that rescission of a mortgage can still take place even after it
has been refinanced and released. However, these cases do not say
that. All they appear to say, e.g., Wiggins v. AVCO Financial
Services, 62 F.Supp.2d 90 (D.D.C. 1999), is that refusal to rescind
a loan by a lender after a timely request is a violation of the
TILA which may subject the lender to statutory damages under
Section 1640 of the TILA,

Assuming the Colemans had in fact had a right to rescind the
transaction with Mortgage Capital because they received a blank
right to rescind notice, this does not automatically mean that the
right to rescind extends to an assignee such as Equicredit. The
Colemans don’t appear to deny that Equicredit received a fully
filled out copy of a right to rescind notice in the loan document
package from its assignor, Mortgage Capital, which contained a
written acknowledgment by the Colemans that they received two
completed copies of the right to rescind in the following language:

ON THE DATE OF THE TRANSACTION LISTED ABOVE
I/WE THE UNDERSIGNED EACH RECEIVED TWO (2)
COMPLETED COPIES OF THE NOTICE OF RIGHT TO
CANCEL IN THE FORM PRESCRIBED BY LAW ADVISING

ME/US OF MY/OUR RIGHT TO CANCEL THIS
TRANSACTION.

JOHN A COLEMAN /S/ 7/28/2000
DELORES FREEMAN COLEMAN /S/ 7/28/00

In addition the Colemans both initialed the date of the transaction
(7-28-00) and the cancellation deadline (8-1-00) on the document.

Their response to Equicredit’s Local Rule 56.1 statement concerning


compensated, they are entitled to be reimbursed the sum of
$12,023.06 for all mortgage payments, i.e., principal and interest,
that they made to Equicredit prior to the refinance. However,
because the Colemans had full use of the money lent to them during
the loan period, they are only entitled to be reimbursed for
interest paid in excess of the interest rate in the mortgage
refinanced by Mortgage Capital and not for the principal. One of
the cases they themselves cited, Maryfield v. Vanguard Savings &
Loan Association, 710 F. Supp. 143, 148 (E.D. Pa. 1989) makes this
clear.
CONCLUSION

Accordingly, the court grants the ion for Summary Judgment

brought by Equicredit and denies On for Summary Judgment

brought by the Colemans.

IT IS SO ORDERED.

Chi LL =

Yous Qupel Judge
f Very sean Wee Court

Date: dM (ZZ)



penalty. Equicredit thereafter released its security interest in
the Colemans’ property and recorded a Satisfaction of Mortgage with
the Cook County Recorder of Deeds. The Colemans then filed this
suit against both Equicredit and Mortgage Capital.

After they filed this suit, the Colemans entered into a
settlement agreement with Mortgage Capital whereby Mortgage
Capital, in return for a release of all claims by the Colemans,
paid them the sum of $14,255.00, which included $6,615.00 as
reimbursement for the prepay penalty which the Colemans were
required to pay to Equicredit to obtain a release of the mortgage;
$3,040.00 as reimbursement for loan origination charges; $2,100.00
as reimbursement for the difference in interest that they would
have paid to service their former loan and the interest actually
paid to Equicredit (for the 8 months that the loan was in
existence); and $2,500.00 for attorneys fees. Equicredit and the
Colemans have filed cross-motions for summary judgment.

DISCUSSION

According to their briefs the Colemans are still seeking
rescission of their mortgage with Equicredit even though they
refinanced their loan, paid off Equicredit, and had their mortgage
released. However there is nothing to rescind because the mortgage
they want rescinded has been released and no longer exists. King
v. State of California, 784 F.2d 910, 913 (9th Cir. 1986). The

Colemans cite several cases they claim stand for the proposition


the document containing the acknowledgment is that they “are
without personal knowledge as to the documents Equicredit
received.” Pointedly, they do not deny that they executed the
document in question.

Equicredit is an assignee of the original lender, Mortgage
Capital. An assignee's liability under TILA depends on the terms
of Section 1641. This section makes an assignee liable to an
obligor only for those TILA violations that are apparent on the
face of the documents it receives as part of the assignment.
Equicredit received a fully filled out copy of the Notice of Right
to Cancel which bore the acknowledgment of the Colemans
acknowledging that the requirements of Section 1635 had been
satisfied. Case law interpreting Section 1641 makes it clear that
a creditor can rely on the documentation it receives from its
assignor and has no obligation to investigate its accuracy, Taylor
v. Quality Hyundai, Inc., 150 F.3d 689, 694 (7th Cir. 1998), even
where the assignee may have special knowledge that the facts may
not be so. Balderos v. City Chevrolet, 214 F.3d 849, 853 (7th Cir.
2000). Therefore Equicredit was entitled to rely on the documents
it received which showed that Mortgage Capital had apparently
complied with the requirements of Section 1635 and that the
Colemans right to rescind had long since expired.

However, even if Equicredit had violated the TILA, the

Colemans would still not be entitled to recover against it because


5

Minute Order Form (06/97)

Se

United States District Court, Northern District of Illinois

Name of Assigned Judge i . Sitting Judge if Other
or Magistrate Judge Harry D. Leinenweber than Assigned Judge

CASE NUMBER 01 C 2130 DATE 1/22/2002

CASE John A. Coleman, et al vs. Equicredit Corporation of America
TITLE
Un the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintifl, and (b) state briefly the nature

MOTION: of the motion being presented.]

