Steines v Westgate: Military Lending Act Oral Arguments

Oral arguments in Steines v Westgate were heard in United States District Court Middle District, Orlando Division on October 11, 2022. The hearing was called to resolve Defendant’s Westgate Resorts Motion to Compel Arbitration.

The lawsuit, filed on February 2, 2022, on behalf of active duty service members, claims that Westgate Resorts’ timeshare agreement is void because it has an arbitration clause. The Military Lending Act (MLA) prohibits arbitration. A “Covered Borrower” is an active duty service member covered under the MLA.

Arguments swirled around whether a timeshare is a residential “dwelling” or a transient stay, like a hotel. Residential mortgages are exempt from the MLA.

Questions I would have liked to ask of those who argue a timeshare loan is the same as a residential home loan:

  1. What house in America can’t be sold because of an outstanding loan? 

Timeshares are next to impossible to get rid of if there is a loan outstanding. Service members can be deployed at a moment’s notice. Even without a loan, there is no guaranteed release.

  1. Why is a residential foreclosure different from a timeshare foreclosure? If I default on a $50,000 timeshare loan, the developer can take back my points, resell them for $50,000, then turn around and sue me on the $50,000 promissory note. However, if I have a $300,000 home, default on a $150,000 loan, and if the home is sold for $300,000 after foreclosure, I would be given $150,000.

This last question I asked of attorney Mike Finn of Finn Law Group, as he was quoted in Kiplinger on October 4, 2022, concerning this remarkable fact: “And then I (the developer) may sue your pants off, even though I am going to sell it to someone else and get my purchase price back.’ There is no other product in the world that can do this to you. None!”

The popularity of Arbitration among the industry

Developers vehemently argue in favour of arbitration, arguably biased against the consumer. There must be a reason why Congress decided arbitration should be prohibited under the Military Lending Act, which was created to protect service members from a threat to our nation’s military readiness, morale, and retention.

An arbitration clause was added to Westgate’s benefits page on February 1, 2022. The MLA lawsuit was filed on February 2, 2022. Now owners cannot access their World of Westgate (WOW) benefits without agreeing to arbitration. The courts ruled against BB&T for adding an after-the-fact arbitration clause.

An older Westgate contract did not contain an arbitration clause:

PUBLIC CITIZEN lists, in the article linked below, reasons why arbitration is unfair to consumers and discriminatory:   

In addition to the denial of consumers’ and employees’ rights to seek remedies in court, arbitration between two parties with unequal bargaining power is too often a discriminatory and one-sided process, benefiting the corporations mandating it.

Westgate was ordered to produce any efforts they took to target veterans. Jared Saft, Westgate’s Chief Business Officer, stated that Westgate gives away annually 1,500 two-night stays with no strings attached, meaning no required timeshare tours. He mentioned a few executives at Westgate who were themselves veterans. He said the stays were given to veterans, “to show appreciation for their service.”

A question I would have liked to ask:

  1. If Westgate is so appreciative of veterans, why the callous attitude toward a veteran who served 24 years overseas, in Military Intelligence, with deployments to Iraq and Afghanistan? He needs his remaining earned income working at the Pentagon. His lung condition is fatal without a lung transplant. He must be on a ventilator to be moved up on the wait list. Because of his Westgate loan, his security clearance is in jeopardy. Westgate denied the family a hardship release.  Like many others, he reported that he was told he could rent to cover the cost of the timeshare.

Westgate Arbitration and the Military Lending Act, June 17, 2022,


From the order issued by presiding United States District Judge Roy B, Dalton Jr:

On the one hand, Defendants’ Arbitration Addendum contains an express delegation provision that commits to an arbitrator the threshold determination of whether the agreement to arbitrate is enforceable. This delegation provision divests the court of jurisdiction to review any challenge other than to that provision. 

On the other hand, if the MLA applies it would render the delegation provision in Defendants’ Arbitration Addendum void ab initio and unenforceable. 

