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Roger
Roger, Attorney
Category: Business Law
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Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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where would I find the rules governing a line of credit"?

Customer Question

where would I find the rules governing a 'line of credit"? is it different state to state?
Submitted: 1 year ago.
Category: Business Law
Expert:  Roger replied 1 year ago.

Kirk Adams : Hi - my name is XXXXX XXXXX I'm a Business litigation attorney. Thanks for your question.
Kirk Adams : The rules governing a line of credit is generally governed by the terms of the loan agreement.
Kirk Adams : Thus, the rules that apply to a line of credit can vary from agreement to agreement.
Customer:

okay.

Customer:

Heres what I am looking for. I am in a lawsuit with a bank. I am looking for federal or state laws that may have been violated

Customer:

Heres the scoop

Customer:

I applied for a 30 year res mortgage. I lived in another state and was making the buy/sell offer from out of state.

Customer:

Prior to the closing the only papers I received form the bank was a 30 year good faith estimate for res mortgage and a truth in lending 30 year res mortgage

Customer:

At the closing they switched loans and gave me an 18 month commercial 'construction loan' or a commercial lone of credit.

Customer:

Neither me nor my realtor who was with me caught this, nor did the closing agent make any mention of anything.The bank has been ordere by a supreme court to stand trial for fraud. That's obvious.

Kirk Adams : Ok.
Customer:

So I am looking for respa or other violations in banking laws, for instance- they are claiming it was a straight line of credit for $300K. However , I received no monthly statements for over a year. The only statement I received was a mortgage interest statement at the end of the year, and it made no menion of a line of credit, nor did it say 'commercial'

Customer:

They withdrew $2200 monthly from my bank account. I thought I was paying a 30 year mortgage.

Kirk Adams : If the lender swapped the documents without telling you about it, then that is certainly improper and can be a fraudulent act on the lender's part.
Customer:

Arent they required by law to issue monthly statements on a line of credit?

Customer:

Yes it was, that's a given

Customer:

According to in house memos found in discovery, the loan officers had determined the property was in business /commercial zoning and precluded it from the 30 year rez mortgage I applied for. They failed to disclose and gave me a predatory loan which set me up to fail.

Customer:

What I am looking for is banking violations aside from the obvious fraud. I want to hit them as hard as I can in pre trial.

Kirk Adams : Sure. A line of credit is generally a RESPA-covered transaction, so those rules do apply to a loan of this type.
Customer:

I went over those and couldnt find it.... I believe they legally have to send monthly statements, which of course if they did I would have caught it

Kirk Adams : Well, it depends on what the terms of repayment were on the note. If the note called for monthly payments, then monthly statements should be issued.
Kirk Adams : However, if the payments were yearly, or if the loan just had a due date for some time in the future, then a monthly statement may not have been required.
Customer:

Well they took monthly withdrawals from my account, but no statements. Is there a law that says if a line of credit has a future due date ( they all do?) then no monthly statements have to be issued?

Customer:

where can I find this info?

Customer:

I probably need to ask a banker or loan officer?

Kirk Adams : I don't think there's a law under RESPA or the Frank-Dodd Act that requires a lender to send monthly statements. Instead, the loan documents should provide that.
Customer:

okay lets talk about that. what are loan documents? the only thing I was provided was a promissory note. period. Thats the extent of any loan documents

Kirk Adams : It would depend on whether or not monthly payments are required under the loan.
Kirk Adams : The promissory note is really all you need - - that's the document where you agree to repay the debt.
Kirk Adams : If the note says that the debt will be paid back at the monthly amount of $____ for so many months, then monthly statements should be issued.
Customer:

well it does not specify month etc, and in fact it says that upon a 100K paydonw they would release collateral. Whn I attepted to do that, they refused and said they now wated 200K paydonw. So they did not follow their own note?

Kirk Adams : If the line of credit just has a due date, and no monthly payments were required, then a monthly statement isn't required.
Kirk Adams : If they refused to honor the terms of the note.....
Kirk Adams : then that's obviously a breach of contract and you should have a legitimate beef about that.
Customer:

okay I will re read it. And yes they refused to honor the terms. I did not win on the breach of contract just the fraud

Customer:

I will go over it all again, thanks,

Kirk Adams : WOW - - if they refused to honor the terms of the note, I don't see how that wouldn't be a breach of contract.
Kirk Adams : Nevertheless, if you've got a case set up for fraud, then that's probably worth more - - in terms of damages - - to you.
Customer:

exactly. I got screwed in many ways, but I didnt have a lawyer. gotta go.

Customer:

thanks!

Roger, Attorney
Category: Business Law
Satisfied Customers: 27081
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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