be brought against the assignee regardless of §1641(a)’s requirement that violations be apparent on
the face of the disclosure statement. Payton finds support in Fairbanks Capital Corp. v. Jenkins, 225
F, Supp. 2d 910, 915-17 (N.D. Ill. 2002), where Judge Kennelly respectfully disagreed with the
Brodo court’s conclusion that rescission is the sole remedy available against an assignee. However,
Judge Kennelly expressly declined to rule on whether statutory damages is a possible remedy. Id.
At 917.

This court finds that TILA does not allow the imposition of statutory damages upon USB in
this case.” The statute clearly limits an assignee’ liability to violations that are apparent on the face
of the disclosure statement except where otherwise specifically provided. A plain reading of §
1641(c) makes clear that the right to rescind remains against an assignee regardless of any limitation
in 1641(a). A plain reading of 1641(c) does not necessarily lead to the conclusion that this provision
was meant to specifically provide for statutory damages against an assignee. Congress has created
ageneral rule in 1641(a) that assignees are not liable when they are neither responsible nor on notice
of acreditor’s violation. Overcoming this general rule requires a specific provision from Congress.
Section 1641(c) does not specifically provide for statutory damages against an assignee, and,
therefore, this court will not impose statutory damages upon USB under that section absent clearer
Congressional direction. Thus, because Payton has not proved that USB violated § 1641(a) or any
other TILA provision providing for statutory damages, this court grants USB’s motion for summary
judgment on the issue of statutory damages.

Payton also asserts that she is entitled to attorneys’ fees. In Fairbanks Capital Corp., Judge

>This finding obviates the need to address defendants’ argument that when rescission is
disputed statutory damages cannot be awarded until a loan holder continues to violate § 1635's
requirements after a judicial determination that rescission is appropriate.

13



trial. Id, A party who bears the burden of proof on a particular issue, however, may not rest on its
pleadings, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine

issue of material fact that requires trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).

ANALYSIS

Payton has moved for summary judgment against the remaining defendants claiming they
committed a violation of TILA by refusing to honor her right of rescission. Ocwen’s original
declaratory action and Ocwen and USB’s cross-motion for summary judgment ask this court to rule
that Payton has no right to rescind, or in the alternative that they are not liable for attorneys’ fees and
statutory damages. Thus, this court must determine whether Payton should be granted summary
judgment on the issue of rescission, and then what liability the defendants bear for any refusal to
honor plaintiff's request for rescission.

L Payton’s Right to Rescind.

TILA clearly gives a consumer the right to rescind a loan against a creditor within three days
of the “consummation of the transaction.” 15 U.S.C. § 1635(a). Furthermore, the right to rescind
extends to three years if “the required notice or material disclosures are not delivered.” 12 C.F.R.
§ 226.23(a)(3). The “notice” that is required to be given to the consumer is two “copies of the notice
of the right to rescind.” 12 C.F.R. § 226.23(b)(1). This notice is required to be on a separate piece
of paper and it must contain the date the rescission period ends. 12 C.F.R. § 226.23(b)(1), (b)(1)(v).
The “material disclosures” that must be delivered “mean{] the required disclosures of the annual
percentage rate, [and] the finance charge.” 12 C.F.R. § 226.23(a)(3) n. 48. If a consumer has the

tight to rescind against a creditor, the right will also apply to any assignees of that creditor. 15


Acreditor’s liability regarding rescission is relatively straightforward: “any creditor who fails
to comply with any requirement imposed under this part, including any requirement under section

the statute clearly contemplates liability

Jaid out in § 1635. A creditor, however “is

the person to whom the debt arising from the co

iE
I nor USB fits the definition of a creditor.

Un |

Payton alleges that both defendants are liable as assignees, and that assignees are liable for statutory

| | | J et transaction is initially payable.” 15
I

U.S.C. § 1602(f). All parties agree that neither

damages and attorneys’ fees for refusing a proper request for rescission. The defendants concede
that USB is an assignee (Defs.’ 56.1(a) Stmt. 7), but dispute an assignee’s liability and further argue
that Ocwen is a servicer and not an assignee. The distinction between a servicer and an assignee is
important because TILA clearly does not allow liability to be assessed upon a mere servicer. This
court will now turn to the question of whether Ocwen is a servicer, and then decide the extent of
USB?’s liability to Payton.

