Vincent Howard and our team of Moreno Valley foreclosure defense lawyers were interested to see a recent case in which the Ninth U.S. Circuit Court of Appeals took on the statute of repose in Truth in Lending Act cases. This is a perennial issue in TILA cases, because the lender stands to lose so much and the borrower to gain so much if the borrower can prove he or she met all of the deadlines: TILA allows outright cancellation of predatory loans. That was what Kathryn McOmie-Gray sought in McOmie-Gray v. Bank of America Home Loans, originating out of the Eastern District of California. McOmie-Gray alleged that her original lender did not meet TILA's disclosure requirements and that because her notice of rescission was timely, she was not required to bring suit within the three-year statute of repose. The Ninth Circuit disagreed, in a case of first impression.
McOmie-Gray took out a mortgage from Paramount Equity Mortgage in April of 2006. At closing, she signed two TILA notice of right to cancel forms, but she alleges that neither specified when her right to cancel would expire. The loan was soon assigned to Countrywide, which was acquired by BofA after its collapse. In January of 2008, through an attorney, McOmie-Gray notified the bank of her intention to rescind the loan on the basis that there was no specified cancellation date. She alleges that the bank then negotiated with her for more than a year, expressly agreeing to toll the statute of limitations on her TILA claim until Aug. 30, 2009. She filed suit on Aug. 28, 2009. When the court ultimately ruled on her amended complaint, it found that the TILA statute of repose had expired after the statutory three years, in April of 2009, and thus the lawsuit was time-barred. It did not mention the alleged tolling agreement. McOmie-Gray appealed.
Ultimately, her luck was no better in the Ninth Circuit. Federal regulations on TILA permit a borrower to notify the lender in writing of her intention to rescind within three years, if there was a deficiency in the notice. Though McOmie-Gray's notice met that burden, the Ninth said, rescission is not automatic upon the giving of notice. Instead, it found that borrowers must file suit to determine whether rescission is proper (if the lender does not comply). The statute is silent on when such a suit should be filed. But under caselaw from both the Ninth Circuit and the U.S. Supreme Court, the majority wrote, suits must be brought within the three years. The plaintiff in that case and McOmie-Gray both argued that the notice triggers an additional one-year deadline for filing suit, under a provision for TILA litigation, but the Ninth rejected this as contrary to the plain language calling for the three-year repose period. Thus, it affirmed dismissal of the case.
Vincent Howard and all of our Tustin foreclosure defense attorneys would be pleased to see this case in an en banc rehearing. The cases cited by the Ninth Circuit to support its position are not precisely on point; one involved no notice to the lender at all, and the other involved timely notice, but to the wrong party. Thus, it's not unreasonable to say that the issue of when suit must be filed is not settled. This is particularly important in cases like McOmie-Gray's, in which she apparently reasonably relied on a promise to toll the statute of limitations that was broken as soon as she filed suit. At Howard Law, P.C., our Norwalk foreclosure defense lawyers feel strongly that lenders' promises cannot be relied on -- most of our clients come to us after multiple broken promises -- and thus, it's best to take quick action when a deadline is running out.
If you believe you're being pushed into foreclosure by your loan servicer's indifference or active attempts to stymie you, don't wait to call Vincent Howard and Howard Law. For a consultation or to learn more, you can send us an email or call toll-free at 1-800-872-5925.