The central issue here is whether Plaintiffs’ timeshare loans constitute “a residential mortgage” exempt from the MLA’s coverage. The Department of Defense (“DOD”) defines a residential mortgage as “any credit transaction secured by an interest in a dwelling[.]”2 See 32 C.F.R. § 232.3(f)(2)(i). 

Oral Arguments over Semantics – To be or not to be – a residential dwelling?

Opposing parties were directed to produce any evidence relevant to Schwarz factors. This was a lawsuit from 2006 concerning Plaintiff Schwarz suing the City of Treasure Island, Florida, over zoning issues. Mr. Schwarz was leasing his homes to recovering substance abuse patients. The courts determined that if there were more than six stays in a year, the stay is transient (like a hotel), and not a residential stay.

While a different policy and statutory scheme may animate the analysis of the MLA, the Schwarz factors may be relevant for classifying a property as a “residential structure” for purposes of the MLA. 

Attorney Richard Epstein, of Greenspoon Marder, representing Westgate, contrasted amenities available at his AC Marriott hotel he had stayed at the night before the hearing, compared to amenities that a timeshare has, like a kitchen.

Question I would have liked to ask:

  1. What about Marriott’s Residence Inn? They have kitchens. 

Judge Dalton brought up Airbnb and VBRO, that can be booked with any amenity desired (even a boat), and  commented that he could not leave his underwear and toothbrush at a timeshare, but he could if a residence.

Attorney Janet Varnell, with Varnell and Warwick, representing Plaintiffs, commented that Westgate Palace was closed during the Covid pandemic. Ms Varnell said homes were not closed during Covid, adding “You were sent to your home.”

Co-counsel for Plaintiffs, Craig E. Rothburd, pointed to Westgate’s documents that stated “for transient use only.” Mr. Epstein countered that that paragraph was only a small part of the document that stated this.

A Department of Defense Predatory Lending Report Relevant to this lawsuit

Another MLA lawsuit complaint, filed against Wyndham on 1/7/2020, in the UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA, contained a report issued by the Department of Defense that listed factors relevant to this lawsuit. The lawsuit was dismissed because borrowers were not active duty at the time of purchase.


Excerpts from the Report On Predatory Lending Practices Directed at Members of the Armed Forces and Their Dependents,

In 2006, the United States Department of Defense (“DOD”) issued the Report, focusing on “predatory lending” to military members. 

The Report highlighted the “steady and significant increase in the rate of revoked or denied security clearances for military personnel due to financial problems; ‘At a time when we are at war, this is an unacceptable loss of valuable talent and resources.’” 

According to the Report:

Predatory lending in the small loan market is generally considered to include one or more of the following characteristics: 

High interest rates and fees; little or no responsible underwriting; 

My comments in parenthesis:

(Timeshares are financed at 12% to 19.99%.  Credit cards, often opened at purchase, financing the down payment or purchase, have interest rates as high as 24%. There is no underwriting) 

loan flipping or repeat renewals that ensure profit without significantly paying down principal; 

(Up-sell, up-sell, up-sell is the mantra. The Navy veteran in the YouTube linked below had to seek bankruptcy protection after being switched back and forth between programs. He ended up with $2,700 a month in timeshare loan payments that he charged to credit cards.)

loan packing with high cost ancillary products whose cost is not included in computing interest rates;

(There have been many reports of buyers being offered an inflated price for their existing timeshare, when in fact there is little to no resale for a timeshare. An example: $111,835 Purchase price less additional equity $82,395 for my Orange Lake and Westgate timeshares, Adjusted purchase price $29,440.)

a loan structure or terms that transform these loans into the equivalent of highly secured transactions; 

fraud or deception; 

(There have been Attorneys General settlements and lawsuits too numerous to mention. The most recent (October 6, 2022), a jury awarded over $1 million to FantaSea victims.

waiver of meaningful legal redress; or 

(Arbitrators are retained at $400 to $800 an hour, paid by the developer, as opposed to a judge paid for by taxpayer dollars. One active duty service member lost in arbitration disputing a $12,000 purchase. The judgment issued against the family of six, while dad was deployed, was $66,000. Over $50,000 was the resort’s attorneys’ fees.) 

operation outside of state usury or small loan protection law or regulation. 