A. Whether Ocwen is a Servicer or Assignee

TILA expressly disclaims any liability for mere servicers “unless the servicer is or was the
owner of the obligation.” 15 U.S.C. § 1641(f)(1). Furthermore, a servicer is not to be treated as an
assignee for purposes of liability under TILA “on the basis of an assignment of [an] obligation from
the creditor or another assignee to the servicer solely for the administrative convenience of the
servicer in servicing the obligation.” 15 U.S.C. § 1641(f(2). For the definition of a servicer, TILA
refers to 12 U.S.C. § 2605(i)(2), which states: “The term ‘servicer’ means the person responsible for
servicing of a loan (including the person who makes or holds a loan if such person also services that

loan).” From the foregoing, it is clear that for liability purposes the crux of the matter is ownership.


however, deny that Payton received blank forms and support that denial with an affidavit from an
Ocwen employee that asserts Ocwen has in its loan file for Payton properly completed Notices of
Right to Cancel signed by Payton (Defs.’ 56.1(a) Stmt., Ex. D). Furthermore defendants have
submitted these completed and signed Notices of Right to Cancel as an exhibit. (Defs.’ 56.1(a)
Stmt., Ex. H).

TILA is a disclosure statute that requires the creditor to “provide . . . appropriate forms.” 15
U.S.C. § 1635(a). The material fact therefore is whether Payton received the properly completed
forms, Although defendants have not brought this to the attention of the court, TILA has a provision
that creates a rebuttable presumption of delivery of required documents when there is “written
acknowledgment of receipt of any disclosures required.” 15 U.S.C. § 1635(c). While this provision
was likely enacted for the benefit of borrowers, it does not necessarily preclude reliance by creditors
and assignees. See In re Rhoades, 80 B.R. 938, 941 (Bankr. C.D. Ill. 1987). Viewing these facts
in the light most favorable to the defendants, this court finds that there exists a dispute of fact as to
the issue of whether Payton was given blank Notice of Right to Cancel forms. See Rowland v,
Novus Fin Corp., 949 F. Supp. 1447, 1459-60 (D. Ha. 1996) (finding a material issue of fact when
plaintiff produced blank Notices of Right to Cancel and defendant produced signed, complete
Notices of Right to Cancel). If her blank copies of the forms were Payton’s only asserted basis for
rescission, this finding would preclude a grant of summary judgment in her favor. However, Payton
asserts a second undisputed violation as a basis for the extended right to rescind.

The second ground Payton asserts for rescission is that the finance charge for her loan was
understated by at least $35. She supports this contention with her disclosure statement from New

Century which lists the sum of $111 for“Government Recording and Transfer Charges (Pl.’s 56.1(a)


US.C. § 1641(0).

As a preliminary matter defendants have argued that Payton cannot rescind a loan that has

been refinanced. Payton refinanced her loan} equest for rescission was refused by Ocwen.

The Seventh Circuit has not yet addressed of whether refinancing a Joan precludes
rescission. The judges of this district are issue. Judges Bucklo and Leinenweber,
1 & published opinion,’ King v, California, 784

F.2d 910, 913 (9th Cir. 1986), have held that

Jenkins v. Mercantile Mortgage Co., 231 F. upg 2 if 737, 745-46 (N.D. Ill. 2002) (Bucklo, J.);
Coleman v, Equicredit Corp., 2002 WL 88750, at *2 (N.D. Ill. Jan. 22, 2002) (Leinenweber, J.).
More recently, Judge Plunkett has held that refinancing a loan does not preclude rescission. Pulphus
y. Sullivan, 2003 WL 1964333, at * 13-14 (N.D. Ill. Apr. 28, 2003) (Plunkett, J.). Given the absence
of statutory or regulatory language of such a requirement, and the absence of analysis by the Ninth
Circuit in King, this court agrees with the courts which have held refinancing does not bar a suit for
rescission. See McIntosh v. Irwin Union Bank and Trust, 215 F.R.D. 26, 31 (D. Mass. 2003).

