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First District Appellate Court Ruling in Favor of Southport Bank

The First District Appellate Court of Illinois issued an opinion regarding claims against Barack Ferrazzano client Southport Bank that had been previously dismissed in the Illinois Circuit Court. In the original case, a residential borrower claimed that violations of the Illinois High Risk Home Loan Act (IHRHLA) (815 ILCS 137/95 et seq. (West 2006)) were made when Southport Bank, the original lender, failed to advise the borrower her home loan was a "high risk home loan" (815 ILCS 137/95 (West 2006)). Pursuant to the IHRHLA, consumers must be given notice their loan is a "high risk home loan" where the "total points and fees payable by the consumer at or before closing" exceed 5 percent of the total loan amount. The borrower also claimed violations of the Illinois Consumer Fraud Act (ICFA) based upon a knowing violation of the IHRHLA's disclosure requirements (see 815 ILCS 505/2 et seq. (West 2006); 815 ILCS 137/135 (West 2006)).

In this case of first impression in Illinois, the Court found the borrower's claim hinged on whether or not a yield spread premium (YSP) qualifies as a "point and fee payable by the consumer at or before closing." Barack Ferrazzano attorney Matt Singer argued that even if the IHRHLA definition of a "point and fee" includes YSPs as compensation "indirectly paid to a mortgage broker," the IHRHLA is nevertheless inapplicable to the borrower's loan because this particular "point and fee" was not "payable at or before closing" as required under the plain language of the statute. The Court agreed with this argument and upheld the dismissal of the claims, ruling in favor of Southport Bank.

"Matt Singer's diligence and hard work were critical to the successful outcome for our client," says Barack Ferrazzano Partner Heather Macklin, who led the litigation team in the representation of Southport Bank.

About Barack Ferrazzano

For 30 years, Barack Ferrazzano's Litigation Group has represented prominent domestic and international companies in their most significant legal disputes. The Litigation Group has unmatched experience in defending banks and their officers and directors in litigation matters. In line with the highest standards of our firm, they have assembled a group of highly skilled trial lawyers – seasoned partners and well-trained associates – who represent clients both efficiently and effectively.


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