The opinion of the court was delivered by: Surrick, J.
Plaintiff Christina Palmer alleges that Defendant Ameribanq Mortgage Group, LLC, committed violations of various federal and state laws in connection with a mortgage transaction in 2004. Plaintiff filed an Amended Complaint on October 14, 2008. (Doc. No. 35.) Count One seeks statutory damages and attorney's fees under the Truth-in-Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., for Ameribanq's alleged failure to provide Plaintiff with a notice of her right to cancel and for Ameribanq's alleged failure to disclose the finance charges associated with the transaction. Count Two seeks rescission of the mortgage under § 1635(b) of TILA because Ameribanq's omissions were material. Count Three seeks damages under the federal Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691 et seq., because Ameribanq allegedly substituted different, less favorable terms in the mortgage transaction without advising Plaintiff. Count Four seeks recovery under the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), 73 Pa. Cons. Stat. § 201-1 et seq., because Ameribanq made misrepresentations and intended to confuse Plaintiff in connection with the mortgage transaction. After a bench trial, and after review of the parties' post-trial submissions, we conclude that Ameribanq did not provide Plaintiff with an accurate disclosure of the finance charges associated with the transaction and that Plaintiff is entitled to relief on Count I. We further conclude that Ameribanq and the other Defendants, assignees of Plaintiff's mortgage, are entitled to judgment in their favor on the remaining counts in the Amended Complaint. In accordance with Federal Rule of Civil Procedure 52, we make the following findings of fact and conclusions of law.
1. Plaintiff Christina Palmer and her husband Gregory Palmer both testified at trial. Neither was a convincing witness. Plaintiff's testimony was less than credible on a number of material points. Her testimony was directly contradicted in several significant areas. After watching Plaintiff testify and hearing what she had to say in light of all of the other evidence presented, it was apparent that Plaintiff's testimony was not designed to be factually accurate but rather was designed to support the claims that she is making. The testimony of Plaintiff's husband was of little value.
2. In 2004, Plaintiff owned and resided at the residential property located at 4945 Chester Creek Road, Brookhaven, Pennsylvania (the "Property").
3. Plaintiff had a fixed-rate mortgage on the Property. Her monthly payments were $1429, including taxes and insurance. (Trial Tr. 33:17-25 to 34:1-6.)
4. On September 26, 2004, Plaintiff telephoned Ameribanq to apply for a loan (the "Loan") to refinance the Property. Plaintiff spoke with Ameribanq representative Jared Weisfeld. Weisfeld faxed Plaintiff a loan application package. Plaintiff signed and dated copies of the following documents and faxed them back to Weisfeld on September 26, 2004: a Good Faith Estimate (Ex. D-1), a Preliminary Federal Truth in Lending Disclosure Statement (Ex. D-3), and a Notices & Disclosures to Applicant form (Ex. D-5). Plaintiff's testimony that she did not receive these documents was not credible. (See Trial Tr. 34:20-23, 35:15-17.) Plaintiff's testimony that she did not date the Preliminary Truth in Lending Disclosure Statement documents was also not credible. (See, e.g., id. 87:4 to 90:13.)
5. The Good Faith Estimate listed the amount of the loan as $217,600. The Preliminary Federal Truth in Lending Disclosure Statement provided estimates of the annual percentage rate (14.015%); the finance charge ($793,459.74); the amount financed ($208,849.83); and the total payments ($1,005,309.57). The Preliminary Federal Truth in Lending Disclosure Statement further estimated the monthly payments of the Loan to commence at $1790.14 a month for the first 36 months increasing to $2914.90 a month for the final 312 months.
6. The parties do not agree with regard to the date on which the loan closed. Plaintiff contends that it closed on October 6, 2004. Defendants contend that it closed on October 7, 2004. Some of the closing documents contained both dates. For example, the Truth in Lending Disclosure Statement contained a type-written date of October 6, 2004, but a handwritten date of October 7, 2004. (See, e.g., Ex. D-11.) Plaintiff testified that the loan closed on October 6, 2004. (Trial Tr. 36:5 to 37:2.) Plaintiff's testimony on this issue was directly contradicted and it was not convincing or credible. Defendants offered the testimony of Maureen Nihill, the notary who attended the closing, and Frances Bedekovic, Ameribanq's liquidating manager, to establish that the Loan closed on October 7, 2004. (See, e.g., id. at 155:7 to 158:25; 207:17 to 211:9.) Nihill and Bedekovic were both credible witnesses. We find that the closing was initially scheduled for October 6, but it took place on October 7. (See id. at 167:16 to 169:5.)
