Banking and Finance Law Daily Borrowers failed to rebut presumption of TILA compliance regarding signed acknowledgment
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Thursday, March 1, 2018

Borrowers failed to rebut presumption of TILA compliance regarding signed acknowledgment

By Lee P. Dunham, J.D.

The U.S. Court of Appeals for the Eighth Circuit held that an acknowledgment of receipt of Truth in Lending Act "right to cancel" disclosures signed by mortgage loan borrowers at their closing created a rebuttable presumption that the borrowers had received the requisite number of copies, and that the borrowers had failed to raise a triable question of fact rebutting the presumption. The ruling affirmed the decision of a federal district court in Minnesota, on remand from the Supreme Court, granting summary judgment to the lender (Jesinoski v. Countrywide Home Loans, Inc., Feb. 28, 2018, Melloy, M.).

Pursuant to TILA and its regulations, borrowers may rescind their loan within three days of closing, but the rescission period extends to three years if the lender fails to deliver "the required notice or material disclosures" (12 C.F.R. §1026.23(a)(3)(1); 15 U.S.C. §1635(a), (f)). At the loan closing, the borrowers each signed their names to an acknowledgment form stating that they had received two copies of a notice of right to cancel. More than three days but fewer than three years after the closing, the borrowers sent a notice of rescission. In the litigation, the borrowers argued that their notice of rescission was timely because they claimed that they had received a total of only two copies of the notice of their right to cancel.

Court’s decision. The Eighth Circuit held that, pursuant to TILA, a signed acknowledgment that the borrowers received the notice created a rebuttable presumption of proper delivery. Despite the fact that the acknowledgment did not specify that the borrowers had each received two copies, the court held that the language of the acknowledgment gave rise to the presumption that they had, in fact, received the proper number of copies.

The borrowers sought to rebut this presumption by presenting evidence that, several years after the closing, they had taken a folder in their possession containing the closing documents to a mortgage specialist, who reviewed its contents and advised them that it contained only two copies of the disclosure. The court held that this evidence was insufficient to create a triable issue of fact because it was "textbook inadmissible hearsay," and because the borrowers had not testified that they had conducted their own inspection of the file. Therefore, even accepting the borrowers’ "closed envelope theory" that the contents of the folder several years after the closing date were all of the documents actually received at closing, the borrowers had failed to rebut the presumption that they had received the correct number of copies.

The case is No. 16-3385.

Attorneys: Bryan R. Battina (Trepanier & Macgillis) for Larry and Cheryle Jesinoski. Matthew Allen Fitzgerald (McGuire & Woods) for Countrywide Home Loans, Inc., doing business as America’s Wholesale Lender, a subsidiary of Bank of America, N.A., and BAC Home Loans Servicing, LP.

Companies: America’s Wholesale Lender; BAC Home Loans Servicing, LP; Bank of America, N.A.; Countrywide Home Loans, Inc.

MainStory: TopStory ArkansasNews IowaNews Loans MinnesotaNews MissouriNews Mortgages NebraskaNews NorthDakotaNews SouthDakotaNews TruthInLending

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