Concluding Westgate Oral Arguments

At the conclusion of two hours of oral arguments, Judge Dalton said he disagreed with Mr Epstein. Mr Epstein stated he would appeal to the 11th Circuit. Judge Dalton appeared unfazed.

Related articles – Active Duty Service Members harmed by timeshare sales and lending

Report 1 of 6: Active Duty Navy, Chief Petty Officer, 14 years served

Report 2: Marine Veteran, 26 years served, security clearance

Report 3: Active Duty Navy, 12 years served

Report 4: Active Duty Navy, 18 years served

Report 5: Husband & Wife,  both Active Duty Air Force 10, 9 years

Report 6: Active Duty Air Force, 8 ½ years served

Irene will be following this case and will no doubt write an update in the future, cases such as this are just the beginning for consumer rights, military or civilian. Europe began to unify regulations on timeshare in the 1990s, covering how it operates and more importantly how it is sold, with the first directive known as Directive 94/47/EC. This came into force in 1994, with all EU members placing it into their own laws. Over the years these were adapted as timeshare changed, the first being in 1998 with Directive 98/27/EC, this was the basis for Spanish Timeshare Law 42/1998.

Spain’s timeshare laws were further strengthened with Law 4/2012, and then in 2015 legal history was made with the first Supreme Court ruling on the timeshare laws, further rulings followed, cementing them to the benefit of consumers. It took years for change to happen, the industry believed it was above the law and used every trick it could muster, including hints that genuine law firms were “scammers” only out to get your money. As time moved on the giants were falling like flies at every appeal, the consumer who purchased in Spain which had the largest timeshare market was protected. Sales fell dramatically, even before Covid, Sales Decks closed down and many sales companies have gone into liquidation. It is a stark warning to the industry, you can only “Screw the Consumer so far”.



  1. John

    So Westgate argues that a timeshare is a “residence” and should be considered as such. How come people don’t even know where they are staying until they get there? Additionally, if a timeshare is a “residence,” how come nobody is allowed to paint the walls, change the carpet, move the furniture? Westgate sets the rules. A homeowner in the truest sense can do whatever he wants to his residence. Not so with timeshares.

    1. Benn Dover

      It’s also important to note that banks won’t finance a timeshare loan because they have no resale value. Also, according to the HUD Handbook 4000.1 FHA Single Family Housing Policy Handbook: A loan secured by an interest in a timeshare must be considered an Installment Loan and not a housing obligation!

  2. Jackie

    Atty Epstein APPEALING the decision to release this military family further depicts Westgate’s predatory character…UNDENIABLY SHAMEFUL & quite frankly, disgusting.

    Meanwhile here they go again with their annual “Military Appreciation” weekend.

    Blatantly hypocritical.

    Westgate needs to instruct their commission-driven sales reps to tread carefully during their upcoming predatory Military weekend (Dec 9th to 11th).

    The only rally that should be happening is by the 1200+ Westgate Timeshare HOSTAGES group, demanding that owners’ voices finally be heard.

  3. Irene Parker

    (A Purple Heart veteran who requested anonymity)
    As a wounded combat Vietnam Vet , I was lied to and kept for 9 hours. I was one of the fortunate ones to get my money refunded. I just returned from an Honor Flight and was treated to an overwhelming reception at airport. I wish time share agents respected us .

  4. Benn Dover

    Westgate has a long history of lawsuits involving unethical and illegal practices. It isn’t just one particular process but seems to encompass each and every process, Sales, closing, Public Offering Statements, loans, and more. What does it take to wake people up? It has gone on way too long, it is time for something to be done!

