2018 IL App (1st) 170921
Ill. App. Ct.2018Background
- In May 2005 Hirt refinanced her house with GreenPoint for $219,200; the loan closing included a written acknowledgment that she received two copies of the TILA notice of right to cancel.
- Hirt defaulted in February 2008 and on February 12, 2008, her attorney sent GreenPoint a notice of rescission under TILA; GreenPoint received it on February 15, 2008.
- GreenPoint filed foreclosure in May 2008; Hirt counterclaimed (April 2009) alleging TILA violations (wrong/missing disclosures and only one copy of the right-to-cancel notice), sought rescission and statutory damages.
- During the litigation GreenPoint assigned/servicing transferred the loan; U.S. Bank was substituted as plaintiff and later the foreclosure was dismissed after a refinance (October 2015).
- The trial court granted summary judgment for GreenPoint on rescission (Feb. 17, 2016) and later granted summary judgment on Hirt’s statutory damages claims (Mar. 13, 2017); Hirt appealed.
Issues
| Issue | Plaintiff's Argument (GreenPoint) | Defendant's Argument (Hirt) | Held |
|---|---|---|---|
| Whether Hirt timely exercised TILA rescission (3 days v. 3 years) | The signed acknowledgment proves delivery of two notices, so rescission was untimely | Hirt’s deposition testimony rebuts the acknowledgment and creates a factual dispute that she received only one notice, extending rescission to 3 years | Reversed as to rescission; genuine factual dispute exists and case remanded for evidentiary hearing |
| Whether assignment/ refinancing moots rescission claim | Assignment to U.S. Bank and refinance/dismissal make rescission moot because creditor cannot release security interest | Assignment does not relieve original creditor’s statutory duty to return monies received upon valid rescission; assignee liability addressed by §1641 | Court rejects mootness argument; assignment does not automatically moot a timely rescission claim |
| Whether Hirt’s inability to tender repayment bars rescission | Hirt cannot tender repayment, so rescission should be denied | TILA/Regulation Z default requires creditor to act first (return monies, release security interest); inability to tender is a factor for a court to address only after finding a violation | Court rejects tender argument at summary judgment stage; lender must act first and factual dispute precludes summary judgment |
| Whether untimely statutory damages for failure to honor rescission survive dismissal of foreclosure | Dismissal of the primary foreclosure eliminates any set-off/recoupment basis, so Hirt’s damages claim cannot survive | Hirt relies on §1640(e) savings clause and §13-207 to preserve her defensive damages claim | Affirmed for statutory-damages claim: because §1640(e) permits untimely damages only as set-off/recoupment, dismissal of the foreclosure defeats that defensive vehicle; summary judgment for GreenPoint on damages affirmed |
Key Cases Cited
- Beach v. Ocwen Federal Bank, 523 U.S. 410 (1998) (TILA rescission rule and extension to three years for disclosure failures)
- Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790 (2015) (borrower may effectuate rescission by notice without filing a lawsuit)
- Handy v. Anchor Mortgage Corp., 464 F.3d 760 (7th Cir. 2006) (rescission under §1635 is not limited to release of security interest; creditor obligations remain)
- Barrett v. JP Morgan Chase Bank N.A., 445 F.3d 874 (6th Cir. 2006) (discussion of rescission scope under TILA)
- Franciscan Sisters Health Care Corp. v. Dean, 95 Ill. 2d 452 (1983) (Illinois ‘‘bursting bubble’’ presumption doctrine applied to rebuttable acknowledgments)