Greenpoint Mortg. Funding, Inc. v. Cynthia Hirt, Mortg. Registration Sys., Inc.

• Decision Date: 22 January 2018
• Docket Number: No. 1–17–0921,1–17–0921
• Citation: 97 N.E.3d 66,2018 IL App (1st) 170921
• Parties: GREENPOINT MORTGAGE FUNDING, INC., Plaintiff and Counter–Defendant–Appellee, v. Cynthia HIRT, Mortgage Registration Systems, Inc., GreenPoint Funding Inc., Towne Place Condominium Association, Unknown Owners and Nonrecord Claimants, Defendants (Cynthia Hirt, Defendant and Counter–Plaintiff–Appellant).
• Court: United States Appellate Court of Illinois

2018 IL App (1st) 170921

97 N.E.3d 66

GREENPOINT MORTGAGE FUNDING, INC., Plaintiff and Counter–Defendant–Appellee,

v. Cynthia HIRT, Mortgage Registration Systems, Inc., GreenPoint Funding Inc., Towne Place Condominium Association, Unknown Owners and Nonrecord Claimants, Defendants(Cynthia Hirt, Defendant and Counter–Plaintiff–Appellant).

No. 1–17–0921

Appellate Court of Illinois, First District, FIRST DIVISION.

January 22, 2018

Matton Law Offices, of Chicago (Douglas M. Matton, of counsel), for appellant.

Pilgrim Christakis LLP, of Chicago (Jeffrey D. Pilgrim and Matthew O. Stromquist, of counsel), for appellee.

OPINION

JUSTICE HARRIS delivered the judgment of the court, with opinion.

¶ 1 GreenPoint Mortgage Funding, Inc. (GreenPoint) initiated this action when it filed a mortgage foreclosure complaint against Cynthia Hirt. Hirt filed both affirmative defenses and counterclaims seeking rescission of the loan and statutory damages pursuant to the Truth in Lending Act (TILA) ( 15 U.S.C. § 1601 (2012) ). During the course of the litigation, GreenPoint assigned the mortgage to U.S. Bank National Association (U.S. Bank). U.S. Bank and Hirt agreed to refinance the mortgage. As part of refinancing, U.S. Bank dismissed the foreclosure action.¹

¶ 2 GreenPoint and Hirt then proceeded to litigate Hirt's counterclaim for rescission and statutory damages. On February 17, 2016, the circuit court of Cook County granted GreenPoint summary judgment as to the rescission claim but denied it as to the statutory damages claims. On March 13, 2017, after GreenPoint brought a motion to reconsider, the circuit court granted summary judgment in GreenPoint's favor as to Hirt's damages claims. This timely appeal followed.

¶ 3 For the reasons stated below, we reverse in part and affirm in part. A question of fact remains as to whether Hirt had three days or three years to seek rescission. We therefore reverse the portion of the February 17, 2016, order that granted summary judgment in favor of GreenPoint on Hirt's rescission claim. We affirm that portion of the March 13, 2017, order that granted summary judgment in favor of GreenPoint as to Hirt's statutory damages claim related to the failure to honor the rescission. We also affirm the portion of the March 13 order that granted summary judgment in favor of GreenPoint as to Hirt's statutory damages claim stemming from GreenPoint's failure to make certain disclosures when the loan closed.

¶ 4 JURISDICTION

¶ 5 GreenPoint filed this foreclosure action on May 5, 2008. On April 9, 2009, Hirt filed her counterclaim for rescission and damages. On October 29, 2015, the foreclosure action was dismissed without prejudice. On February 17, 2016, the circuit court granted summary judgment in favor of GreenPoint as to Hirt's rescission claim. On March 13, 2017, the circuit court granted summary judgment in favor of GreenPoint as to Hirt's statutory damages claims. Thereafter, on April 11, 2017, Hirt filed her notice of appeal. Accordingly, this court has jurisdiction over this matter pursuant to article VI, section 6 of the Illinois Constitution, and Illinois Supreme Court Rules 301 and 303. Ill. Const. 1970, art. VI, § 6 ; Ill. S. Ct. R. 301 (eff. Feb. 1, 1994); R. 303 (eff. May 30, 2008).

¶ 6 BACKGROUND

¶ 7 On May 13, 2005, Hirt refinanced her mortgage on her property located at 125 Stirling Lane, Schaumburg, Illinois. In connection with this transaction, GreenPoint lent Hirt $219,200 to be secured against the property.

¶ 8 On February 1, 2008, Hirt failed to make the required service payment on the GreenPoint loan. On February 12, 2008, Hirt, through her attorney, sent GreenPoint a notice of rescission pursuant to TILA asserting that GreenPoint had failed to comply with TILA's various disclosure requirements and that she was therefore entitled to rescind the loan. On February 15, GreenPoint received Hirt's notice of rescission. On May 5, 2008, GreenPoint filed a complaint to foreclose the mortgage based on Hirt's failure to make the required payments.

