The Court of Appeals for the 4th Circuit reviewed the decision of the district court, acknowledging that the TILA allows a loan deal to be rescinded where there is a "consumer credit transaction." The court also noted that the Weintraubs define a "consumer credit transaction" as any situation where two or more parties begin negotiations that could lead to extending credit.
While the court agreed that the paying of the $500 fee was a transaction, they did not agree that it was a transaction for credit. According to the court, there is no consumer credit transaction unless the loan deal is closed and credit has been extended to the borrowers. If the court allowed the Weintraubs to rescind prior to getting the loan, potential borrowers would have a right to a free application for home financing. Lenders would end up bearing all the costs of credit reports and appraisals, regardless of whether the borrower intended to close the transaction.
Barry Weintraub said he brought his suit because unscrupulous lenders lure consumers with false promises, and then make it difficult to back out of the loan without losing money on the fees. Weintraub refinanced a year later for a better interest rate. At closing, Weintraub's fees ended up being less than his brick-and-mortar lender had estimated.
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Robin Gerber is a lawyer and the author of Barbie and Ruth: The Story of the World's Most Famous Doll and the Woman Who Created Her.