TILA Rescission Claim

The U.S. Court of Appeals for the Third Circuit recently held that the testimony of a borrower alone is sufficient to overcome TILA's presumption of delivery of TILA disclosures.

A copy of the opinion is available at:

http://www.ca3.uscourts.gov/opinarch/094055p.pdf

The borrower brought a TILA rescission claim, specifically alleging that she did not receive the notices of her right to cancel at the closing on her home, and further, that to the extent she did receive the notices in the mail after the closing, they were not clear and conspicuous as required by TILA because they listed the wrong final rescission date and because they were received only after the loan funds had been disbursed.

Thus, according to the borrower, TILA's three-year extension of the right to rescind under the mortgages was triggered. The jury entered a verdict in favor of the lender on this TILA rescission claim.

On appeal, the borrower challenged various aspects of the jury instructions, including the District Court's instruction that because her signature was on the notice of right to cancel, "something more than just [her] testimony . . . is needed to rebut the presumption that she received" the notice.

Examining the jury instruction at issue, the Court noted that, unless Congress or the Rules of Evidence provide otherwise, "a presumption in a civil case imposes the burden of production on the party against whom it is directed, but does not shift the burden of persuasion." Further, "the introduction of evidence to rebut a presumption destroys that presumption, leaving only that evidence and its inferences to be judged against the competing evidence and its inferences to determine the ultimate question at issue."

The Court then examined the language within TILA, specifically the provision stating that when a borrower signs a "written acknowledgment of receipt" of the disclosures required by TILA, his or her signature "does no more than create a rebuttable presumption of delivery thereof." The Court concluded that this language in TILA indicated that Congress did not intend that something more than the testimony of a borrower was required to overcome TILA's rebuttable presumption of receipt. Thus, the District Court's jury instruction to the contrary was in error.