851 F. Supp. 2d 1115
N.D. Ill.2012Background
- Iroanyahs obtained two TBW loans: $192,000 (First Loan, 30-year) and $36,000 (Second Loan, 15-year), both secured by the home.
- TBW assigned the Second Loan to BOA; BNY acquired the First Loan; Green Tree Servicing handles the First Loan and services the Second; MERS is a nominee on both.
- Iroanyahs seek rescission and TILA statutory damages; several parties move for summary judgment; TBW went into bankruptcy, staying its claims.
- At closing, dispute over whether the Iroanyahs received one or two Notices of Right to Cancel per loan; they signed acknowledgments claiming two copies, record evidence disputed.
- Disclosure Statements for both loans listed total payments but not the frequency or individual due dates; Wilson testified payments were monthly.
- After stopping payments in 2008, TBW foreclosure actions were filed; rescission notices were sent in Sept 2008; TBW offered rescission if tendered; tender amounts debated.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Liability of Green Tree and MERS for TILA damages | Green Tree and MERS should be liable as horror of servicing/nominee affiliations. | Servicer/nominee cannot be liable unless owner of obligation; not originators/assignees. | Green Tree and MERS granted summary judgment on damages; remain parties in case. |
| Whether Disclosure Statements and Notices violated TILA and timeliness of rescission | Notice and disclosure defects extend rescission period; damages may accrue. | No violation or timeliness bar; damages limited by statute. | Disclosure Statements violated; rescission window extended to three years; damages available but one-year for damages applies. |
| Effect of rescission notices on security interests and court modification of procedures | Rescission notices void security interests; tender may be waived by court modification. | Security interests do not void upon notice; court should not modify procedures to force tender. | Security interests do not void on mere notice; court may modify procedures, here to require tender before release. |
| Whether tender must be immediate or may be installment; appropriate tender plan | Tender could be in installments over original loan terms. | Installment tender would effectively re-form the loan; not permitted. | Installment tender not allowed; three-month tender deadline set for complete tender. |
| Damages for failure to respond to rescission notices and amount | Defendants failed to timely/adequately respond; damages warranted. | Responses within 20 days but not fully compliant; damages contested. | Plaintiffs awarded $8,000 in statutory damages and $2,800 in actual damages; amounts reflected in tender reductions. |
Key Cases Cited
- Hamm v. Ameriquest Mortg. Co., 506 F.3d 525 (7th Cir. 2007) (disclosure statements must specify payment frequency or due dates)
- Marr v. Bank of Am., N.A., 662 F.3d 963 (7th Cir. 2011) (TILA requires meaningful disclosures; rescission and damages framework)
- Yamamoto v. Bank of N. Y., 329 F.3d 1167 (9th Cir. 2003) (security interest becomes void upon completion of rescission, not merely upon notice)
- Velazquez v. HomeAmerican Credit, Inc., 254 F.Supp.2d 1043 (N.D.Ill. 2003) (creditor must comply with 1635(b) within twenty days or face damages; equity may modify process)
- Andrews v. Chevy Chase Bank, 545 F.3d 570 (7th Cir. 2008) (section 1635(g) cross-reference; rescission may accompany damages, not alter limitations period)