DOCKET ENTRY:

(th) o Filed motion of [ use listing in “Motion” box above.]

(2) o Brief in support of motion due

(3) ob Answer brief to motion due___ . Reply to answer brief due_

(4) oO Ruling/Hearing on set for at

(5) oO Status hearing[held/continued to] [set for/re-set for] on set for at

(6) o Pretrial conference{held/continued to] [set for/re-set for] on set for at .

(7) oO Trial[set for/re-set for] on at

(8) a {Bench/Jury trial] [Hearing] held/continued to at

(9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

CFRCP4(m) (General Rule21 OFRCP41(a)(1) © FRCP41(a)(2).

(0) «x [Other docket entry] ENTER MEMORANDUM OPINION AND ORDER: The Court grants the
Motion for Summary Judgment brought by Equicredit and denies the Motion for Summary Judgment
brought by the Colemans.

dl) @ [For further detail see order attached to the original minute order.]

No notices required, advised in open court, Document
No notices required Number
umber of novices
Notices mailed by judge's staff, : 9. 2882
Notified counsel by telephone. vine docketed
Y | Docketing to mail notices. \ 5
Copy to judge/magistrate judge. i210
O sh 2.
courtroom vA EER) 22 Nut 29 date mailed notice
war deputy’s .
initials 6H
Daterdmblredeived in
central Cletk’s Office nang depaty nits



the Colemans have been fully compensated for all the damages they
sustained due to the violation of Section 1635. The only actual
damages that the Colemans claim they sustained were the prepayment
penalty, the origination charges and the excess interest they paid.
The evidence shows that the Colemans received full reimbursement
for all three of these items. They also received their attorneys’
fees. They don’t claim that they suffered any other actual damage.
They argue that the document showing the breakdown of the
settlement amount paid by Mortgage Capital, was prepared by
Mortgage Capital’s attorney as part of the settlement negotiations
and is therefore inadmissable under Rule 408. However, the
Colemans misunderstand the purpose for which the document is being
used: rather than to prove the validity or amount of their claim,
it is being used to show what compensation they have already
received. They are not entitled to be compensated twice, once by
Mortgage Capital and again by Equicredit. The cause of action
provided for by Section 1640 of the TILA is a statutory tort and
under normal tort law a plaintiff is entitled to one recovery for
his actual damages even though more than one person may be legally
responsible. The Colemans don’t dispute that the breakdown
accurately reflects their actual damages, so that the document
merely shows that they have, in fact, been compensated.

The Colemans do contend however that they are entitled to more
money than what they received from Mortgage Capital. They contend
that, in addition to the three items for which they have been

~6-


IN THE UNITED STATES DISTRICT COURT F I
FOR THE NORTHERN DISTRICT OF ILLINOIS L E D
EASTERN DIVISION

J
JOHN A. COLEMAN and DELORES , AN 22 7007
FREEMAN-COLEMAN , Wdge Hany Le,
as US. District Conutebien
Plaintiff, uk

Case No. 01 C 2130

v.
Hon. Harry D. Leinenweber

EQUICREDIT CORPORATION OF
AMERICA and MORTGAGE CAPITAL

ASSOCIATES, INC., POCKETED

Defendants. JAN 2 3 2002

MEMORANDUM OPINION AND ORDER

On July 27, 2000, the Plaintiffs, John A. Coleman and Delores
Freeman-Coleman (the “Colemans”), obtained a non-purchase money
mortgage loan, secured by their residence, from Mortgage Capital
Associates for personal family purposes. The loan was assigned by
Mortgage Capital to the defendant Equicredit Corporation shortly
after the loan closing. The Colemans had refinanced an existing
fixed interest FHA loan with an adjustable rate mortgage at a
higher interest rate, which, as they came to realize, was not a
particularly smart thing to do. Because the loan was secured by
the Colemans’ home, and had not been entered into for initial
acquisition or construction, they were entitled to rescind it, if
they did so on a timely basis, and the Colemans were entitled to

written notice of this right. See the Truth in Lending Act

2

(“TILA”), 15 U.S.C. § 1635 and 12 C.F.R. § 226.23.


Under 12 C.F.R. § 226.23, a creditor is obligated to deliver
two copies of the notice of the right to rescind to each borrower
entitled to rescind, and the notice must be by separate document
and must advise the borrower of the following specifics: that a
security interest in the consumer’s dwelling is retained by the
creditor; that he has a right to rescind and how to exercise it;
the effects of rescission; and that the right to rescind expires at
midnight of the third business day following the receipt of the

notice.

On February 19, 2001, well after the three-day deadline for
rescission if they had received a valid notice at closing, the
Colemans’ lawyer sent Equicredit a demand that the loan be
rescinded on the grounds that the notice of the right to cancel
given them by Mortgage Capital was defective because it did not
include the date of the transaction and the date the right to
rescind expired. Equicredit declined to rescind the loan and
notified the Colemans’ lawyer that it had obtained, as part of the
loan document package it had received from its assignor, Mortgage
Capital, a fully filled out notice of the right to rescind form,
which included a written acknowledgment by the Colemans that they
had in fact received notices that had been fully filled out. A
copy of the notice to rescind obtained by Equicredit was sent to
the Colemans’ lawyer. On April 2, 2001, the Colemans refinanced
the loan elsewhere and paid the sum of $166,634.50 to Equicredit in
full payment of their mortgage obligation, including a prepay

-2-