Payton asserts two grounds for her claim that she is entitled to rescind her loan. First, Payton
asserts that she was given Notice of Right to Cancel forms that contain a blank where the deadline
date for rescission should be. She supports this assertion with an affidavit and copies of the blank
forms. (PI.’s 56.1(a) Stmt., Exs. A and 1-2.) The failure to provide two completed copies of the

notice of the right to rescind is a basis for rescission. 12 C.F.R. § 226.23(b)(1). Defendants,

'The Court of Appeals for the District of Columbia addressed this issue in an unpublished

opinion. Duren v. First Gov’t Mortgage and Investors Corp., 221 F.3d 195, 2000 WL 816042, at
*2 (D.C. Cir. 2000) (noting that “we disagree with [Appellees] contention that the refinancing of
the 1994 loan rendered unavailable TILA’s statutory rescission remedy, notwithstanding the

Ninth Circuit’s terse suggestion to the contrary in King.”).
5



1635(i)(2).

Second, the overcharge of the recording fees is not specifically exempted from inclusion in
the finance charge by TILA. While defendants do not point to any specific exemption that would
remove the disputed “Government Recording and Transfer Charges” amount from the finance
charge, § 1605(d)(1) specifically exempts “fees and charges prescribed by law which actually are or
will be paid to public officials.” This provision, however, does not help the defendants. It is
undisputed that $49.50 of the $111 fee denoted as a government charge was not paid to the
government. Thus, this overcharge cannot be saved from inclusion in the finance charge.

Third, plaintiff alleges and defendants admit that the mortgage broker attempted to return $41
of this overcharge. (Defs.” 56.1(b) Stmt. J 18). TILA is clear that any fee paid by the borrower to
a mortgage broker must be included in the finance charge. It is unreasonable to infer that in a
commercial setting a mortgage broker would seek to return part of a fee to a borrower that was not
initially received by the mortgage broker from the borrower. Thus, this court finds that a mortgage
broker fee, which was not exempted from disclosure and was in excess of $35, was charged to
Payton and not disclosed in the finance charge.

The failure to include this amount in the disclosed finance charge gives rise to an extended
tight of rescission because the true finance charge is a material fact that must be disclosed.
Therefore, Payton’s motion for summary judgment is granted and defendants’ is denied on the issue
of Payton’s right of rescission.

I. Defendants’ Liability
Now that this court has determined Payton has a right to rescind her loan, it must be

determined what liability, if any, the defendants Ocwen and USB share.


Minute Onder Porm (0697)

SS G United States District Court, Northern District of linois

Ns
evr Maghtate Judge | __JameSF. Holderman “han isigved Judge
CASE NUMBER 03 C 703 DATE October 10, 2003
CASE OCWEN FEDERAL BANK vs. PAYTON
TITLE

[ln the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

MoTION: of the motion being presented]

DOCKET ENTRY:

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

(2) oO Brief in support of motion due

@) o Answer brief to motion due___. Reply to answer briefdue___.

(4) Qo Ruling/Hearingon__setfor__at

(5) oO Status hearing[held/continued to) [set for/re-set for]on__—ssetfor___—_—at

(6) Qo Pretrial conference[held/continued to] (set for/re-set for]on____—ssetfor_———sat__—.
(e) Oo Trial[set for/re-set for]on___—__—at

(8) oO [Bench/Jury trial] [Hearing] held/continued to__—_at

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

OUFRCP4(m) (Local Rule 41.1 CIFRCP41(a)(1)  FRCP41(a)(2).

qo) [Other docket entry] Pursuant to Memorandum Opinion and Order entered this day, plaintiff's motion
for summary judgment is granted as to rescission and attorneys’ fees and denied as to statutory damages.
Defendant Ocwen’s cross motion for summary judgment is granted as to its liability as a servicer. All claims
against Ocwen are dismissed. Defendant U.S. Bank’s motion is granted as to statutory damages and denied as
to rescission and attorneys’ fees. The court’s grant of summary judgment in favor of plaintiff Payton entitles her
to rescission and reasonable attorneys’ fees against defendant U.S. Bank. Any pending motions are moot.

