February 15, 2005 | Posted By Sheppard Mullin | permalink
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Rate "Lock In" Agreement Subject To Three-Day TILA Notice

Is a separate agreement whereby a borrower pays a fee for a locked-in interest rate itself subject to the three-day cancellation right under the Truth In Lending Act?

Yes, according to the Ninth Circuit in Jones v. e*Trade Mortgage Corporation, 05 C.D.O.S. 1283.

Here, the bank sent the borrowers a separate agreement under which they paid $400 for a locked-in interest rate. The bank approved the loan and then sent the borrowers the required three-day cancellation notice under TILA. The borrowers backed out and demanded the return of the $400 fee. The bank refused, and the district court dismissed the borrowers' complaint for failure to state a TILA claim.

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