  5. Cheryl Farmer

    This Westgate law is rediculous, not only to veterans but one and all! I’m a owner with Vistana and I feel that they are rediculous too that they won’t buy back your property when you can no longer afford to pay for this high taxes that they charge you every year! There needs to be something that we as owners ought to have a right to be able to get out of our properties!

    1. Irene Parker

      Cheryl, Sheraton Vistana is owned by Marriott, one of the more reputable timeshare companies. Have you contacted their department to be released? If not please contact them and reply back how they responded. There are too many resorts that either do not allow an exit under any circumstances, or the requirements are too stringent, like Hickory Hills in MS that requires the owner be 1) Bedridden 2) Living in a nursing home 3) Diagnosed with a terminal disease. Then there are resorts that charge an exorbitant amount of money to be release. Indian Wells wanted $2,700. They are being converted to whole use condos as reported by towb

  6. Emily

    I wish I had known about these deceptive practices prior to purchasing a vacation club membership. It truly makes no logical sense that there is no reasonable way out of these agreements. Also interesting how they will attack your credit for a default (which I’m considering) but I’m getting no positive credit movement on the payments that I’m currently making as the loan does not even show on my report.

  7. Sheilah

    If timeshares are considered a residence, real property like a home then the loan should also be a mortgage from a mortgage company or bank not through credit cards or the timeshare company. If the timeshare company holds the paperwork or they have someone else hold it they should have to disclose who it is. All mortgages have to be signed and notarized. I don’t Recall any of the four timeshares I own having in writing that we are taking out a mortgage. Also if you want to refinance your loan a a bank and it is for a timeshare the bank won’t give you a mortgage or home equity loan. If you have to go through bankruptcy most states see if you can list that timeshare. I know we couldn’t. We could list our house but not a timeshare.
    Wake up people that serve the people of the United States and protect the people who vote you into office.

  8. Angela Gruber

    I really appreciate reading this article. I didn’t realize how rampant and deep this deception went. It seems these practices are used in this whole industry. This is hard to read and comprehend how a corporate company can continue getting away with deceiving their client! Why isn’t the A G stepping in. I was in an update a few weeks ago and the representative said I was paying .08 cent a point and he could get it down to .04 cent a point. I feel like I can’t believe anything they say. Beware!!!

  9. Marl

    We bought our Timeshare in westgate dec 2021 , and in the contract they already Note that waives our rights to file a lawsuit or any types of claim from westgate. They have this even before Westgate launched the WOW progran last Feb 2022. None of these clauses including the 10 days recession period was read upfront or diclosed by the notary public before we signed electonically. Just like our veterans many civilian owners are on the same boat, and hope this case is just a beginning for all TS victims. The vacation dream now becoming a nightmare. Pla keep us posted Irene where this case will lead to.

  10. Jeffrey E Diehl

    My experience with my timeshare is and continues to be one of greedy people who are motivated by money and the lack of politicians, who will write laws that have real teeth and will put these criminals in prison, take everything they own, and publicize examples of what happened to criminals who are in the timeshare field.
    The main challenge I keep seeing is the lack of organizational pressure on lawmakers who could make laws that would put an end to these criminal activities. Everyone should be continuously contacting their lawmakers and letting them know, they will be forced out of office if they don’t come down hard on these crooks.

    Jeff Diehl
    USMC 1975-78 Honorably Discharged

  11. Charles Hotaling

    How is it legal to foreclose on a timeshare than sell it (mind you a piece of property) and then sue the prior owner. Sounds like the legal system is broken or choosing to turn a blind eye to what developers are doing. Timeshare contacts should not be legal at all. There is no other legal contract in the world that allows a developer/company to continue to charge a purchaser for life with no option to exit or buyout. On top of this they can go after your family,

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