AFSCME 3357-HOF'S BLOG

Fifth Third Mortgages Defy Gravity
Some ARMS go up but don't go down - Class Certified

There aren't very many lawyers in Indiana handling consumer cases, but two of the few, M. Scott Barrett, of Bloomington, and Constantine "Kim" Orfanos, of Indianapolis, have won a hard-fought battle to get a class certified in the case of a client with an adjustable rate mortgage (ARM) that went up but didn't come down.

When a big lender like Fifth Third "accidentally" fails to adjust a mortgage for falling interest rates, but has no problems tacking on rate increases, you gotta believe that it probably wasn't an accident; and you have to believe that it probably didn't happen to one customer. In the case of Grider vs. Fifth Third Bank, shortly after the lawsuit was filed in 2004, the bank admitted that it miscalculated the interest rate. While admitting an error, the company fought like the dickens any discovery motions that would prove that the imposition of a n unwarranted "floor" interest rate was unique to the named plaintiff, but the same time, the bank maintained that it was an isolated incident. (Hmm, what's wrong with this picture?) The plaintiff's attorneys fought for three years, and in April, they got an order certifying a class. (Grider vs. Fifth Third Bank, Case No. 49D07-0404-PL-000819, Marion Superior Court, Marion County, Indiana). In the three year fight, they were able to determine that 49-60 ARM loans improperly had a "floor" rate improperly set. The class definition includes prospective loans issued in Ohio and Kentucky. While that doesn't seem like many loans to a big company like Fifth Third, and it may be a small portion of their entire portfolio, it's potentially hundreds of thousands of dollars in extra interest being paid by the homeowners. It will be interesting to see what numbers come out of the Ohio and Kentucky loans. I'd also be interested to find out if there was a third party which designed the loan products and the software tracking the loans. If so, an "error" by a regional bank like Fifth Third might have been repeated by other lenders across the country.

However big or small this case turns out to be, congratulations to Scott and Kim, the lawyers, and to Mr. and Mrs. Grider, the clients. You've won a battle against the big boys, and not everybody can say that.

(Oh yeah, Kim Orfanos is a UAW-LSP alum. For fellow 3357 members who are concerned about life after the death of the unionized auto industry, this proves that there is hope for us all.)