Sanders v. Mountain America Federal Credit Union
2012 U.S. App. LEXIS 15714
| 10th Cir. | 2012Background
- This case concerns TILA rescission for mortgage loans where a timely written rescission notice requires the creditor to release its security interest and refund finance charges; the Sanderses allege a lack of two required disclosures, prompting rescission claims and related ECOA and FCRA claims.
- Sanderses refinanced their home in July 2007 with Mountain America after Salt Lake City Credit Union allegedly misreported their credit; Mountain America later denied a March 2009 refinancing application.
- The Sanderses timely notified Mountain America of rescission on March 2, 2010, before the statutory deadline, but the district court dismissed the rescission, ECOA, and FCRA claims on pleadings.
- The district court required the Sanderses to plead ability to repay the loan proceeds as a condition of rescission, an approach the court of appeals rejects as not in the text of TILA or Regulation Z.
- The court holds that pleading ability to repay cannot be a prerequisite to TILA rescission; the case is remanded for further proceedings on whether equitable relief is warranted and on the feasibility of tendering the home or other remedies.
- The court also addresses whether the Sanderses’ ECOA notice claim and FCRA claim survived, with ECOA reversed in part and FCRA dismissed with prejudice the FCRA claim, and remands for further proceedings on TILA and potential equitable relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether pleading ability to repay is required for TILA rescission. | Sanderses did not have to plead repayment. | District court required repayment ability. | No; district court erred; rescission not contingent on pleading repayment. |
| Whether tendering the home can satisfy rescission obligations. | Home tender may be adequate. | Tender of loan proceeds required; home tender not automatically sufficient. | Home tender alone does not automatically satisfy obligations; remand to determine feasibility and amount owed. |
| Whether the ECOA adverse-action notice claim was properly pleaded. | Application was completed during the call; notice should have issued. | Claim not properly supported by facts; district court erred in assuming incompleteness. | Reversed in part; ECOA claim survives remand. |
| Whether the FCRA claim against the furnisher is actionable in private suit. | Furnishers are liable for accurate reporting and failure to correct. | Private action limited to credit reporting agencies; furnishers not liable. | Affirmed dismissal of FCRA claim; only agency claims may pursue private action; remand on dispute process. |
Key Cases Cited
- McKenna v. First Horizon Home Loan Corp., 475 F.3d 418 (1st Cir. 2007) (rescission restores status quo ante; lender must be restored before discharge of proceeds)
- Shelton v. Bank of Am., N.A., 486 F.3d 820 (4th Cir. 2007) (equitable relief in late rescission cases acknowledged; timing matters)
- Yamamoto v. Bank of New York, 329 F.3d 1167 (9th Cir. 2003) (recognizes court may modify TILA rescission procedures in appropriate cases)
- Williams v. Homestake Mortg., 968 F.2d 1137 (11th Cir. 1992) (equitable modification of rescission procedures)
- Park Univ. Enters., Inc. v. Am. Cas. Co., 442 F.3d 1239 (10th Cir. 2006) (approach to pleading and inferences on pleadings for appellate review)