TILA Statute of Limitations — No Limit

Editor’s Note: Judges are quick to jump on the TILA Statute of Limitations by imposing the one year rule for rescission and damages. But there is more to it than that.

First the statute does NOT cut off at one year except for items that are apparent on the face of the closing documentation; so for MOST claims arising under securitization where almost every real detail of the transaction was hidden and intentionally withheld, the one year rule does not apply.

Second, the statute of limitations does not BEGIN to run until the date that the violation is revealed. In most cases this will be when the homeowner knows or should have known that the loan was securitized. Since the pretender lenders are so strong on the point that securitization does not affect enforcement, the best point in time for the statute to run is when a forensic analyst or expert tells the homeowner that TILA violations exist.

And THEN, in those cases where the information was hidden, the statute of limitations is three years from the date the information was revealed.

So when you go after undisclosed fees, profits and other compensation of any kind, you are not cut off by one year because — by definition they were not disclosed. The only way the other side can get out of that is by admitting the existence of the fee, and then showing that it WAS disclosed — presumably through yet another fabricated document, signed by a non-existent person with non existent authroity with non- existent witnesses and notarized by someone three thousand miles away (whose notary stamp and forged signature was applied to hundreds of pages of blank documents for later use). [Brad Keiser was the one who discovered this tactic by doing what most forensic analysts don’t do — actually reading every piece of paper sent by the pretender lender and every piece of paper provided by the homeowner. Case law shows that where the notary was improperly applied — and there are many ways for it to be improperly applied, the notary is void. If the statute requires recording the document in the public records, then the document so notarized shall be considered as NOT being in the public records and is ordered expunged from those records].

This comment from Rob elaborates:

Regarding the TILA Statute of Limitations:

When a violation of TILA occurs, the one-year limitations period applicable to actions for statutory and actual damages begins to run. U.S.C. § 1641(e).
A TILA violation may occur at the consummation of the transaction between a creditor and its consumer if the transaction is made without the required disclosures.
A creditor may also violate TILA by engaging in fraudulent, misleading, and deceptive practices that conceal the TILA violation occurring at the time of closing. Often consumers do not discover any violation until after they have paid excessive charges imposed by their creditors. Consumers who later learn of the creditor’s TILA violations can allege an equitable tolling of the statute of limitations. When the consumer has an extended right to rescind or
pursue other statutory remedies because a violation occurs, the statute of limitations for all the damages the consumers seek extends to three years from the date the violation is revealed.
McIntosh v. Irwin Union Bank & Trust Co., 215 F.R.D. 26, 30 (D. Mass. 2003).

13 Responses

  1. Pro Se filed TILA and FRAUD, Federal Judge will not help.

    My name is Rickey Fantroy. I’m a victim of mortgage fraud and never received my closing documents. In January 2012 I was able to obtain a copy of my Hud 1, with an increase from $59,000.00 to $107,000.00. This prima face proof of the fraudulent acts by the mortgage companies. I immediately filed in North Texas Federal Court Dallas Division Case Number 3:12-CV-82-NBH. My questions are:
    1. I became aware of TILA in February 9, 2012 and amended my petition accordingly. This was brought to my attention by the Stopfraud.gov and hudoig.gov. I am pro se and need to know which laws are the duties of a federal judge to search and look for any violations since I am Pro Se.
    2. If the State Comptroller has forfeited a mortgage company or business as of May 21, 2010, then wrongfully moved us out of the house on 6-14-2010 how many and which laws did they break not being able to do business according to the comptroller. I have obtained this information from the State Comptroller.
    Your response is greatly appreciated.
    Thanking you in advance,
    Rickey Fantroy

  2. Just want to put out a warning to all. I just received an e-mail from Mortgage Servicing News warning that FANNIE MAE is about to start manufacturing “clear chains of title” through Nationwide Title Clearing…! Nationwide Title Clearing is claiming they can create any missing documents in the chain and Fannie Mae are planning on recording manufactured fraudulent assignments and other docs. There is no legal fix for the Origination Fraud! They all need to go to prison…!

  3. ….would not act in a predatory manner.

  4. @Christine Springer..Why would a Bank commit TILA violations in the first place? TILA VIOLATIONS are fraud. U.S. courts have ruled “Deception is evaluated from the perspective of the unsophisticated consumer.” TILA violations were part of a chain of many predatory practices committed by Banks. These fraudulent concealments allowed the Banks to commit massive mortgage fraud even before the closing. People were too trusting and believed that a bank

  5. In New York at least CPLR 214 and 203 determine when a statue of limitation can be tolled around TILA. A case that explains said analysis in detail is Lincoln First Bank v. Rupert, 60 AD 2d 193 – NY: Appellate Div., 4th Dept. 1977.

