Service of Notice of Rescission on Creditor Effective to Rescind the Loan Against the Assignee who was not notified until three years later

was proper even though the assignee received more than three years after the closing. In Hubbard v. Ameriquest Mortg. Co. 05-CV-389 (September 2008 N.D.Ill.,) the parties conceded that the Plaintiff was entitled to rescind the loan. However, the assignee maintained that it cannot be liable for rescission because, although the Plaintiff gave notice to the loan originator within three years, the Plaintiff did not also give notice of the request for rescission to the assignee within the three years as required by 15 U.S.C. § 1635. The assignee first received notice of Plaintiff’s intent to rescind the loan when it was added as a party to the lawsuit. The question was whether Plaintiff’s timely notice to the original lender was sufficient to effectuate rescission as to assignees who did not receive timely notice. The court concluded that a timely rescission request as to the original creditor is equally effective against an assignee, despite lack of notice to the assignee within the three year window. The court’s conclusion was premised on the language of TILA and Regulation Z which significantly only require notification to the creditor. 15 U.S.C. § 1635(a) Thus, under the plain language of the statute, [plaintiff] fulfilled his obligation to rescind when he notified . . . the ‘creditor’ that he wanted to rescind. The court also fixed on the statutory language reading that [a]ny consumer who has a right to rescind a transaction under section 1635 of this title may rescind the transaction against any assignee of the obligation 15 U.S.C. § 1641(c) as being fully consistent with this outcome. Reading that provision in light of the text, structure, and purpose of TILA as a whole and the Seventh Circuit’s relevant precedents, the Court concluded that Section 1641(c) simply clarifies that assignees may not hide behind an assignment. As long as the borrower has properly rescinded the transaction by giving notice to the creditor within the three year statutory period, the rescission of the transaction is effective against any assignee. Note that the Ninth Circuit in Miguel v. Country Funding Corp., 309 F.3d 1161 (9th Cir., 2002) concluded that a borrower’s rescission was not effective where it was not received by the assignee of the loan within the three-year statute of repose.

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