(11) fO [For further detail see order (on-reverse-side-ef/attached to) the original minute order.]

Fan Ko notices required, advised in open court, Document
‘No notices required. ofotices
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persuasive the cases not relevant to the decision in Miguel] that decide the filing of a complaint
bearing the loan holder’s name as defendant is sufficient to satisfy TILA’s requirement for notice.
See Taylor v. Domestic Remodeling Inc,, 97 F.3d 96, 100 (Sth Cir. 1996) (repudiating any previous
holding to the contrary in James v. Homes Constr. Co., 621 F.2d 727, 731 (Sth Cir. 1980)); Pulphus,
2003 WL at * 13; Fairbanks Capital Corp., 225 F. Supp. 2d at 913-14; Elliot v. ITT Corp., 764 F.
Supp. 102, 105-06 (N.D. Ill. Mar. 15, 1991). Under this line of cases the filing of the complaint
naming USB as a defendant provided notice sufficient to satisfy TILA. Therefore, the court need
not address the issue of whether notice to a servicer is sufficient under TILA to put the loan holder
on notice,

The main thrust of USB’s cross-motion for summary judgment is that while TILA requires
an assignee to rescind a loan that could have been rescinded against a creditor, TILA also prohibits
the imposition of attorneys’ fees or statutory damages upon an assignee. TILA makes clear that any
violation by the creditor of its rescission duties imposed by § 1635 results in liability: “Except as
otherwise provided in this section, any creditor who fails to comply with any requirement imposed
under this part, including any requirement under section 1635 of this title . . . with respect to any
person is liable to such person ....” 15 U.S.C. §1640(a). Thus, it is clear that a creditor violating
§ 1635 can be liable for statutory damages. See also 15 U.S.C. § 1635(g). USB seizes upon the
presence of “creditor” and absence of “assignee” in § 1640(a) to argue that TILA does not under any
circumstances contemplate liability for an assignee who fails to take the voluntary steps to rescind
the transaction as required by § 1635. To further support this position, USB points out that § 1641,

titled “Liability of assignees” specifically limits an assignee’s liability:

0



However, nowhere does Payton provide evidence that Ocwen is or was the owner of the loan, even
though she is required to do so to survive defendants’ motion for summary judgment. See Celotex
Corp, 474 U.S. at 2554. Payton, in fact, “does not dispute that Ocwen has never owned Payton’s
loan.” (PI’s 56.1(b) Stmt. 75.) Nevertheless, Payton continues to assert that liability against Ocwen
can be maintained because Ocwen “has an interest” in the loan. (Id.) A servicer obviously has an
“interest” in a loan — an interest in servicing the loan. Nevertheless, the fact remains that the interest
that counts is ownership because this is what the statute says. Because plaintiff Payton submits no
evidence on an element that is essential to her case, defendants’ motion for summary judgment in
favor of Ocwen is granted. Thus, all claims against Ocwen are dismissed.

B. — USB's Liability as an Assignee

USB has two arguments remaining to support the conclusion that it bears no liability
notwithstanding a determination that Payton’s loan was subject to rescission. First, USB argues that
it was never given TILA’s required notice of Payton’s election to rescind her loan. See 12 C.F.R.
§ 226.23(a)(2) (requiring the borrower to “notify the creditor of the rescission by mail, telegram or
other means of written communication.”). Payton argues that the notice sent to Ocwen was
sufficient notice for USB, or that the actual filing of the complaint naming USB as a defendant was
itself sufficient notice to USB.