    The questions presented to court where :

    1. whether subdivision (e) of section 1640 of title 15 of the United States Code which states “[a]ny action under this section may be brought in any United States district court, or in any other court of competent jurisdiction, within one year from the date of the occurrence of the violation” is a bar to defendant’s two counterclaims, based upon violations of the Federal Truth in Lending Act (US Code, tit 15, § 1601 et seq.) and regulation Z thereunder (12 CFR 226.1 et seq.), contained in an answer served more than one year from the date of the alleged violations (the date the retail instalment contract was signed); and

    “The basic question to be answered in determining whether, under a given set of facts, a statute of limitations is to be tolled, is one `of legislative intent whether the right shall be enforceable * * * after the prescribed time’ Midstate Horticultural Co. v Pennsylvania R. Co., 320 US 356, 360. Classification of such a provision as `substantive’ rather than `procedural’ does not determine whether or under what circumstances the limitation period may be extended [footnote omitted]. As this Court has expressly held, the * * * limitation period is not totally inflexible, but, under appropriate circumstances, it may be extended [citations omitted]. These authorities indicate that the basic inquiry is whether congressional purpose is effectuated by tolling the statute of limitations in given circumstances.

    The court answered

    A basic and necessary consideration in the interpretation of a statute is the general purpose and policy underlying its enactment (McKinney’s Cons Laws of NY, Book 1, Statutes, § 96). A court, in construing a statute, should consider the “mischief sought to be remedied” and should favor the construction which will “suppress the evil and advance the remedy.” (McKinney’s Cons Laws of NY, Book 1, Statutes, § 95.)

    From an examination of the statute itself, one readily concludes that the purpose of the Federal Truth in Lending Act is to protect the borrower by requiring a full disclosure of the terms of the credit transaction, so that he may be better able to compare the cost of credit, and that the “mischief sought to be remedied” is the very type of nondisclosure in the retail instalment contract about which defendant complains.[2] 198*198 The statute, which is designed to prevent unscrupulous creditor practices, is remedial, and must be liberally construed to effectuate the Congressional intent (Littlefield v Flanagan & Co., 498 F.2d 1133, 1136; Freed Co. v Board of Governors of Fed. Reserve System, 473 F.2d 1210, 1214, cert den 414 US 827). It is apparent from the statute also that the only method of enforcing the disclosure requirements provided by Congress is the civil remedy set forth in section 1640 of title 15 of the United States Code. Thus, the holding, urged by respondent, that a consumer should be barred by the one-year limitation from asserting a Federal Truth in Lending Act counterclaim where the creditor has not commenced suit until the one-year period has expired, would frustrate the very purpose and spirit of the legislation. It would permit an unscrupulous creditor, by the simple expedient of withholding suit against an uninformed or trusting borrower, to ignore the disclosure requirements with the assurance that the borrower’s truth-in-lending claims would be barred if he should be alerted to the creditor’s violations when suit is finally commenced. We reject such an anomolous and unjust construction as contrary to the very ends Congress sought to achieve by enacting the legislation.

    Nothing in the statute compels a different construction. On the contrary, that the statutory time limit applies only to “actions” and omits any reference to counterclaims, setoffs or recoupments, and that the statute’s language is permissive and not mandatory (i.e., “may be brought” rather than “must be brought”) support the interpretation we reach[3] (see McKinney’s Cons Laws of NY, Book 1, Statutes, § 177, subds a and b).

    Our holding that truth-in-lending counterclaims arising out of the transaction sued on should not be barred by the one-year 199*199 limitation in subdivision (e) of section 1640 of title 15 of the United States Code, is consistent with decisions in other jurisdictions, and in New York (see, e.g., Connecticut Bank & Trust Co. v Ossen, 5 CCH Consumer Credit Guide, par 98,182 [D Con April 29, 1977]; Wood Acceptance Co. v King, 18 Ill App 3d 149; First Nat. City Bank v Drake, NYLJ, Sept. 27, 1973, p 17, col 6; Continental Acceptance Corp. v Rivera, 50 Ohio App 2d 338; Stephens v Household Finance Corp., 566 P2d 1163 [Okla]; Bankers Guar. Corp. v Powell, 5 CCH Consumer Credit Guide, par 98,176 [DC Sup Ct, May 11, 1977]).[4]

  6. What no one has mentioned on this post is that as part of the Helping Families Save Their Homes Act (the “Act”), Congress amended Section 131 of the Truth in Lending Act (15 USC § 1641)(“TILA”) to include a new provision (Section 131(g)) that requires the assignee of a mortgage loan to notify a consumer borrower that his loan has been transferred. Bottom line – if the loan was transferred, even via a bogus assignment, and the homeowner was not notified within 30 days of that transfer, the homeowner may be entitled to $9000 in penalities under TILA and FTC. PaCE is helping homeowners secure this $9000.00 payment from the assignee. fclosurehelp@live.com
    You don’t have to be in foreclosure to pursue these money damages. MERS, WF and US Bank have been filing assignments recently to try to CYA and it is coming back to bite them when homeowners are informed of the law.

