444316 ("HOEPA Leg. Hist.")).
Accordingly, Congress made assignees subject to "all claims and
defenses, whether under [TILA] or other law, that could be raised against
the original lender." HOEPA Leg. Hist. at *11; see also In re Rodrigues,
278 B.R. 683, 688 (Bankr. D.R.I. 1999); In re Murray, 239 B.R. at 733;
Vandenbroeck, 53 F. Supp.2d at 968. The provision for assignee liability
for HOEPA loans, in all cases except rescission, provides as follows:
Any person who purchases or is otherwise assigned a
mortgage referred to in section 1602(aa) of this title
shall be subject to all claims and defenses with
respect to that mortgage that the consumer could
assert against the creditor of the mortgage, unless
the purchaser or assignee demonstrates, by a
preponderance of the evidence, that a reasonable
person exercising ordinary due diligence, could not
determine, based on the documentation required by this
subchapter, the itemization of the amount financed,
and other disclosure of disbursements that the
mortgage was a mortgage referred to in section
1602(aa) of this title.
15 U.S.C. § 1641(d)(1) (emphasis added).
In sum, HOEPA subjects mortgage assignees to increased liability for
HOEPA loans. 15 U.S.C. § 1641(d)(1). For HOEPA loans, liability is
not limited to violations apparent on the face of loan documents, as
detailed in section 1641(a), but rather liability exists unless the
assignee proves that a reasonable person exercising ordinary due
diligence could not determine, based on the documentation required by
this subchapter, the itemization of the amount financed, and other
disclosure of disbursements that the loan was a HOEPA loan, as detailed
in section 1641(d)(1). 15 U.S.C. § 1641(a), (d)(1).
Courts have interpreted section 1641(d)(1)'s due diligence requirement as
placing the burden on an assignee to prove, by a preponderance of the
evidence, that the ...