In support of its position, USB cites Miguel v. Country Funding Corp,, 309 F.3d 1161, 1165
(9th Cir. 2002) in which the Ninth Circuit refused to allow a plaintiff leave to amend her complaint
after the expiration of the statute of limitations for the purpose of substituting the loan holder in
place of the servicer. In doing so, the court noted that “no authority supports the position that notice

to [the servicing agent] should suffice for notice to the Bank.” Id, This court, however, finds

10



Stmt., Ex. 5), a form indicating that only $61.50 was actually paid to record the mortgage (Pl.’s
56.1(a) Stmt., Ex. F), and, finally, a check from the mortgage broker attempting to return, after the
present suit was filed, a $41 overcharge (Pl.’s 56.1(a) Stmt., Ex. G). Defendants deny that the
finance charge was understated on the basis that the $111 fee was a recording fee excluded from the
finance charge (Defs.’ 56.1(b) Resp. { 17), but do not otherwise dispute Payton’s version of the facts.
Thus, it is undisputed that Payton paid $111 at her closing for purported “Government Recording
and Transfer Charges,” and that only $61.50 of that sum was actually paid to the government.
Furthermore, after the initiation of Payton’s lawsuit the mortgage broker involved in Payton’s
closing, American Capital Mortgage, attempted to return $41 of this overcharge.

First, a consumer has the right to rescind a credit transaction for up to three years if material
disclosures are not given. 15 U.S.C. § 1635 and 12 C.F.R. § 226.23(a)(3). Material disclosures
include the finance charge. 15 U.S.C. § 1602(u) and 12 C.F.R. § 226.23(a)(3) n. 48. The finance
charge is defined as “the sum of all charges, payable directly or indirectly by the person to whom the
credit is extended, and imposed directly or indirectly by the creditor as an incident to the extension
of credit.” 15 U.S.C. § 1605(a). Charges imposed by a third party, such as a settlement agent, are
finance charges if the creditor requires the charge or the service resulting in the charge, or if the
creditor retains a portion of the charge. 15 U.S.C. § 1605(a). Charges imposed by mortgage brokers
“are finance charges even if the creditor does not require the consumer to use a mortgage broker and
even if the creditor does not retain any portion of the charge.” 12 C.F.R. § 226.4(a)(3). Furthermore,
“for the purposes of exercising any rescission rights after the initiation of any judicial or nonjudicial
foreclosure process,” as occurred in this case (Defs.’ 56.1(b) Resp. 13), a finance charge is not

accurate if it varies from the amount required to be disclosed by more than $35. 15 U.S.C. §



Payton was given various documents. The single fact in dispute relates to these documents. Payton
claims she was given blank Notices of Right to Cancel. Defendants Ocwen and USB claim that
Payton was given properly completed Notices of Right to Cancel. It is undisputed that Ocwen’s loan
file for Payton contains properly completed Notices of Right to Cancel. Another undisputed fact is
that Payton was charged a $111 fee, itemized in the disclosure statement as “Government Recording
and Transfer Charges,” and that only $61.50 of that fee was actually paid to the government.

At the closing, Payton was given a notice informing her that the servicing of the loan was
being transferred to Ocwen. During 2002, Payton missed one or more mortgage payments. Ocwen
refused to accept any further payments and determined to foreclose. A foreclosure action was in fact
filed against Payton. On December 23, 2002, Payton gave notice by a letter mailed to Ocwen that
she was rescinding her loan. No letter of rescission giving notice directly to USB was mailed. On
March 16, 2003, Payton paid-off the loan that is the subject of this litigation by refinancing with

another company.

STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 56(c), summary judgment is proper “if the pleadings,
depositions, answers to interrogatories, 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
judgment as a matter of law.” All evidence must be viewed in the light most favorable to the
nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). However, inferences
in favor of the nonmoving party must be legitimate and justifiable. Id, This court’s function is not

to weigh evidence or make credibility determinations, but to determine whether there is an issue for