¶ 9 On January 8, 2009, Hirt, by her attorney, filed her appearance, answer, and affirmative defenses to GreenPoint's foreclosure action. In her affirmative defenses, she asserted that the foreclosure action should be dismissed with prejudice because she had rescinded the loan.

¶ 10 On April 9, 2009, Hirt filed her counterclaim against GreenPoint asserting that it had violated TILA and corresponding regulations (12 C.F.R. § 226 (2008) (Regulation Z)) by (1) failing to provide her with two copies of the notice of the right to cancel, (2) failing to take any action necessary to terminate the security interest in Hirt's property within twenty days of receipt of Hirt's notice of rescission, and (3) failing to properly and accurately disclose the finance charge. As a result of these violations, Hirt asserted that her right to rescind the loan under TILA had extended from three days to three years. Therefore, she asserted she timely exercised her right to rescind when GreenPoint received her notice of rescission on February 15, 2008. Hirt also sought statutory damages based on GreenPoint's failure to make disclosures when the loan closed and its failure to honor the rescission.

¶ 11 On August 18, 2009, Hirt was deposed. At the deposition, she acknowledged signing a receipt stating she had been provided with two copies of her right to cancel. Despite signing the receipt, she stated she walked out with one copy of the notice. She testified that she did not realize she had been provided with only one copy until she reviewed her entire closing packet with her foreclosure attorney in 2008. She stated that after she left the closing with the loan documents in the folder given to her, she went home and placed the folder into a file cabinet. The folder remained in the cabinet from the time of the closing until she turned it over to her attorney. She claimed to have never looked at the folder during that period, nor did she review the folder prior to meeting with her attorney.

¶ 12 Hirt understood that she would have to return the money she borrowed from GreenPoint as a result of the rescission. When asked whether she had more than $200,000 available, she stated that she did not know and that she would have to review her finances to determine whether she could return the money she borrowed. She also did not know the value of her home.

¶ 13 On July 22, 2014, GreenPoint filed a motion to substitute U.S. Bank as party plaintiff. The motion stated that "subsequent to filing the complaint, servicing rights of the subject loan were transferred from GreenPoint Mortgage Funding, Inc. to Ocwen Loan Servicing, LLC and Ocwen Loan Servicing, LLC would like to proceed in the name of the investor, U.S. Bank National Association, as Trustee, successor in interest to Wachovia Bank, National Association as Trustee for Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset–Backed Certificates, Series 2005–A6, as plaintiff." On August 11, 2014, the circuit court granted the motion and allowed U.S. Bank to be substituted as party-plaintiff.

¶ 14 On September 29, 2015, U.S. Bank moved to dismiss its foreclosure action without prejudice because Hirt had accepted a loan modification, which brought her loan current. On October 29, 2015, the circuit court granted the motion and dismissed the foreclosure action without prejudice.

¶ 15 On November 6, 2015, GreenPoint moved for summary judgment as to Hirt's counterclaim. On February 17, 2016, after briefing from the parties, the circuit court granted the motion for summary judgment as to Hirt's rescission claim but denied it as to Hirt's damages claims. On December 23, 2016, GreenPoint moved for reconsideration of the circuit court's denial of summary judgment as to Hirt's damages claims. On March 13, 2017, the circuit court granted GreenPoint's motion to reconsider. Hirt timely appealed.

¶ 16 ANALYSIS

¶ 17 In the first issue, Hirt contends the circuit court erred in granting summary judgment in favor of GreenPoint on her rescission claim. Summary judgment is proper only when "the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." 735 ILCS 5/2–1005(c) (West 2014). "A genuine issue of material fact exists where the facts are in dispute or where reasonable minds could draw different inferences from the undisputed facts." Morrissey v. Arlington Park Racecourse, LLC , 404 Ill. App. 3d 711, 724, 343 Ill.Dec. 636, 935 N.E.2d 644 (2010). A material fact is one that "might affect the outcome of the suit" under the applicable substantive law. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment is a drastic measure and should only be granted if the movant's right to judgment is clear and free from doubt. Outboard Marine Corp. v. Liberty Mutual Insurance Co. , 154 Ill. 2d 90, 102, 180 Ill.Dec. 691, 607 N.E.2d 1204 (1992). On appeal, our review of a summary judgment order is de novo , and "we afford no deference to the trial court's decision and instead, we consider anew the pleadings, affidavits, depositions, admissions, and exhibits on file to determine whether the trial court's decision was correct." Jackson v. Graham , 323 Ill. App. 3d 766, 779, 257 Ill.Dec. 330, 753 N.E.2d 525 (2001).

¶ 18 Hirt argues a question of fact remains as to whether she timely rescinded. "[W]hen a loan made in a consumer credit transaction is secured by the borrower's principal dwelling," TILA permits the borrower to "rescind the loan agreement" ( Beach v. Ocwen Federal Bank , 523 U.S. 410, 411, 118 S.Ct. 1408, 140 L.Ed.2d 566 (1998) ) up to three business days after the transaction. 15 U.S.C. § 1635(a) (2012). When the lender "fails to deliver certain forms or to disclose important terms accurately" to the borrower, the Act extends the borrower's right to rescind...