LaSalle Bank, N.A. v. David Shearon

Under New York state law, certain predatory-lending practices were prohibited with respect to high-cost home loans, or subprime mortgage loans. In 2005, David and Karen Shearon (defendants) sought to purchase a house. David’s credit score was 696, and Karen’s credit score was 760. Their combined adjusted gross income was $29,567. The Shearons worked with a mortgage broker, Michael Farber, to find a lender to obtain financing. Farber informed the Shearons that they qualified for traditional loan products with fixed interest rates (as opposed to subprime products with adjustable rates). Soon after, the Shearons entered into a sale contract to purchase a house with a listed price of $335,000. However, the purchase price in the contract was $355,100. Farber informed the Shearons that the entire $355,100 price would be financed by WMC Mortgage Corporation (WMC). Notably, the record is devoid of any evidence that WMC conducted any verification of the Shearons’ income or provided the Shearons with the requisite list of credit counselors. WMC considered the loan to be a high-cost loan based its preparation of the forms required for such loans. Unexpectedly, David was listed as the sole purchaser and borrower in the loan-closing documents. Closing expenses totaled just under $20,000. At some point, LaSalle Bank, N.A. (plaintiff) became the trustee and successor for WMC. LaSalle Bank brought a foreclosure action against David. David filed an answer and alleged that he had been a victim of predatory lending in violation of the New York Banking Law. David claimed that WMC improperly financed 106 percent of the purchase price of the house, failed to conduct due diligence on his ability to repay the loan, and failed to provide the required credit-counseling disclosures, among other allegations. LaSalle Bank filed a motion for summary judgment.