Consumer Loan Companies – Civil Litigation

Consumer Loan Act licensees alleged to have violated any of the applicable Washington consumer loan statutes or regulations can face liability from two primary avenues: DFI enforcement actions and civil litigation.  This page is pertains to Civil Litigation.

Civil Litigation

Separate from a DFI enforcement action, a Consumer Loan Licensee accused of violating the governing statutes or regulations may be the subject to civil litigation in the form of a lawsuit.

The Consumer Loan Act works in tandem a number of incorporated statutes and regulations. Statutes such as the Truth in Lending Act allow private litigants to bring direct causes of action, whereas the Graham Leach Bliley Act limits civil actions to those brought by government agencies. Other statutes such as the Real Estate Settlement Procedures Act allow private litigants to bring direct actions under some sections of the Act but not others. But whether or not a statute allows a private litigant to sue a licensee for a violation of that statute, under Washington law a violation of many, and possibly all statutes and regulations involving disclosures to clients, representations to clients, the handling of client funds, and several other mortgage broker requirements are actionable under the Washington Consumer Protection Act.  

A Licensee found to have violated the Washington Consumer Protection Act, whether due to a violation of a statute or by having found to have caused a person to incur injury (such as lost money) due to an act or practice found to be unfair or deceptive act, may be liable for the actual damages proven that may be tripled, up to an additional $25,000 along with liability for the legal costs and attorney’s fees the other person incurred in bringing the action. See, Brazier v. Sec. Pac. Mortg., Inc., 245 F. Supp. 2d 1136 (W.D. Wash. 2003); Anderson v. Wells Fargo Home Mortg., Inc., 259 F. Supp. 2d 1143 (W.D. Wash. 2003).

Also keep in mind a separate DFI enforcement action may follow after the conclusion of civil litigation.

A Consumer Loan Licensee or a licensee’s agent operating under the same license who is facing an action, whether in the form of a DFI investigation or enforcement action or a private civil action should not ignore the first notice they receive of the action. Such actions rarely, if ever, disappear on their own. It is important that a licensee or anyone working with a licensee respond to such allegations promptly and with the help of an experienced attorney. In many cases, an early and well thought out response can prevent an investigation from escalating to an enforcement action or can prevent a dispute from becoming a lawsuit.

Ari Brown has litigated a variety of issues involving lending, loan origination, loan servicing, and debt collection for nearly twenty-five years. This includes dealing with state and federal cases involving CPA, MBPA, RESPA, and TILA. Pierce v. Novastar Mortg., Inc. 489 F.Supp.2d 1206 (W.D. Wash 2007); 238 F.R.D. 624 (W.D. Wash. 2006) was the first successful class action in Washington to apply the MBPA and CLA to RESPA and the Washington Consumer Protection Act on a class basis. In the course of securing a $5.4 million settlement in 2007, he had the opportunity to work with DFI and to better understand this agency. The subsequent DFI regulatory enforcement action ultimately removed a notorious lender from Washington State. Years of work involving banking and lending practices have informed Mr. Brown’s approach to dealing with alleged violations of applicable statutes and to differentiating between wrongful conduct that the product of deliberate practices, from simple mistakes and errors.

Robert Rhodes is a lawyer who works with Mr. Brown on an as-needed basis.  He has handled hundreds of administrative and licensing investigations and enforcement actions in various forums. He is able to draw on an extensive background in criminal and whistleblower law that occasionally becomes useful.  Other team members are available as necessary.