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Oregon Dist. Court Grants T.R.O. For “Failure To Record Assignments, TILA Violation” EKERSON v. Mortgage Electronic Registration System (MERS)

Oregon Dist. Court Grants T.R.O. For “Failure To Record Assignments, TILA Violation” EKERSON v. Mortgage Electronic Registration System (MERS)


, a
foreign corporation;
corporation; and CAL-WESTERN
, a foreign



Case Dusterhoff LLP
9800 S.W. Beavterton-Hillsdale Hwy
Suite 200
Beaverton, OR 97005
(503) 641-7222
Attorneys for Plaintiff

BROWN, Judge.

This matter comes before the Court on Plaintiff’s Motion (#3) for a Temporary Restraining Order Pursuant to FRCP 65. For the reasons that follow, the Court GRANTS Plaintiff’s Motion and temporarily RESTRAINS Defendants from proceeding with the February 16, 2011, foreclosure sale of Plaintiff’s property.


The following facts are taken from Plaintiff’s Complaint:
On November 21, 2006, Plaintiff David Ekerson entered into a promissory note secured by property located at 622 S.E. 71st Street, Hillsboro, Oregon, pursuant to one or more deeds of trust recorded December 5, 2006. According to title records, Citibank was the original mortgagee.

At some point, it appears Defendant Mortgage Electronic Resolution System (MERS) became an assignee of the original lender under the Notes, and on October 12, 2010, MERS “grant[ed], assign[ed], and transfer[red]” to Defendant Citimortgage, Inc., “all beneficial interest under” the November 21, 2006, deed of trust. Decl. of Alex Golubitsky, Ex. D. Also on October 12, 2010, MERS evidently issued a Notice of Default to Plaintiff. MERS’s assignment to Citimortgage, however, was not recorded in Washington County’s records until two days later on October 14, 2010.

In his Complaint, Plaintiff alleges he believes Citimortgage is the “current servicer or owner of the loan, having been assigned the loan by Freddie Mac.” Plaintiff also believes Defendant Cal-Western Reconveyance (CWR) is the trustee in charge of the foreclosure sale.

Plaintiff’s property is scheduled to be sold at public auction on February 16, 2011, based on the Notice of Default that Plaintiff contends was improperly issued by MERS.

On February 10, 2011, Plaintiff filed a Complaint in this Court alleging Defendants violated Oregon’s Unfair Trade Practices Act, Or. Rev. Stat. §§ 646.608(1)(k) and 646.608(2)(n). Plaintiff seeks damages and a declaration as to (1) whether Defendants have standing to foreclose; (2) whether MERS “duly and appropriately recorded all assignments of the beneficial interest in the trust deeds” pursuant to Oregon Revised Statute § 86.735 and whether a nonjudicial foreclosure is allowed by statute; and (3) whether the right of the lender to impose a delinquency charge was properly disclosed in the initial loan agreement pursuant to the Truth in Lending Act (TILA), 15 U.S.C. § 1601, Regulation Z, Part 266.18.

On February 10, 2011, Plaintiff also filed a Motion for Temporary Restraining Order in which Plaintiff moves for the entry of an order preventing Defendants from proceeding with the proposed foreclosure sale of Plaintiff’s property on February 16, 2011.


A party seeking a temporary restraining order or preliminary injunction must demonstrate (1) it is likely to succeed on the merits, (2) it is likely to suffer irreparable harm in the absence of preliminary relief, (3) the balance of equities tips in its favor, and (4) an injunction is in the public interest.  Winter v. Natural Res. Def. Council, 129 S. Ct. 365, 374 (2008). “The elements of [this] test are balanced, so that a stronger showing of one element may offset a weaker showing of another. For example, a stronger showing of irreparable harm to plaintiff might offset a lesser showing of likelihood of success on the merits.” Alliance For The Wild Rockies v. Cottrell, No. 09-35756, 2011 WL 208360, at *4 (9th Cir. Jan. 25, 2011)(citing Winter, 129 S. Ct. at 392). Accordingly, the Ninth Circuit has held “‘serious questions going to the merits’ and a balance of hardships that tips sharply towards the plaintiff can support issuance of a preliminary injunction, so long as the plaintiff also shows that there is a likelihood of irreparable injury and that the injunction is in the public interest.” Id., at *7.

“An injunction is a matter of equitable discretion” and is “an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter, 129 S. Ct. at 376, 381.


