(CN) – A woman cannot sue a bank over $57 in finance charges that it failed to disclose at a loan closing, the 3rd Circuit ruled, finding the error within the tolerance range of the Truth in Lending Act.
Gayle Sterten claimed Option One Mortgage violated the Truth in Lending Act in several undisclosed finance charges on her $132,000 loan.
She got the loan in 2001 to fold her medical and credit card bills into a second mortgage-refinancing.
Two years later, she claimed that Option One failed to provide full disclosure of finance charges when she closed on the loan.
The trial court determined that Sterten could pursue claims for two undisclosed finance charges: a $25 markup in the appraisal fee and $32 charged for notary services.
The circuit court affirmed, ruling that the $57 in mistaken finance charges was within the tolerance range of the Act, making the bank’s disclosure “accurate” because the error was within $100 of the correct amount.
Sterten argued that the bank’s failure to raise the tolerance defense “in any fashion” during proceedings meant that it forfeited its chance to be free from liability.
The 3rd Circuit disagreed, finding that the bank did not have to cite the provision in order to be protected from claims for undisclosed finance charges that lie within “a specified range of error.”
The court determined that a defense based on the tolerance provision is a general, not affirmative defense, and does not have to be pleaded specifically for a defendant to receive its protections.
The three-judge panel affirmed, finding that the protections of the tolerance provision were not an “unfair surprise” to Sterten.