7. Any discrepancies in the closing documents between the type-written dates and the hand-written dates were clerical errors arising from the date change. Defendants offered Bedekovic's testimony to establish that in October 2004 Ameribanq utilized a loan-document preparation software program known as MRG. (Id. at 204:20 to 205:7.) The purpose of the software was to ensure that loan documents were prepared in accordance with industry standards. (Id.) Ameribanq retained Mortgage Resource Network, an independent vendor, to audit the documents prior to the closing. (Id. at 205:11-24.) After the closing but prior to Ameribanq funding the loan, Mortgage Resource Network performed a second audit of the closing documents. (Id. at 206:23-25; see also Ex. D-25.)
8. Plaintiff received and signed the following documents at the closing: a Notices and Disclosure to Applicant form (Ex. D-5); a Settlement Statement from Rockwood Title and Settlement Group (Ex. D-6); a Truth in Lending Disclosure Statement (Ex. D-9 (hereinafter, the "Final Disclosure Statement")); two copies of the Notice of Right of Rescission (Exs. D-12, D-14; see also Trial Tr. 155:19 to 156:8); an Adjustable Rate Note (Ex. D-16); a Mortgage Contract (Ex. D-18); an Adjustable Rate Rider to the Mortgage Contract (Ex. D-19); an Initial Escrow Account Disclosure Statement (Ex. D-21); a Compliance Agreement (Ex. D-22); and a First Payment Letter (Ex. D-23). Plaintiff admitted to signing some of these documents. (Trial Tr. 38:23.) However, she denied signing several of them, asserting that those documents that she contends she did not sign were forgeries. (Id. at 46:19-22; 73:23 to 74:16; 77:9 to 79:5; 92:19 to 93:20; see also Pl.'s Pretrial Mem. at 3.) Plaintiff's testimony in this regard was not credible. We find that Plaintiff did in fact sign the documents that Defendants contend that she signed at the closing. (See id. at 153:2-20; 193:22 to 194:17; 209:1-5; 210:12-23; Ex. D-25.) The above-listed documents from September or October that bear Plaintiff's signature are not forged. The testimony of Defendants' handwriting expert who identified Plaintiff's signature on the documents was credible.
9. The amount of the Loan was $217,600. (Ex. D-6.) The Final Disclosure Statement that Plaintiff received at the closing set out, among other things, the annual percentage rate (11.184%); the fact that the "loan contain[ed] a variable-rate feature"; the finance charge ($547,324.76); the amount financed ($208,808.80); and the total payments ($756,133.56). The Final Disclosure Statement further set out the monthly payments of principal and interest on the Loan, which started at $1790.14 a month for the first 36 months and increased to $2137.01 a month for the final 318 months. The First Payment Letter informed Plaintiff that her monthly payments would include additional fees for insurance and taxes and that her initial total monthly payment was $2347.99: $1790.14 for principal and interest; $67.42 for hazard insurance; $92.42 for flood insurance; and $398.01 for real estate taxes. (Ex. D-23.) In addition to the First Payment Letter informing Plaintiff that her monthly payments would include insurance and taxes, the Notices and Disclosures to Applicant and the Initial Escrow Account Disclosure Statement informed Plaintiff that her monthly payments would include escrow payments to cover taxes and insurance. (Exs. D-5, D-21.)
10. The Settlement Statement, also known as a HUD-1 form, listed the loan amount and itemized the Settlement Charges, the Reserves Deposited with the Lender, the Title Charges, and the Disbursements to Others. Among those receiving disbursements from the settlement were the holder of Plaintiff's original mortgage, Wells Fargo Bank, in the amount of $173,215.80; Harley Davidson, in the amount of $8473; Resorts USA, in the amount of $1676; and Dell Financial, in the amount of $2337.
11. Plaintiff's husband did not participate in the loan-making process. Even though his name was not on the deed to the property, he was aware of the fact that Plaintiff was obtaining a loan to refinance the Property. (See id. at 113:1-3.) Plaintiff's husband testified to his belief that the Loan payments were supposed to be about $1700 a month, including taxes and insurance. (Id. at 113:4-7.) When he discovered the amount of the loan he became "angry" and "infuriated." (Id. at 114:8; 117:3-4.) The testimony offered by Plaintiff and her husband regarding Plaintiff's husband's involvement in the loan process was contradictory and unconvincing. (See, e.g., id. at 100:13-15; 101:1-3.)
12. The Loan was funded on or about October 12, 2004. (Ex. D-6.) Shortly thereafter, Ameribanq assigned the Loan to Countrywide Home Loans, Inc. (Trial Tr. 240:24 to 241:14.) Countrywide later assigned the Loan to Bank of New York. (Id. at 241:3.) Countrywide currently services the Loan, and Bank of New York currently holds it. (Id. at 241:15-16.)