I. Merits

Plaintiff seeks an order preventing Defendants from proceeding with the proposed foreclosure sale of Plaintiff’s property as scheduled because, among other things, Defendants “have not followed the appropriate procedures for recording all the deeds and assignments for this property, and therefore lack standing to foreclosure [sic] this property.” Specifically, Plaintiff contends MERS assigned its apparent beneficial interest in the property “to other parties who were not recorded in violation” of Oregon Revised Statute § 86.735.

In Burgett v. Mortgage Electronic Registration Systems, District Judge Michael Hogan explained the mortgage practice engaged in by MERS as follows:

“In 1993, the Mortgage Bankers Association, Fannie Mae, Freddie Mac, the Government National Mortgage Association (Ginnie Mae), the Federal Housing Administration, and the Department of Veterans Affairs created MERS. MERS  provides ‘electronic processing and tracking of [mortgage] ownership and transfers.’ Mortgage lenders, banks, insurance companies, and title companies become members of MERS and pay an annual fee. They appoint MERS as their agent to act on all mortgages that they register on the system. A MERS mortgage is recorded with the particular county’s office of the recorder with ‘Mortgage Electronic Registration System, Inc.’ named as the lender’s nominee or mortgagee of record’ on the mortgage. The MERS member who owns the beneficial interest may assign those beneficial ownership rights or servicing rights to another MERS member.  These assignments are not part of the public record, but are tracked electronically on MERS’s private records. Mortgagors are notified of transfers of servicing rights, but not of transfers of beneficial ownership.”

2010 WL 4282105, at *2 (D. Or. Oct. 20, 2010)(quoting Gerald Korngold, Legal and Policy Choices in the Aftermath of the Subprime and Mortgage Financing Crisis, 60 S.C. L.Rev. 727, 741-42 (2009)). In Burgett, the plaintiff, a mortgagee, brought an action against MERS and the servicer of the plaintiff’s mortgage loan alleging, among other things, a claim for breach of contract and seeking declaratory relief to prevent a foreclosure sale of his property. The plaintiff contended the MERS practice set out above was not permitted under Oregon trust-deed law because it allowed assignment of beneficial interests without recording. Id. The defendants moved for summary judgment. Judge Hogan noted the plaintiff’s contention did not “necessarily mean that the arrangement violates the Oregon Trust Deed Act such that foreclosure proceedings could not be initiated by MERS or its substitute trustee.” Id. Judge Hogan, however, denied the defendants’ motion for summary judgment as to the plaintiff’s request for declaratory relief and claim for breach of contract on the ground that the defendants failed to “record assignments necessary for the foreclosure.” Id., at *3. Judge Hogan reasoned:

Under ORS 86.705(1) a “‘Beneficiary’ means the person named or otherwise designated in a trust deed as the person for whose benefit a trust deed is given, or the person’s successor in interest, and who shall not be the trustee unless the beneficiary is qualified to be a trustee under ORS 86.790(1)(d).” Plaintiff contends that MERS cannot meet this definition because there is no evidence that the trust deed was made to benefit MERS. However, the trust deed  specifically designates MERS as the beneficiary. Judge Henry C. Breithaupt provides a persuasive discussion related to this issue:

[T]he interest of MERS, and those for whom it was a nominee, in question here was recorded and known to Plaintiff when it received the litigation guarantee document prior to starting this action.

The Statutes do not prohibit liens to be recorded in the deed of records of counties under an agreement where an agent will appear as a lienholder for the benefit of the initial lender and subsequent assignees of that lender-even where the assignments of the beneficial interest in the record lien are not recorded. It is clear that such unrecorded assignments of rights are permissible under Oregon’s trust deed statute because ORS 86.735 provides if foreclosure by sale is pursued all prior unrecorded assignments must be filed in connection with the foreclosure. The trust deed statutes therefore clearly contemplate that assignments of the beneficial interests in obligations and security rights will occur and may, in fact, not have been recorded prior to foreclosure. The legislature was clearly aware such assignments occurred and nowhere provided that assignments needed to be recorded to maintain rights under the lien statutes except where foreclosure by sale was pursued.

Letter Decision in Parkin Electric, Inc. v. Saftencu, No. LV08040727, dated March 12, 2009 (attached as Exhibit C to the second declaration of David Weibel (# 60)).

