            NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                       File Name: 05a0573n.06
                          Filed: July 7, 2005

                                        No. 04-1711

                       UNITED STATES COURT OF APPEALS
                            FOR THE SIXTH CIRCUIT


MARY BOOKER,
                                                              ON APPEAL FROM THE
       Plaintiff-Appellant,                                   UNITED STATES DISTRICT
                                                              COURT FOR THE
v.                                                            EASTERN DISTRICT OF
                                                              MICHIGAN
WELLS FARGO HOME MORTGAGE, INC.
and HOME CONSULTANTS, INC.,                                           OPINION

       Defendants-Appellants.




BEFORE: NORRIS and DAUGHTREY, Circuit Judges; JORDAN, District Judge.*

       LEON JORDAN, District Judge. Mary Booker appeals the district court’s grant of

summary judgment in favor of defendants/appellees in this Home Ownership and Equity

Protection Act case. For the reasons stated below, we affirm.

                                             I.

       In 1997, appellant purchased a Detroit, Michigan duplex. She subsequently defaulted

on her loan and the property was foreclosed. Mortgage assignee Ocwen Federal Bank

(“Ocwen”) purchased the duplex at foreclosure sale in February 2001.


       *
        The Honorable R. Leon Jordan, United States District Judge for the Eastern District of
Tennessee, sitting by designation.
No. 04-1711
Booker v. Wells Fargo Home Mortgage, Inc.

       In July 2001, within her statutory redemption period, appellant obtained financing

from appellee Home Consultants, Inc. (“HCI”) to redeem the property from Ocwen.

Appellant soon thereafter stopped making payments on the HCI loan. By letter dated March

28, 2002, appellant attempted to rescind the HCI transaction due to the lender’s purported

violations of the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq., and the Home

Ownership and Equity Protection Act of 1994 (“HOEPA” or “the Act”), 15 U.S.C. §§

1602(aa), 1639. The recision request was denied.1

       Appellant then filed suit seeking money damages, recision, and an injunction

preventing foreclosure by Wells Fargo. Her complaint asserted that HCI failed to make

certain disclosures mandated by TILA and HOEPA. Appellant eventually abandoned her

TILA claim.

       The district court granted summary judgment in favor of both defendants without

reaching the question of whether HCI in fact made all HOEPA-required disclosures. Instead,

the district court determined that the mortgage is not governed by HOEPA because: (1) it is

a “residential mortgage transaction” exempted from the Act’s coverage; and (2), in the




       1
          Booker directed the recision communication to Option One Mortgage Corporation
(“Option One”), an assignee of the HCI mortgage. Appellant has consistently referred to Option
One as a defendant throughout this litigation, even though she never actually sued that lender.
Appellees argue that it is Option One who is the “correct defendant.” In addition, appellee Wells
Fargo Home Mortgage, Inc. (another assignee) argues that it is entitled to a holder in due course
defense. We need not reach either issue.

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No. 04-1711
Booker v. Wells Fargo Home Mortgage, Inc.

alternative, the transaction’s points and fees were not high enough to trigger HOEPA’s

disclosure requirements.

                                              II.

       This panel reviews a district court’s grant of summary judgment de novo. Moore v.

Philip Morris Cos., Inc., 8 F.3d 335, 339 (6th Cir. 1993). Pursuant to Federal Rule of Civil

Procedure 56(c), summary judgment is appropriate when “the pleadings, depositions,

answers to interrogatories, and admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that the moving party is entitled to

judgment as a matter of law.” Edwards v. Aguillard, 482 U.S. 578, 594, 107 S. Ct. 2573,

2583, 96 L. Ed. 2d 510 (1987) (quoting Fed. R. Civ. P. 56(c)).

                                             III.

       Congress enacted HOEPA in 1994 to “force the ‘High Cost Mortgage’ market to

police itself.” Bryant v. Mortgage Capital Res. Group, 197 F. Supp. 2d 1357, 1364 (N.D.

Ga. 2002) (citation omitted). Lenders must make certain warnings and disclosures in

conspicuous type size at least three business days prior to the consummation of a HOEPA

transaction. 15 U.S.C. § 1639(a)-(b)(1). However, HOEPA does not apply to, inter alia,

“residential mortgage transactions.” 15 U.S.C. §§ 1602(aa)(1), 1639(a)(1). Further, even

if a loan is of the type governed by HOEPA, it is not subject to the Act’s disclosure

requirements unless it also features either: (a) a sufficiently high annual percentage rate


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Booker v. Wells Fargo Home Mortgage, Inc.

(“APR”); or (b) points and fees payable at or before closing exceeding the greater of eight

percent of “the total loan amount” or $400.00. See 15 U.S.C. §§ 1602(aa)(1), 1639(a)(1).

       Booker advances three arguments on appeal. First, she contends that the district court

erroneously concluded that the HCI mortgage was a HOEPA-exempt “residential mortgage

transaction.” She further argues that the district court erred in excluding two charges

($644.38 in prepaid interest and a $300.00 “settlement or closing fee”) from the points and

fees total. Appellant does not argue that her loan meets HOEPA’s APR test.

       The parties agree that the “total loan amount” was $51,279.62. Eight percent of that

sum is $4,102.37. Appellant claims that ten charges included in her Settlement Statement

are “points and fees” totaling $4,193.38, thereby exceeding HOEPA’s eight percent

threshold. Since the “points and fees” total advanced by appellant exceeds eight percent of

the loan total by only ninety-one dollars, both the prepaid interest and the “settlement or

closing fee” must be “points and fees” in order for HOEPA to apply.

       Statutorily exempted from the “points and fees” calculation is, inter alia, “interest or

the time-price differential.” 15 U.S.C. § 1602(aa)(4)(A). Undaunted by this exclusion,

appellant advances the novel argument that “interest” is not “interest” until it is earned, and

therefore “prepaid interest” is not really “interest.” The district court correctly rejected this

argument as “unpersuasive.” The statutory “points and fees” exclusion does not distinguish

between prepaid interest and “non-prepaid” interest. More importantly, § 1602(aa)(1)(B)


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Booker v. Wells Fargo Home Mortgage, Inc.

makes clear that the “points and fees” analysis involves only those charges “payable by the

consumer at or before closing.” Interest “payable by the consumer at or before closing” can

by its very nature only be “prepaid” interest.

       The district court therefore correctly excluded the $644.38 in prepaid interest from

appellant’s asserted $4,193.38 total, leaving (at most) $3,549.00 in “points and fees.” This

sum falls short of HOEPA’s $4,102.37 eight-percent threshold. For this reason alone,

HOEPA does not apply to the HCI mortgage. See 15 U.S.C. §§ 1602(aa)(1)(B), 1639(a)(1).

Appellant’s remaining issues (“residential mortgage transaction” and the “settlement or

closing fee” ) are accordingly moot.

       The judgment of the district court is affirmed.




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