The federal appeals-court panel ruled Wednesday 2-1 against the borrowers who had tried to get the loans rescinded, claiming rescissions under the Truth in Lending Act are a “purely individual remedy.”
Additionally, the panel noted that such action would have had severe implications for the already under-stress mortgage industry.
The borrowers involved must now proceed with individual lawsuits if they wish to pursue the case.
The original ruling was brought about by Susan and Bryan Andrews, a Wisconsin couple who took out an option arm loan with Chevy Chase Bank.
The couple claimed they didn’t understand the terms of the loan after their initial mortgage rate of 1.95 percent more than doubled after the first month.
At the same time, you’d think borrowers would be aware they were paying significantly lower rates than the national average, so it’s hard to hold either party fully responsible.