The problem that defendants run into in this case is an apparent failure to record assignments necessary for the foreclosure. As Judge Breithaupt notes, ORS § 86.735 provides that if foreclosure by sale is pursued, all prior unrecorded assignments must be filed in connection with the foreclosure. ORS § 86.735(1) specifically provides The trustee may foreclose a trust deed by advertisement and sale in the manner provided in ORS 86.740 to 86.755 if:

(1) The trust deed, any assignments of the trust deed by the trustee or the beneficiary and any appointment of a successor trustee are recorded in the mortgage records in the counties in which the property described in the deed is situated.

Id., at *2-*3. Judge Hogan noted Oregon Revised Statute § 86.735 requires any assignments of the trust deed by the trustee or the beneficiary and any appointment of a successor trustee to be recorded. The record in Burgett, however, did not reflect all transfers to the subsequent lenders/servicers had been recorded.
Similarly, in Rinegard-Guirma v. Bank of America, District Judge Garr M. King granted the plaintiff, a mortgagee, a temporary restraining order against the defendants, MERS and others, prohibiting the defendants from conducting a foreclosure sale of the plaintiff’s home because the plaintiff established “nothing [was] recorded with Multnomah County [that] demonstrates that LSI Title Company of Oregon, LLC is the successor trustee. No. 10-CV-1065-PK, 2010 WL 3655970, at *2 (D. Or. Sept. 15, 2010). Judge King reasoned:

Pursuant to ORS 86.790, the beneficiary may appoint a successor trustee. However, only “[i]f the appointment of the successor trustee is recorded in the mortgage records of the county or counties in which the trust deed is recorded” is the successor trustee “vested with all the powers of the original trustee.” ORS 86.790(3). Accordingly, unless the appointment of LSI Title Company of Oregon, LLC was recorded, the purported successor trustee has no “power of sale” authorizing it to foreclose Rinegard-Guirma’s property. See ORS 86.710 (describing trustee’s power of sale); ORS 86.735 (permitting foreclosure by advertisement and sale but only if “any appointment of a successor trustee [is] recorded in the mortgage records in the counties in which the property described in the deed is situated”).

Similarly, she is likely to experience irreparable harm if her home is foreclosed upon.


Plaintiff also contends this foreclosure proceeding is defective because there has not been established any basis in law for Defendants to have assessed a $77,000.00 delinquency charge which far exceeds the actual loan balance. Plaintiff contends this is a violation of TILA.

The Court finds persuasive the reasoning in Burgett and Rinegard-Guirma as to MERS status in the case on this record. The Court, therefore, concludes Plaintiff has established he is likely to succeed at least as to his request for declaratory judgment related to Defendants’ failure to comply with Oregon Revised Statute § 86.735. Plaintiff also has established MERS, who was the recorded beneficiary of the trust deed, assigned successor trustees to the trust deed but failed to record the appointment of any successor trustee as required before a nonjudicial foreclosure sale may be conducted under Oregon law.

The Court also finds there is a legitimate basis to be concerned that the alleged $77,000.00 delinquency has been assessed improperly. Plaintiff also has established he is likely to experience irreparable harm if the scheduled foreclosure proceeds unabated. The Court, therefore, concludes the balance of hardships tips sharply in Plaintiff’s favor, and there are at least serious questions as to the merits of Plaintiff’s request for declaratory judgment.

Accordingly, the Court GRANTS Plaintiff’s Motion for a Temporary Restraining Order and hereby RESTRAINS
Defendants from proceeding with the February 16, 2011, foreclosure sale of Plaintiff’s property.

II. Notice under Federal Rule of Civil Procedure 65

Federal Rule of Civil Procedure 65(b) provides in pertinent part:

(1) Issuing Without Notice. The court may issue a temporary restraining order without written or
oral notice to the adverse party or its attorney only if:

(A) specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition; and

(B) the movant’s attorney certifies in writing any efforts made to give notice and the reasons why it should not be required.

Here the Court issues the order temporarily restraining Defendants from proceeding with the proposed foreclosure sale of Plaintiff’s property without notice to Defendants because there is insufficient time before the scheduled foreclosure sale to compel Defendants to appear and to respond to the Motion. In addition, Plaintiff’s counsel has made reasonable efforts to  notify Defendants and has been unsuccessful in securing the presence of a responsive party.

Finally, the Court concludes the risk of irreparable harm to Plaintiff is significant when weighed against the temporary delay authorized by this Order.

