4th Cir.: Lyons v. PNC II

Summary:

In the case William T. Lyons v. PNC Bank, N.A., the U.S. Court of Appeals for the Fourth Circuit addressed two key issues involving the Truth in Lending Act (TILA) and the Real Estate Settlement Practices Act (RESPA), both related to Home Equity Lines of Credit (HELOCs).
 

• TILA Offset Provision: The court ruled that TILA’s offset provision, which prohibits banks from withdrawing funds from a consumer’s deposit account to offset credit card debt without prior authorization, applies to HELOCs if accessed via a credit card. The district court's decision that TILA did not apply to HELOCs was reversed, as the appellate court found that the term “credit card plan” should include HELOCs where a credit card is used to access the credit.

• RESPA and CFPB’s Authority: The court affirmed that the Consumer Financial Protection Bureau (CFPB) has the authority to exempt HELOCs from RESPA’s requirements, particularly regarding timely responses to borrower inquiries. RESPA’s protections for mortgage servicing errors do not apply to HELOCs due to CFPB regulations, which already cover HELOCs under other provisions.

The appellate court thus reversed and remanded the TILA claim and affirmed the RESPA claim. However, in a dissenting opinion, Senior Judge Floyd argued that the term “credit card plan” in TILA should not include HELOCs, pointing to regulatory and legislative distinctions between HELOCs and credit cards.

Commentary:

In a previous decision,  Lyons v. PNC Bank, Nat’l Assoc., 26 F.4th 180 (4th Cir. 2022), the 4th Circuit found that the Dodd-Frank Act amended TILA and “prohibits consumer agreements related to residential mortgage loans from requiring the arbitration of claims” , including HELOCs.

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