Kennelly did address this issue, and found that:

the text of § 1640(a) itself indicates that attorney’s fees, at least, are available from

an assignee, and not just from the originating creditor, for violating a consumer’s

right to rescind. Section 1640(a)(3) provides that “in the case of any successful

action to enforce the foregoing liability or in any action in which a person is

determined to have a right of rescission under section 1635 of this title, the costs of

the action, together with a reasonable attorney’s fee as determined by the court” is

available. 15 U.S.C. § 1640(a)(3) (emphasis added). Congress’ use of the

disjunctive indicates that liability for attorney’s fees, at least, is not limited to actions

against the creditor that initiated the loan but rather applies in “any action” in which

a right to rescind is determined to exist.
225 F. Supp. 2d at 916-17. This court agrees with Judge Kennelly that a consumer who takes
judicial action to establish a right to rescind can recover attorneys’ fees from an assignee. Section
1641(a) works to limits an assignee’s liability except where Congress specifically provides
otherwise. Section 1640(a)(3) specifically provides for attorneys’ fees against an assignee: “in the
case of any successful action to enforce the foregoing liability or in any action in which a person is
determined to have a right of rescission under section 1635 of this title, the costs of the action,
together with a reasonable attomeys’ fee as determined by the court [is available].” 15 U.S.C.
1640(a)(3). A plain reading of the phrase “any action” includes an action against an assignee. This
court also agrees with Judge Kennelly that “denying a consumer whose demand for rescission was
refused by an assignee the ability to recover attorneys’ fees upon successful court action to enforce
her TILA rights would undermine the policies underlying the TILA and its private enforcement
mechanisms.” Fairbanks Capital Corp., 225 F. Supp. 2d. at 917.

The plain language of the statute and the policy behind TILA make clear that attorneys’ fees
are to be provided in “any action,” including one against an assignee, “in which a person is

determined to have a right of rescission under section 1635 of this title.” § 1640(a)(3). Therefore,

14



*A0 450(Rev. 5/8S)Judgment in a Civil Case
United States District Court
Northern District of Illinois

Eastern Division

OCWEN FEDERAL BANK | JUDGMENT IN A CIVIL CASE

v. Case Number: 03 C 703

PAYTON |

Oo Jury Verdict. This action came before the Court for a trial by jury. The issues have been

tried and the jury rendered its verdict. |
| Decision by Court. This action came to trial or hearing before the Court. The issues
have been tried or heard and a decision has been rendered.

IT IS HEREBY ORDERED AND ADJUDGED that plaintiff's motion for summary judgment
is granted as to rescission and attorneys’ fees and denied as to statutory damages. Defendant
Ocwen’s cross motion for summary judgment is granted as to its liability as a servicer. All
claims against Ocwen are dismissed. Defendant U.S. Bank’s motion is granted as to statutory
damages and denied as to rescission and attorneys’ fees. The court’s grant of summary
judgment in favor of plaintiff Payton entitles her to rescission and reasonable attorneys’ fees
against defendant U.S. Bank. Any pending motions are moot. This action is dismissed in its
entirety,

Michael W. Dobbins, Clerk of Court

Date: 10/10/2003

J Smith/ eputy Clete



of the Truth in Lending Act (“TILA”), 15 U.S.C. §1601 et seq. On January 30, 2003, Ocwen Federal
Bank, FSB filed a complaint against Payton in case number 03 C 703 seeking a declaratory judgment
that Payton was not entitled to rescind her mortgage loan, or that if the loan was rescinded that
Ocwen should receive proper payments. On April 2, 2003, Ocwen’s declaratory judgment action
was reassigned to this court pursuant to Local Rule 40.4 as it was related to Payton’s complaint in
case number 03 C 333. Defendant New Century has since been dismissed from the case, pursuant
to settlement, leaving Ocwen and USB as the sole defendants. On June 27, 2003, plaintiff Payton
filed a motion for summary judgment, and defendants Ocwen and USB responded with a joint cross-
motion for summary judgment. In her motion Payton requested this court to hold (1) that she should
be granted summary judgment in Ocwen’s declaratory action because she was entitled to rescind her
loan, (2) that she is entitled to $2,000 statutory damages for defendants’ failure to honor her right
to rescind, and (3) that she is entitled to attorneys’ fees and costs. In their response to Payton’s
motion, defendants Ocwen and USB requested this court to hold that Payton had no right to rescind,
and that they are liable for neither statutory damages nor Payton’s attorneys’ fees. As will be
discussed below, Payton’s motion for summary judgment is granted as to Payton’s right to rescind
and as to reasonable attorneys’ fees. This motion is denied as to statutory damages. Defendants’
motion for summary judgment is granted as to the issue of Ocwen’s liability and statutory damages

and denied as to plaintiff's right to rescind and reasonable attorneys’ fees.