III. Security

Pursuant to Rule 65(c), the Court requires Plaintiff to post a $500.00 bond by 4 p.m., Monday, February 14, 2011, as a reasonable security for any costs or damages sustained by any party found to have been wrongfully restrained.


For these reasons, the Court GRANTS Plaintiff’s Motion (#3) for a Temporary Restraining Order and hereby RESTRAINS Defendants from proceeding with the February 16, 2011, foreclosure sale of Plaintiff’s property. The Court DIRECTS Plaintiff to post a $500.00 bond by 4 p.m., Monday, February 14, 2011.


DATED this 11th day of February, 2011.

This order is issued on February 11, 2011, at 5:00 p.m., and expired on February 25, 2011, at 5:00 p.m., unless extended by order of the Court.

/s/ Anna J. Brown
United States District

[ipaper docId=48775940 access_key=key-o6272eyqn10csz2bm14 height=600 width=900 /]

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TILA ‘VIOLATION’ TIMELY FILED REVERSAL & REMAND: Luce Frazile v. EMC Mortgage Corporation, 09-15560

TILA ‘VIOLATION’ TIMELY FILED REVERSAL & REMAND: Luce Frazile v. EMC Mortgage Corporation, 09-15560


LUCE FRAZILE, Plaintiff-Appellant,

EMC MORTGAGE CORPORATION, a Foreign corporation, FREMONT REORGANIZING CORPORATION, a foreign corporation, Defendants-Appellees.

No. 09-15560. Non-Argument Calendar.

United States Court of Appeals, Eleventh Circuit.

June 11, 2010.

Before BIRCH, MARTIN and ANDERSON, Circuit Judges.



Luce Frazile brought this action against EMC Mortgage Corporation (“EMC”) and Fremont Reorganizing Corporation (“Fremont”). She alleges that in executing and servicing her mortgage loan the defendants misrepresented the true nature of her obligations and violated various federal loan processing requirements. The district court granted the defendants’ motions to dismiss. This appeal followed. For reasons we will discuss, we affirm in part, reverse in part, and remand to the district court.


Accepting the factual allegations of the complaint as true and construing them in the light most favorable to Frazile, the relevant facts are as follows. In 2006, a Fremont agent approached Frazile and encouraged her to refinance the home mortgage on her primary residence, which she alone owned. After she refinanced, it quickly became apparent that Frazile could not afford the payments on her newly refinanced mortgage and she turned to Fremont to rework the agreement’s terms. On November 16, 2006, Frazile again refinanced her mortgage loan. However, Frazile claims that at closing Fremont never provided her with certain documents, namely a consumer handbook on adjustable rate mortgages, two copies of a notice of right to cancel the mortgage, or a closing package. She further alleges that at some point after closing, EMC was assigned either the mortgage and note, loan servicing responsibility, or some combination of these.

Approximately two years after closing, in November 2008, Frazile attempted to rescind her mortgage loan transaction, a right to which she claimed entitlement under the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601-1667f. In December 2008, Frazile finally received a “less-than-complete copy of the closing package” from EMC. In these documents, her monthly income was misstated as $4,000, well above her actual $1,200 monthly earnings. Under the terms of the mortgage, the required monthly payments actually exceeded her monthly income. According to her complaint, “[t]he cumulative effect of increased monthly mortgage payments, property taxes and insurance premiums was to create an onerous financial burden on Frazile that would seriously jeopardize her ownership of the homestead of sixteen (16) years.”

On June 15, 2009, Frazile filed this lawsuit. In addition to three state law claims, she sought relief under the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601-2617, TILA, and relevant federal regulations. The defendants filed Rule 12(b)(6) motions to dismiss for failure to state a claim. The district court granted the defendants’ motions, dismissing with prejudice Frazile’s federal claims, declining to exercise supplemental jurisdiction as to her remaining state law claims, and closing the case. Frazile now appeals, challenging only the district court’s ruling as to her two federal claims.


“We review de novo the district court’s grant of a motion to dismiss under Rule 12(b)(6).” Redland Co. v. Bank of Am. Corp., 568 F.3d 1232, 1234 (11th Cir. 2009). While we accept all allegations of the complaint as true, the “[f]actual allegations must be enough to raise a right to relief above the speculative level.’” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 1965 (2007). In other words, the plaintiff must “allege[] enough facts to suggest, raise a reasonable expectation of, and render plausible” the claims. Watts v. Fla. Int’l Univ., 495 F.3d 1289, 1296 (11th Cir. 2007). “[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. ___, 129 S. Ct. 1937, 1949 (2009). Furthermore, although the pleading party is not required to “allege a specific fact to cover every element or allege with precision each element of a claim, it is still necessary that a complaint contain either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory.” Roe v. Aware Woman Ctr. for Choice, Inc., 253 F.3d 678, 683 (11th Cir. 2001) (citation and internal quotation marks omitted).