  7. “The statute does not limit the amount of fees a borrower is charged, it does not address post closing transactions and nor does it outlaw securitization. As far as I know there is no requirement for a creditor to disclose its source of funds to the borrower.”

    Maybe or maybe not, but it does show a lie in disclosure in the probability of the sale or transfer to a new entity as opposed to keeping the loan “in house.”

  8. Mortgage Auditor said “I fail to see how securitization voids the one year statute of limitations.”

    Well, I personally think it’s fraudulent concealment of material fact if a lender fails to disclose to the borrower that his mortgage transaction will be made subject to preexisting third party agreements. And that MERS thing, come on now – do you honestly believe that all these borrowers KNEW at execution that they would be giving a beneficial interest in thier home to potentially THOUSANDS of third-party entities who were not even parties to the transaction? Look at the language on the Mortgage: it says that MERS is a separate corporation and is granted a title interest solely to secure repayment to the Lender. And the lender was repaid, and the borrower was never notified of the new Note Holder’s address, which is required by the Note language! Where does the mortgage or Note mention the other thousands of entities? When is it ever disclosed to the borrower ANYTHING about the agreements between the lender, MERS, and securitizers, made even BEFORE the borrower signed the docs? Will you deny that the borrower’s transaction is made part of those agreements, and is affected by them?
    This is all fraud and misrepresentation, plain and simple. Just try telling a borrower that his home may potentially be owned by a thousand different banks, title cos, GSE’s, trade cos, or people, if he chooses to refinance his mortgage. Would YOU accept a refinance loan under this condition? This is the whole reason the material fact is concealed from the borrower at application, execution, and throughout the duration of the loan. If the borrower had knowledge of all the facts, and the true nature of the transaction, and the true nature of MERS, he would never have entered into that transaction. Any transaction wrought in fraud is a void one – but for the bankers, it’s business as usual, and they as well as those working in collusion with them, see nothing wrong at all.

  9. Judge: Family Can Seek Rescission, Damages From Mortgage Lender

    HONOLULU — A federal judge on April 15 refused to dismiss a Hawaii family’s lawsuit seeking rescission and statutory damages from their mortgage lender based on its alleged violations of the Truth in Lending Act because they do not need to allege that they can tender the full amount of the loan and because their damages request was timely (Annette Kuulei Agustin, et al. v. PNC Financial Services Group Inc., et al., No. 09-00423 SOM/KSC, D. Hawaii).

  10. I disagree with this post as well…the majority of case law I’ve read says that TILA/RESPA claims, as well as RICO and many other “alphabet” counts in a pleading, get dismissed. Generally speaking, judges don’t want to stop a foreclosure for $35 in undisclosed finance charges, especially if the borrower is waiting until the last minute to file a lawsuit and has been living rent free for many months. It seems to me that fraud is the only allegation that judges will not dismiss.

  11. That depends. It could toll the statute of limitations (SOL) if the TILA error was fraud based. There’s lots of case law utilizing UCC and federal codes. I would agree that a technical error of TILA, even noticed only after the SOL had been exceeded, would not compel a judge to exceed the three years. The Supreme Court has already decided on this.

    I suppose one could always try it, though. In my experience, I don’t think it would be something to rely on.

  12. I fail to see how securitization voids the one year statute of limitations. TILA is a disclosure statute pertaining mainly to finance charges the borrower must pay in relation to the loan transaction. The items that must be disclosed and included in calculating finance charges and the APR are clearly specified, so as long as they are itemized and included in the TIL disclosure and the HUD-1 settlement statement the requirements of TILA have been satisfied. The statute does not limit the amount of fees a borrower is charged, it does not address post closing transactions and nor does it outlaw securitization. As far as I know there is no requirement for a creditor to disclose its source of funds to the borrower.

  13. This is what happens when you have non-attorneys performing loan audits. They’re almost always WRONG!

    McIntosh has been roundly criticized as conclusory and wrong on the law, and rejected by the majority of courts addressing the issue who instead have held that the one year statute of limitations applies to TILA damages claims. See e.g., Bell v. Ameriquest Mortgage Co., 2004 WL 2973819, at *1 (N.D. Ill. 2004); Brown v. Nationscredit Financial Services Corp., 349 F. Supp. 2d 1134, 1137 (N.D. Ill. 2005). Section 1635(f) provides that the statute of limitations for a TILA rescission claim is “three years after the date of consummation of the transaction.” Section 1635(g) states that, “In any action in which it is determined that a creditor has violated this section, in addition to rescission the court may award relief under section 1640 of this title for violations of this subchapter not relating to the right to rescind.” The many courts rejecting McIntosh have concluded that Section 1635(g) does not alter the statute of limitations in Section 1635(f).

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