STATEMENT OF FACTS
Plaintiff Martha Payton is a 76-year-old individual who resides in Evanston, Illinois. On

January 18, 2002, Payton obtained a mortgage loan from New Century. In connection with this loan


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

. EASTERN DIVISION
O )
MARTHA PAYTON, Mi EEA
} DOCKETED
Plaintiff, } OCT 1 4 2003
v. )
)
NEW CENTURY MORTGAGE )
CORPORATION; ) No. 03 C 333
OCWEN FEDERAL BANK, FSB; )
U.S. BANK, N.A., and )
JOHN DOES 1-5, )
)
Defendants. )
)
)
)
OCWEN FEDERAL BANK, FSB, )
)
Plaintiff, )
)
v. ) i
) in
MARTHA PAYTON, ) No. 03 C 703
)
Defendant. )
)
MEMO) ORDE

JAMES F. HOLDERMAN, District Judge:

On January 15, 2003, plaintiff Martha Payton (“Payton”) filed a complaint in case number

03 C 333 against defendants New Century Mortgage Corporation (“New Century”), Ocwen Federal

Bank, FSB (““Ocwen”), U.S. Bank, N.A. (“USB”) and five “John Doe” plaintiffs alleging violations



Except as otherwise specifically provided in this subchapter, any civil action
for a violation of this subchapter . .. which may be brought against a creditor may be
maintained against any assignee of such creditor only if the violation for which such
action or proceeding is brought is apparent on the face of the disclosure statement .

15 U.S.C. § 1641(a). Thus, according to USB, these sections which differentiate between the
liability ofa creditor and assignee make clear that an assignee has no liability for failing to properly
respond to a request for rescission. At least one court has agreed with this position. Brodo v,
Bankers Trust Co., 847 F. Supp. 353, 358-59 (E.D. Penn. 1994) (“Neither § 1641 nor any other
section provides for a statutory penalty or an award of attorney’ s fees to a plaintiff should an assignee
fail to respond to a valid rescission notice.”). In the alternative, USB argues that even if this court
finds that TILA contemplates some assignee liability for failure to comply with a request for
rescission that liability must still be consistent with § 1641(a) and therefore limited to instances
where it is apparent from looking at the disclosure statement that the consumer will have the Tight
to rescind, Furthermore, USB asserts without contradiction from Payton that the basis for rescission
in this case is not apparent on the face of the disclosure statement.

Payton responds by arguing that Brodo and USB are incorrect because § 1641(a) allows
greater liability for an assignee where “specifically provided.” According to Payton, liability for an
assignee’s violation of § 1635 is “specifically provided” for in §1641(c), titled “Right of rescission
by consumer unaffected,” which states: “Any consumer who has the right to rescind a transaction
under section 1635 of this title may rescind the transaction as against any assignee of the obligation.”
15 U.S.C. § 1641(c). According to Payton, the presence of § 1641(c) stands for the proposition that

any Claim for rescission against a creditor, including statutory damages and attomeys’ fees, may also

12


because Payton is entitled to rescind her loan against USB she is also entitled to recover reasonable

attorneys’ fees.

CONCLUSION
For the foregoing reasons, plaintiff's motion is granted as to rescission and attorneys’ fees
and denied as to statutory damages. Ocwen’s motion is granted as to its liability as a servicer. All
claims against Ocwen are therefore dismissed. USB’s motion is granted as to statutory damages and
denied as to rescission and attorneys’ fees. The court’s grant of summary judgment in favor of
Payton entitles her to rescission and reasonable attorneys’ fees against USB. Any pending motions

are moot.

ENTER:

2. Niblermar

JAMES F. HOLDERMAN
United States District Judge

DATE: October 10, 2003

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