Banking and Finance Law Daily Conclusory affidavits can’t defeat presumption that TILA disclosures were received
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Monday, June 5, 2017

Conclusory affidavits can’t defeat presumption that TILA disclosures were received

By Richard A. Roth, J.D.

Mortgage loan borrowers who, at their loan closing, signed acknowledgments that they had received disclosures required by the Truth in Lending Act could not defeat the resulting presumption of delivery by conclusory, self-serving, unsupported affidavits, according to the U.S. Court of Appeals for the Eighth Circuit. As a result, their effort to enforce a rescission of their loan that was demanded more than three days after the closing was rejected (Keiran v. Home Capital, Inc., June 2, 2017, Beam, C.).

The loan closing in question was at the end of 2006, and the suit began when the borrowers sued to enforce their rescission demand in October 2010. After both the trial and appellate courts decided the consumers had not met the TILA time limit for rescission, the borrowers filed a petition for certiorari in the Supreme Court. In the wake of Jesinoski v. Countrywide Home Loans, Inc., in which the Court determined that TILA required borrowers only to notify a creditor of their rescission demand rather than to sue, the Court granted their petition, reversed the appellate court, and remanded the suit.

The nearly two and a half years it took for the suit to wend its way back to the Eighth Circuit has made no difference to the final result. The borrowers’ rescission demand was timely only if the original lender violated TILA and Reg. Z—Truth in Lending (12 CFR Part 1026), and there was no violation, the court said.

Disclosure statements. Under TILA, a mortgage loan borrower has an unconditional three-day right to rescind a loan that is secured by his home (other than a loan that finances the purchase of the home). The three-day period begins at the later of the closing or the delivery of TILA-required disclosures. If the disclosure statements are never provided, the right to rescind lasts for three years after the loan closing. Reg. Z says that the disclosure statement must be given to anyone whose ownership in the property will be subject to the lender’s security interest.

The borrowers claimed that they were not each given a copy of the disclosure statement, as required by Reg. Z. However, at the closing, they each signed a form acknowledging having received the statement. Under TILA, this created a rebuttable presumption that the disclosure statement had been delivered, the court said.

In an effort to rebut that presumption, the borrowers offered only conclusory affidavits claiming that they had received just one copy of the disclosure, rather than the required one copy each. That was not enough to rebut the presumption, the court said. In order to rebut the presumption, the borrowers needed to offer some evidence that supported their affidavits, and they had not done so.

Other claims fail. The court rejected the borrowers’ claim that the disclosures were inaccurate and thus failed to satisfy TILA and Reg. Z. They had waived the claim by not raising it earlier, the court said. Moreover, earlier in the case it had been determined that the disclosures were accurate, and that ruling was the law of the case. Moreover, any inaccuracy would not have violated TILA because the amount specified actually was more than the borrowers had to pay.

The borrowers could not rely on the lender’s failure to reply to their rescission demand within 20 days, the court added. The lender needed to respond only to a timely demand, and the demand would have been timely only if there had been a disclosure violation. In the absence of a violation, the lender was obligated to respond to a rescission demand only if the demand was within three days of the closing. The borrowers had waited nearly three years.

The case is No. 15-3437.

Attorneys: LuAnn Mary Petricka (Petricka Law Firm) for Alan G. Keiran and Mary Jane Keiran. Donald Charles MacDonald (Faegre & Baker) for BAC Home Loans Servicing, L.P.

Companies: BAC Home Loans Servicing, L.P.; Bank of New York Mellon; Home Capital, Inc.

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

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