13. Approximately two months after the closing, Plaintiff received a Federal Express envelope from Ameribanq containing a second notice of the right to rescind. (Ex. P-4; see also Trial Tr. 48:17 to 49:2.) The letter, dated December 7, 2004, stated: "Thank you for giving us the opportunity to assist you with the refinance of your home. It has come to our attention that the enclosed form(s) have been misplaced or omitted at the time of closing. **ORIGINAL NOTICE OF RESCISSION: PLEASE SIGN & DO NOT DATE IT." (Id.) Attached to the letter was a second Notice of Right of Rescission. (Ex. P-5.)
14. Plaintiff testified that she did not read this notice or know what the notice was about. (Trial Tr. 49:6-7; 90:22-23.) On direct examination, Plaintiff testified that when she received the Federal Express envelope, she "opened it and looked at it and just put it back in the envelope and put it on her entertainment center." (Id. at 49:4-5.) On cross-examination, Plaintiff testified that she looked at the letter and understood that it was from Ameribanq (id. at 91:18) and that, despite the fact that she had actively yet unsuccessfully sought to communicate with Ameribanq (see id. at 39:11 to 40:17), she did not read it. She explained that she did not read the letter because Ameribanq "never returned my calls and I couldn't get in touch with them.... so I figured why are they sending me a letter." (Id. at 91:19-20.) This explanation is unpersuasive and it lacks credibility, especially in the light of other testimony given by Plaintiff. She maintained that at no time could she afford the $2300 per month payments (id. at 38:19-21), yet, she disregarded her right to rescind sent about two weeks after her first payment was due (Ex. D-23).
15. Plaintiff made her monthly payments of $2347.99 starting in December 2004. (See Trial Tr. 47:20 to 48:3.) Sometime in early 2005, Plaintiff became concerned that she could not afford her mortgage payments. (See id. at 50:15-17.) This coincided with her husband's discovery of the amount of the monthly payment. Whether from concern about not being able to afford the monthly payments or concern of her husband's anger, Plaintiff retained counsel. (See id. at 51:2-5.) On March 7, 2005, Plaintiff's counsel sent a letter to Countrywide and Ameribanq seeking to rescind the loan. (Ex. P-6.) Plaintiff did not receive a response from Countrywide or Ameribanq. (Trial Tr. 51:18-20.)
16. Several court actions ensued. Plaintiff filed the instant action on April 28, 2005. (Id. at 51:24 to 52:4.) Bank of New York filed an action in the Court of Common Pleas of Delaware County to foreclose on the Property. (Ex. P-15; see also Trial Tr. 17:17-21.) In October 2006, Plaintiff and her husband filed for bankruptcy. (Id. at 52:21 to 53:9; see also Ex. P-14.) The bankruptcy action automatically stayed the state-court foreclosure proceedings. (See Trial Tr. 57:15 to 58:17.) For a time, Plaintiff made modified payments pursuant to an order by the bankruptcy judge. (Trial Tr. 55:8-11; 56:13-16.) In April 2008, Plaintiff and her husband received a discharge, eliminating personal responsibility for the loan. (Ex. P-14; Trial Tr. 15:4-6.) The foreclosure action remains pending. (Trial Tr. 14:22-23; 17:17-25; 58:20 to 59:5.)
1. We have jurisdiction over Plaintiff's TILA claims under 15 U.S.C. § 1640(e) and 28 U.S.C. § 1331; Plaintiff's ECOA claim under 15 U.S.C. § 1691e(f) and 28 U.S.C. § 1331; and Plaintiff's UTPCPL claim under 28 U.S.C. § 1367.
2. "TILA is a federal consumer protection statute, intended to promote the informed use of credit by requiring certain uniform disclosures from creditors." In re Cmty. Bank of N. Va. & Guar. Nat'l Bank of Tallahassee Second Mortg. Loan Litig., 418 F.3d 277, 306 (3d Cir. 2005). "[A]s a remedial statute which is designed to balance the scales 'thought to be weighed in favor of lenders,' [TILA] is to be liberally construed in favor of borrowers." Smith v. Fid. Consumer Disc. Co., 898 F.2d 896, 898 (3d Cir. 1988) (quoting Bizier v. Globe Fin. Servs., 654 F.2d 1, 3 (1st Cir. 1981)).
