198. At all relevant times, Defendants unreasonably denied Plaintiff and Class members the benefits promised to them under the terms of the Note, including but not limited to a low interest rate for the first three to five years of the loan, clear and conspicuous disclosure of a payment amount sufficient to pay both principal and interest so as to avoid negative amortization, and the other failures to comply with the disclosure requirements mandated by TILA, 15 U.S.C. § 1601, et seq., Regulation Z and FRB Commentary, as alleged herein. 199.

01 solicitations for credit cards to potential consumers was a violation of TILA’s disclosure requirements, which mandate “clear and conspicuous” disclosures that are “reasonably understandable” to a potentional consumer of credit card services. See 15 U.S.C. 1601, et seq.; 12 C.F.R. 226.5 et seq.; see also Roberts 342 F.3d at 262.

In addition, Congress reduced the number of violations for which statutory damages are available when it amended the Act in 1980. Truth in Lending Simplification and Reform Act, Title V of the Depository Institutions Deregulation and Monetary Control Act of 1980, Pub. L. No. 96-221, codified at 15 U.S.C. §§ 1601–1615. Congress changed TILA “in order to provide the consumer with clearer credit information, make creditor compliance easier, [and] limit creditor civil liability for statutory penalties to only significant violations….”

Not only is this argument unsupported by any case law, but it is inconsistent with the stated purposes of TILA to better inform credit consumers. 15 U.S.C. §1601(a); see also Villareal v. Snow, 1996 WL 28308 (N.D.Ill. Jan. 19, 1996) (disclosing two different numbers as the finance charge violates the clear and conspicuous standard); Andrews v. Chevy Chase, F.S.B., 240 F.R.D. 612 (E.D.Wis. 2007), rev’d on other grounds, 545 F.3d 570 (7th Cir. 2008) (putting both the note 2 This action relates to a period in which TILA and its implementing regulations were being revised and renumbered. To be consistent with the terminology in Defendant’s motion to dismiss, the citation to the section in the prior version of Regulation Z governing the disclosure of the grace period on periodic statements, §226.

Thus, listing payment amounts that are insufficient to satisfy the borrower’s actual monthly obligation conceals the true legal obligation owed in violation of TILA. See 15 U.S.C. § 1601, 12 C.F.R. § 226.17, § 226.

As will be discussed in greater detail below, Plaintiffs have adequately alleged that Defendant violated TILA by failing to disclose: (i) the actual interest rate charged on the loans in violation of 12 C.F.R. §§ 226.17 and 226.19 (SAC, ¶¶ 62-70); (ii) the effect of the Payment Cap on the true cost of the Case 4:07-cv-04485-CW Document 34 Filed 03/13/2008 Page 10 of 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiffs’ Opposition to Motion to Dismiss - C-07-04485 - CW 2 loans in violation of 12 C.F.R. § 226.17; (iii) that negative amortization was absolutely certain to occur if consumers followed Defendant’s payment schedules in violation of 12 C.F.R. §§ 226.17 and 226.19; (iv) Plaintiffs’ true legal obligation in violation of 15 U.S.C. 1601, and 12 C.F.R. §§ 226.17 and 226.18; (v) that the initial interest rate was discounted in violation of 15 U.S.C. § 1601, and 12 C.F.R. §§ 226.17 and 226.18; and (vi) the composite interest rate in violation of 12 C.F.R. 226.17(c)(8). Defendant then argues that it should not be required to answer and defend its conduct before this Court despite the fact that it knowingly entered into the ARM loan contracts at issue, concerning a mortgage on real property that is located within this District, in Alameda County.

Fails. Plaintiffs’ eleventh claim for Violation of 15 U.S.C. § 1601 alleges the Loans were subject to 15 U.S.C. §§ 1635, 1641(g) and Reg. Z § 226.

Courts may extend the limitations period for monetary damages for reasons of equity, which must typically involve some type of fraudulent concealment on the part of the creditor. See TILA, 15 U.S.C. § 1601, et seq., RESPA, 1 U.S.C. §2601 et seq. Therefore, Plaintiff should be entitled to declaratory relief as an actual and equitable damage under both statutes.

See 15 U.S.C. 1601, § 226.17 and § 226.18. The true legal obligation would be the amount being charged to Plaintiffs each month; if Plaintiffs were not legally obligated to pay that higher amount, Defendant would not have been able to secretly add to the principal balance each month.

Case 5:07-cv-04500-RMW Document 13 Filed 12/21/2007 Page 10 of 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT CASE NO. C-07-04500 RMW (HRL) 5 See 15 U.S.C. § 1601(a). TILA “focuses on disclosure and does not serve as an umbrella statute for consumer protection in real estate transactions.”