Count I of the complaint alleged violation of RESPA. In her complaint, Frazile specifically identified only one provision of that statute as the basis for her claims. She asserted that the defendants’ statutorily required “good faith estimate” failed to “timely provide [her] with full disclosure regarding the nature and the cost of the loan” including the “amount or range of settlement charges.” For this reason, she alleged that the defendants violated 12 U.S.C. § 2604(c).

We have held in the past that “there is no private civil action for a violation of 12 U.S.C. § 2604(c), or any regulations relating to it.” Collins v. FMHA-USDA, 105 F.3d 1366, 1368 (11th Cir. 1997). For this reason, we affirm the district court’s conclusion that all claims brought under this provision must fail.

However, the district court went on to liberally construe Frazile’s complaint. The court examined Frazile’s argument, made in response to the defendants’ motions to dismiss, that she had pleaded sufficient facts to give rise to a claim under 12 U.S.C. § 2605. Section 2605 does afford a private cause of action, and requires that “[e]ach transferee servicer to whom the servicing of any federally related mortgage loan is assigned, sold, or transferred shall notify the borrower of any such assignment, sale, or transfer.” 12 U.S.C. § 2605(c)(1). The district court dismissed any claim arguably brought under § 2605 on the grounds that Frazile failed to allege either (1) actual damage from the nondisclosure of the assignment of the servicing of the loan—as compared to nondisclosure of the terms of the mortgage—or (2) a pattern or practice of nondisclosure by the defendants that would warrant statutory damages. Such an allegation is a necessary element of any claim under § 2605. Id. § 2605(f). After careful review of the complaint, we agree with the conclusion of the district court that Frazile failed to allege facts relevant to the necessary element of damages caused by assignment. She did not, therefore, state a claim under § 2605.

On appeal, Frazile first acknowledges that her “complaint, as drafted, alleges that the [RESPA] violations were of § 2604(c), only.” Despite this fact, and without citation to any statutory provision, relevant regulation, or binding authority, Frazile sets out a series of other RESPA claims that she argues can be inferred from the facts alleged in her complaint. Her attempts to salvage a RESPA claim, however, are without merit. Frazile seems to suggest that she can assert a cause of action under 12 U.S.C. § 2607 (prohibiting kickbacks, markups, and fee splitting for services not performed) or 12 U.S.C. § 2605(e) (setting out the proper form and timing of responses to qualified written requests).

Frazile never raised arguments regarding § 2607 at the district court, even though she had the opportunity to do so. When, for instance, the defendants pointed out in their respective motions to dismiss that § 2604(c) could not support a private cause of action, Frazile did not argue that her complaint alleged facts sufficient to give rise to claims of unlawful markups, kickbacks, or fee splitting. Instead, as it related to RESPA, Frazile’s responsive filing focused entirely on § 2605. She argued that although she had cited only § 2604(c), “[t]he motion to dismiss should be denied because Ms. Frazile is afforded a private or individual cause of action under § 2605.” “[W]e have repeatedly held that `an issue not raised in the district court and raised for the first time in an appeal will not be considered by this court.’” Walker v. Jones, 10 F.3d 1569, 1572 (11th Cir. 1994) (quoting Depree v. Thomas, 946 F.2d 784, 793 (11th Cir. 1991)). If we were to try and address these new arguments on appeal, “we [would] have nothing to go on other than scattered (and unsupported) factual references in the appellant[`s] brief before this Court.” Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1332 (11th Cir. 2004). Under this standard, Frazile failed to preserve a § 2607 claim.

In addition, after careful review of Frazile’s complaint, we cannot conclude that Frazile “alleged enough facts to suggest, raise a reasonable expectation of, and render plausible” claims brought under either § 2607 or § 2605(e). See Watts, 495 F.3d at 1296. Relying solely on the allegations of the complaint, we conclude that Frazile’s pleading did not afford the defendants fair notice either that she brought a claim for payment of unlawful kickbacks, markups, or fee splitting, or that she brought a claim based on the inadequacy of their response to her qualified written request. In other words, her complaint did not include factual allegations sufficient “to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555, 127 S. Ct. at 1965.