3. TILA authorizes the Board of Governors of the Federal Reserve System to promulgate regulations necessary to effectuate the Act's purpose. 15 U.S.C. § 1604. The Federal Reserve Board's regulations, known as Regulation Z, are codified at 12 C.F.R. § 226.1 et seq. The Supreme Court has directed courts to afford Regulation Z strong deference. Cetto v. LaSalle Bank Nat'l Ass'n, 518 F.3d 263, 274 (4th Cir. 2008) ("'Congress has specifically designated the Federal Reserve Board and staff as the primary source for interpretation and application of truth-in-lending law.'" (quoting Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 566 (1980))); Hamm v. Ameriquest Mortg. Co., 506 F.3d 525, 528 (7th Cir. 2008) ("The Supreme Court has held that 'deference is especially appropriate in the process of interpreting the Truth in Lending Act and Regulation Z [and,]... [u]nless demonstrably irrational, Federal Reserve Board staff opinions construing the Act or Regulation should be dispositive.'" (quoting Mihollin, 444 U.S. at 565)).
(1) Notice of Right of Rescission
4. TILA mandates that creditors clearly and conspicuously disclose to borrowers that borrowers have the unilateral right to rescind a loan transaction for a brief period after consummation. 15 U.S.C. § 1635(a); 12 C.F.R. § 226.23(a)(3); see also Davis v. Deutsche Bank Nat'l Trust Co., No. 05-4061, 2007 U.S. Dist. LEXIS 83307, at *5 (E.D. Pa. Nov. 8, 2007). This right allows the borrower to rescind the transaction until midnight of the third business day following the transaction or the delivery of the notice of rescission along with the other material disclosures required under TILA, whichever occurs later. 15 U.S.C. § 1635(a).
5. Regulation Z provides that a creditor shall deliver two copies of the notice of the right to rescind to each consumer entitled to rescind.... The notice shall be on a separate document that identifies the transaction and shall clearly and conspicuously disclose the following:
(i) The retention or acquisition of a security interest in the consumer's principal dwelling. (ii) The consumer's right to rescind the transaction. (iii) How to exercise the right to rescind, with a form for that purpose, designating the address of the creditor's place of business. (iv) The effects of rescission, as described [by 12 C.F.R. § 226.23(d)]. (v) The date the rescission period expires.
12 C.F.R. § 226.23(b)(1) (emphasis added).
6. Failure to provide the required notices extends a borrower's unilateral right of rescission to three years or until the borrower sells the property, whichever occurs first.
12 C.F.R. § 226.23(a)(3) ("If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation, upon transfer of all of the consumer's interest in the property, or upon sale of the property, whichever occurs first."); see also 15 U.S.C. § 1635(f).
7. As required by Regulation Z, Ameribanq provided Plaintiff with two notices of her right to rescind at the closing on October 7, 2004. Plaintiff signed the notices. (See Exs. D-12, D-14; Trial Tr. 155:19 to 156:8.) Under TILA, Plaintiff's signature on the notices "does no more than create a rebuttable presumption of delivery thereof." 15 U.S.C. § 1635(c). As noted in the Findings of Fact, Plaintiff's testimony that she did not receive the notices was not credible. Cf. Oscar v. Bank One, N.A., No. 05-5928, 2006 U.S. Dist. LEXIS 6410, at *9 (E.D. Pa. Feb. 17, 2006) (holding that the plaintiff's assertion that he did not receive closing documents that bore his signature was, at the summary judgment stage, insufficient to overcome presumption of delivery), appeal dismissed, 223 F. App'x 164 (3d Cir. 2007). Since Plaintiff introduced no other credible evidence to rebut the presumption of delivery, § 1635(c) is of no aid to her.
8. The Notice of Right of Rescission that Ameribanq provided to Plaintiff is substantially similar to the form of notice set out in Appendix H to Regulation Z. See 12 C.F.R. § 226.23(b)(2); 12 C.F.R. pt. 226, app. H-8; see also 15 U.S.C. § 1604(b) (providing that creditors that use the Federal-Reserve-Board-drafted forms are necessarily in compliance with TILA). The one significant difference between the form recommended by Regulation Z and the form that Ameribanq provided to Plaintiff is that the form that Ameribanq provided to Plaintiff contained an additional section titled "Acknowledgment of Receipt," which contained a blank line for a signature and the date. (Ex. D-12.) This alteration did not "affect the substance, clarity, or meaningful sequence of the disclosure," and thus did not alter the adequacy of the disclosure. See 15 U.S.C. § 1604(b).
9. The Notice of Right of Rescission provided: You have a legal right under federal law to cancel this transaction, without cost, within three business days from whichever of the following events occurs last:
(1) the date of the transaction, which is October 6, 2004 (i.e., the date you signed your loan documents);
(2) the date you received your Truth in Lending disclosures; or
(3) the date you received this notice of your right ...