STANLEY M. POHL; ZINAIDA Q. POHL, Plaintiffs - Appellants,
U.S. BANK, as trustee for Merrill Lynch First Franklin Mortgage Loan Trust Back Certificates Series 2007-4; DEBRA JOHNSON, Public Trustee of Denver County; and all unknown persons who claim any interest in the subject matter of this action, Defendants - Appellees.
from the United States District Court for the District of
Colorado (D.C. No. 1:14-CV-02292-PAB-MJW)
on the briefs:[*]
Connelly, Zonies Law LLC, Denver, Colorado; Joseph J. Novak,
Moritz Law, LLC, Denver, Colorado, for Plaintiffs-Appellants.
D. Balser and Taylor T. Haywood, Akerman LLP, Denver,
Colorado, for Defendants-Appellees.
TYMKOVICH, Chief Judge, McKAY and LUCERO, Circuit Judges.
appeal requires us to determine whether the district court
erred in holding that plaintiffs Stanley M. Pohl and Zinaida
Q. Pohl are precluded from asserting a claim to rescind the
foreclosure sale of their home, based on their lender's
alleged violations of the Truth in Lending Act (TILA), 15
U.S.C. §§ 1601-1666j. Exercising jurisdiction under
28 U.S.C. § 1291, we affirm the district court's
grant of summary judgment to the defendants and denial of
summary judgment to the Pohls.
discussion of the rescission process established by TILA is
helpful to understanding the parties' arguments in this
appeal. TILA grants borrowers rights to rescind certain
consumer credit transactions involving a security interest in
the borrower's primary residence. 15 U.S.C. §
1635(a). TILA creates two rescission periods, one
unconditional and one conditional.
have an unconditional right to rescind that lasts
until "midnight of the third business day following the
consummation of the transaction." Id. But when
a creditor fails to deliver the material disclosures and
information and rescission forms required by TILA, a borrower
retains the right to rescind until the creditor delivers
those required documents. Id. This extended right to
rescind is conditional, because it comes into
existence only if the creditor has not delivered the required
documents. And even if the creditor never delivers the
required documents, the conditional right to rescind lasts no
longer than three years after the consummation of the
transaction. Id. § 1635(f).
provides that a borrower exercises the right to rescind
"by notifying the creditor . . . of his intention to do
so." Id. § 1635(a). In Jesinoski v.
Countrywide Home Loans, Inc., 135 S.Ct. 790, 791 (2015),
the Supreme Court considered "whether a borrower
exercises this right [to rescind] by providing written notice
to his lender, or whether he must also file a lawsuit before
the 3-year period elapses." The Court held that the
language of § 1635(a) "leaves no doubt that
rescission is effected when the borrower notifies the
creditor of his intention to rescind. It follows that, so
long as the borrower notifies within three years after the
transaction is consummated, his rescission is timely. The
statute does not also require him to sue within three
years." Id. at 792.
further provides that when a borrower exercises the right to
rescind, "he is not liable for any finance or other
charge, and any security interest given . . ., including any
such interest arising by operation of law, becomes void upon
such a rescission." 15 U.S.C. § 1635(b). "When
a consumer rescinds under TILA, the creditor must-within 20
calendar days after receipt of a valid notice of rescission-
return any money or property that has been given to anyone,
including any finance charges collected from the
consumer." Sanders v. Mountain Am. Fed. Credit
Union, 689 F.3d 1138, 1142 (10th Cir. 2012) (internal
quotation marks omitted). Further, the creditor "must .
. . take any action necessary to reflect the termination of
its security interest." Id. (brackets and
internal quotation marks omitted). "After the creditor
satisfies these rescission obligations, the consumer must
tender to the creditor the loan proceeds or their reasonable
value." Id. (internal quotation marks omitted).
These procedures "shall apply except when otherwise
ordered by a court." 15 U.S.C. § 1635(b).
borrower rescinds during the unconditional three-day
rescission period, "this process is clear and functions
well." Sanders, 689 F.3d at 1142. But
"[t]he process does not work well after the initial
three-day period when the creditor has disbursed funds and
perfected its lien, and the consumer's right to rescind
may have expired." Id. (ellipses and internal
quotation marks omitted). Because "[m]ost creditors are
reluctant to release a lien under these conditions,
particularly if the consumer is in default or in bankruptcy
and would have difficulty tendering, " when a borrower
tenders a notice of rescission after the unconditional
three-day period, ...