For the foregoing reasons, the district court did not err when it held that Frazile’s complaint failed to state a RESPA claim.


Frazile also sought relief under TILA, alleging that the defendants violated 15 U.S.C. §§ 1635, 1640, and 1641 as well as Regulation Z, 12 C.F.R. § 226. She asked that the district court remedy her losses by rescinding her mortgage transaction and awarding damages, costs, and attorney’s fees. The district court rejected Frazile’s TILA claims on the grounds that rescission was not available for residential mortgage transactions of the type at issue in Frazile’s suit and that any claim for damages was time-barred.

The district court turned to 15 U.S.C. § 1635(e)(1) to dispense with Frazile’s rescission claim. However, its reliance on this provision was misplaced. TILA exempts from the right of rescission residential mortgage transactions “to finance the acquisition or initial construction of such dwelling.” See 15 U.S.C. §§ 1635(e)(1), 1602(w); 12 C.F.R. §§ 226.23(f)(1), 226.2(a)(24). However, the facts alleged in Frazile’s complaint clearly demonstrate that the mortgage at issue was obtained as part of a refinancing transaction. Thus, § 1635(e)(1)’s exemption is not applicable.[ 1 ]

Frazile also sought damages, attorney’s fees, and costs under § 1640(a) both for the defendants’ failure to comply with the statute’s disclosure requirements and for their failure to properly respond to her November 2008 rescission request. The district court addressed only the former issue, deeming any claim for damages time-barred under § 1640(e), which requires that plaintiffs bring suit “within one year from the date of the occurrence of the violation.” 15 U.S.C. § 1640(e).

This Court has observed that a TILA nondisclosure “violation `occurs’ when the transaction is consummated,” in other words, at the time of closing of a residential mortgage transaction. Smith v. Am. Fin. Sys., Inc. (In re Smith), 737 F.2d 1549, 1552 (11th Cir. 1984). Insofar as nondisclosure is concerned, we have held that the violation “is not a continuing violation for purposes of the statute of limitations.” Id. We have also recognized that the doctrine of equitable tolling might salvage a stale TILA claim where the debtor “ha[s] been prevented from [bringing suit] due to inequitable circumstances.” Ellis v. Gen. Motors Acceptance Corp., 160 F.3d 703, 706-08 (11th Cir. 1998).

The alleged nondisclosure occurred at closing on November 16, 2006, more than a year prior to the commencement of this suit. As the district court correctly observed, the complaint’s relevant assertions of misconduct all relate to conduct that took place on or before closing. Because Frazile filed this suit on June 15, 2009, more than one year later, her damages action for noncompliance with TILA’s disclosure requirements is time-barred.[ 2 ]

However, the district court did not evaluate whether the defendants’ failure to timely rescind the mortgage transaction amounted to a separate violation of § 1635(b), which is actionable under § 1640(a). See In re Smith, 737 F.2d at 1552. When a borrower exercises a valid right to rescission, the creditor must take action within twenty days after receipt of the notice of rescission, returning the borrower’s money and terminating its security interest. See 15 U.S.C. § 1635(b). Failure to do so constitutes a separate violation of TILA, actionable under § 1640. Therefore, the one-year limitations period for violation of § 1635(b) claims runs from twenty days after a plaintiff gives notice of rescission. See Belini v. Wash. Mut. Bank, FA, 412 F.3d 17, 26 (1st Cir. 2005) (holding that though the plaintiffs had conceded that their disclosure-based TILA claims were time-barred, the statute of limitations had not yet run on claims arising out of noncompliance with § 1635(b)’s twenty-day requirement). Frazile alleged that in November 2008 she exercised her statutory right to rescind and that the defendants failed to timely respond. Frazile then filed this action on June 15, 2009. Thus, Frazile’s cause of action for inadequate response to her notice of rescission is not time-barred.[ 3 ]

We recognize that the defendants set out a series of alternative grounds on which we might affirm the district court’s dismissal of Frazile’s TILA claims. Despite our authority to affirm on other grounds, we think the better course is to leave these issues for appropriate factual and legal development by the district court. See Jones v. Dillard’s, Inc., 331 F.3d 1259, 1268 n.4 (11th Cir. 2003). On remand, the district court should therefore evaluate the defendants’ other grounds for dismissal and determine whether Frazile has, in fact, stated a TILA claim. If she has, the district court must then determine whether the alleged nondisclosures preserved Frazile’s right to rescind for three years, see 15 U.S.C. § 1635(f), and whether Frazile has alleged that the defendants violated TILA’s rescission procedures by failing to adequately respond to her rescission notice, see id. § 1635(b).


