Weintraub v. Quicken Loans, Incorporated
(United States District Court for the Eastern District of Virginia)
In this case, the U.S. District Court upheld that for a loan to be rescinded, it must first be consummated.
On Feb. 1, 2008 Rita and Barry Weintraub applied for a $220,000 loan with Quicken Loans to refinance their principal residence. That same day Quicken electronically sent them a Good Faith Estimate and an interest rate disclosure agreement. The Weintraubs were asked to pay a deposit of $500 for any out of pocket expenses and they agreed. On Feb. 7, 2008 an appraisal was completed. The property was valued at $32,000 less than anticipated which triggered a half-point discount fee to be added to the costs.
On Feb. 18, 2008 closing documents which reflected this change were sent to the Weintraubs and a closing date of Feb. 26, 2008 was set. However, six days before this was to happen, on Feb. 20, 2008, the Weintraubs executed the rescission notice and expressed their desire to cancel the transaction. They requested the return of the $500 deposit.
Quicken Loans deducted the cost of the appraisal and credit report and refunded the difference. The Weintraubs sued under the Truth in Lending Act that because of the rescission they were entitled to the entire $500. The court ruled that only a consummated transaction may be rescinded. The court said that even though TILA does not define "transaction," it does define a "residential mortgage transaction" and a "reverse mortgage transaction." Each is treated as a consummated event and only after that can it be rescinded.