2011 IL App (1st) 103115
Ill. App. Ct.2011Background
- Manzos obtained a loan secured by a mortgage on their Chicago home on Nov 18, 2005 from BNC Mortgage, Inc.
- U.S. Bank filed a foreclosure action on Aug 11, 2006 as holder of the note and mortgage.
- Manzos answered pro se on Sept 11, 2006 and later, with counsel, challenged standing due to lack of assignment.
- Between 2007 and 2008, Manzos sent multiple letters asserting TILA violations and their right to rescind, and sought to negotiate a loan modification.
- On March 11, 2008 the court granted leave to file a counterclaim; Manzos filed the counterclaim on Nov 19, 2008, more than three years after consummation of the loan, triggering timeliness issues under TILA §1635(f).
- Court ruled: rescission claim time-barred under §1635(f); damages claim under §1640(e) considered remediable via Illinois savings statute and recoupment; remanded for damages proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of TILA rescission under §1635(f) | Manzos argue conduct within three years suffices as notice to rescind | Bank contends notice must be clear, unequivocal rescission within three years | rescission timely election not shown; time bar applies |
| Rescission in recoupment under Illinois law (13-207) | If outside three-year window, recoupment allows rescission claim | 13-207 requires a statute of limitations barrier; Terry controls | Illinois recoupment does not save TILA rescission outside the three-year period; claim barred |
| Damages under §1640(e) and saving via 13-207 | Damages claim may survive in recoupment despite one-year limit | Damages claim time-barred unless saved by recoupment | Damages claim remanded for consideration consistent with recoupment analysis |
Key Cases Cited
- Beach v. Ocwen Federal Bank, 523 U.S. 410 (U.S. Supreme Court 1998) (rescission right extinguished after three years; regulation guidance pivotal)
- Terry v. Wells Fargo Bank, N.A., 401 Ill.App.3d 18 (Ill. App. 2010) ( Illinois recoupment analysis rejects post-three-year rescission in recoupment)
- Mt. Vernon Memorial Estates, Inc. v. Wood, 88 Ill.App.3d 666 (Ill. App. 1980) (illustrates application of 13-207 to TILA claims in recoupment)
- National Boulevard Bank of Chicago v. Thompson, 85 Ill.App.3d 1145 (Ill. App. 1980) (recoupment/limitations context for TILA claims in Illinois)
- Limer v. Lyman, 241 Ill.App.3d 125 (Ill. App. 1993) (discusses exceptions to statutory periods; relevance to 13-207)