Editor: David Reiss
Brooklyn Law School

April 16, 2013

Eleventh Circuit Holds that Claim under TILA is Time-barred

By Abigail Pugliese

In Johnson v. Mortgage Electronic Registration Systems, Inc., 252 Fed. Appx. 293 (11th Circ. 2007), the Eleventh Circuit dismissed borrower’s claims under the Truth in Lending Act (“TILA”), because they were time-barred.

On March 17, 2001 Johnson executed a loan from Homegold Financial Inc. The loan was transferred to Household Mortgage Services (“Household”) and MERS held the security deed as nominee for Household. Plaintiff filed a complaint alleging that Household and MERS “failed to make certain disclosures required by [TILA] and sought rescission of her loan and other remedies.” MERS moved to dismiss and the District Court granted summary judgment in favor of MERS. Plaintiff appealed.

Under TILA, the borrower is entitled to a right of rescission, which is “triggered” either (1) by notifying the creditor or (2) “in the face of a judicial or non-judicial foreclosure.” Both of these rights to rescission expire upon the three-year anniversary of the loan transaction. Since Johnson exercised her right to rescission three years and six months after executing the loan, her claim is barred. Since she did not show fraud, the district court properly granted summary judgment.

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