For the foregoing reasons, the district court’s dismissal of Frazile’s RESPA claims is AFFIRMED. However, we REVERSE as to Frazile’s TILA claims and REMAND for proceedings consistent with this opinion.

1. We are aware that under 15 U.S.C. § 1635(e)(2) the right to rescind does not apply to certain refinancing and consolidation loans. However, neither the district court nor either defendant—in their motions to dismiss or on appeal—cites to or relies upon this provision when arguing that Frazile failed to state a TILA claim. Furthermore, even if § 1635(e)(2) were applicable, Frazile might still have a right to rescind “to the extent the new amount financed exceed[ed] the unpaid principal balance, any earned unpaid finance charge on the existing debt, and amounts attributed solely to the costs of the refinancing or consolidation.” 12 C.F.R. § 226.23(f)(2).
2. In her briefs on appeal, Frazile asserts that the district court should have deemed the statute of limitations equitably tolled because the defendants did not supply her with the relevant TILA-required disclosures until December 2008 or January 2009, and that the documents eventually provided were incomplete. She also claims that the statute of limitations defense is inapplicable because the exact date of the closing is in question.Frazile’s equitable tolling arguments fail. The alleged nondisclosure of TILA-related documents is the same conduct that makes up the TILA violation itself, a violation that we have deemed noncontinuing for statute of limitation purposes. See In re Smith, 737 F.2d at 1552. To hold otherwise would mean that any failure to disclose at the time of closing would not only give rise to a TILA claim, but would also toll the statute of limitations, thereby eviscerating the time limit expressly set out in § 1640(e). Frazile knew in 2006, at the time of closing, that she had not been supplied with the documents. Her ability to bring suit within one year of this alleged TILA violation was not affected by the defendants’ failure to provide the required documents at closing or by EMC’s purportedly incomplete disclosures two years later.Insofar as she questions the exact date of the closing, Frazile’s argument is directly contradicted by the allegations of her own complaint, in which she clearly and repeatedly asserts that the refinancing transaction closed on November 16, 2006.

Thus, Frazile has failed to state facts sufficient to demonstrate that she was prevented from filing this lawsuit by extraordinary circumstances that were both beyond her control and unavoidable and that she had diligently sought to preserve her statutory rights within a year of the alleged nondisclosure violation. See Arce v. Garcia, 434 F.3d 1254, 1261 (11th Cir. 2006).

3. Fremont argues that Frazile waived the right to object to both § 1635(e)(1)’s applicability and the timeliness of her damages action because her initial brief did not directly address the grounds on which the district court based its ruling. Instead, argues Fremont, Frazile conflates the two issues and dedicates the bulk of her initial brief to the timeliness of her rescission claim. We do not consider these issues abandoned. In her brief, Frazile argues that she continues to enjoy TILA’s protections, citing cases to support the position that she is allowed three years to request rescission of the mortgage transaction, pursuant to § 1635(f). Her argument therefore necessarily takes issue with the district court’s conclusion that her mortgage transaction is exempted under § 1635(e). Additionally, she challenges the district court’s finding that she is not entitled to equitable tolling of the statute of limitations, claiming in her initial brief that in 2008 and in 2009 EMC obstructed her ability to acquire information relevant to her suit. Thus, the defendants were on notice that the district court’s TILA rulings were within the scope of Frazile’s appeal.
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Posted in foreclosure, foreclosure fraud, respa, reversed court decision, tilaComments (0)



Mr. Davies asked me to post this info for all you to see the FRAUD!

Especially Indymac FSB F/K/A Onewest

Why were any of these NOT signed over by Universal American Mortgage Corp??

The ONLY “lender” he knew at the time of closing was Universal American Mortgage Corp!


§ 226.18  Content of disclosures.

For each transaction, the creditor shall disclose the following information as applicable:
(a)  Creditor. The identity of the creditor making the disclosures.

SEE CASEY LIMP as Vice President in each???

Now this is at the bottom of each page…but I bet these are “not” the originals.

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Posted in concealment, conspiracy, corruption, foreclosure fraud, forensic mortgage investigation audit, Mortgage Foreclosure Fraud, scam, securitization, tilaComments (9)

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