Burson v. Capps
102 A.3d 353
Md.2014Background
- Capps sought to rescind a refinance before consummation; the Deed of Trust and Adjustable Rate Note were signed on April 17, 2007 for $350,000.
- Loan proceeds were disbursed April 25, 2007 to pay off pre-existing mortgage, credit card debts, and provide funds to Capps.
- Capps sent a Notice of Right to Cancel (rescission) April 15–16, 2007 referencing a pre-existing contract; he later signed the loan documents.
- Capps made payments on the note for about two years and then defaulted; foreclosure followed and was ratified after exceptions were heard.
- Court of Special Appeals held rescission timely and pre-consummation rescission was possible; Maryland Trustees petitioned for certiorari to review the issue.
- Court granted certiorari to address whether TILA permits rescission before consummation and its timing, among other questions; the dispute focused on timeliness and timing of rescission.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TILA allows rescission before consummation. | Capps argues rescission can be effective before consummation. | Trustees argue rescission cannot exist before the loan is consummated. | No; rescission cannot be effective before consummation. |
| When the three-day rescission period begins for a pre-consummation transaction. | Rescission window should relate to notice and potential pre-consummation contract. | Window starts at consummation. | Window opens at consummation; pre-consummation rescission is not permitted. |
| How consummation is defined for TILA purposes in this case. | Contestants argue form/date inconsistencies; rescission timing should be flexible. | Consummation occurs when loan documents are signed and binding. | Consummation occurs at signing of loan documents (April 17, 2007). |
Key Cases Cited
- Weintraub v. Quicken Loans, Inc., 594 F.3d 270 (4th Cir. 2010) (rescission requires consummation for a consumer credit transaction to exist)
- Gilbert v. Residential Funding LLC, 678 F.3d 271 (4th Cir. 2012) (plain-text 1635 requires timely notice; timing discussed but not decisive for pre-consummation rescission)
- Fagnani v. Fisher, 418 Md. 371 (Md. 2011) (presumption of validity of foreclosure sale; standard for reviewing ratification)
- McOmie-Gray v. Bank of Am. Home Loans, 667 F.3d 1325 (9th Cir. 2012) (discussion of TILA disclosures and rescission timing in broader context)