                            Illinois Official Reports

                                    Supreme Court



             Financial Freedom Acquisition, LLC v. Standard Bank & Trust Co.,
                                    2015 IL 117950




Caption in Supreme     FINANCIAL FREEDOM ACQUISITION, LLC (OneWest Bank
Court:                 N.A., Appellee), v. STANDARD BANK AND TRUST COMPANY
                       et al., Appellant.



Docket No.             117950



Filed                  September 24, 2015
Rehearing denied       November 23, 2015



Decision Under         Appeal from the Appellate Court for the First District; heard in that
Review                 court on appeal from the Circuit Court of Cook County, the Hon.
                       Robert E. Senechalle, Jr., Judge, presiding.



Judgment               Appellate court judgment reversed.
                       Cause remanded.

Counsel on             John K. Wheeler, of Westmont, for appellant.
Appeal
                       Louis J. Manetti, Jr., of Codilis & Associates, P.C., of Burr Ridge, for
                       appellee.

                       James A. Brady and Michelle A. Weinberg, of Legal Assistance
                       Foundation, of Chicago, for amici curiae National Consumer Law
                       Center and National Association of Consumer Advocates.
     Justices                   JUSTICE BURKE delivered the judgment of the court, with opinion.
                                Chief Justice Garman and Justices Freeman, Thomas, Kilbride,
                                Karmeier, and Theis concurred in the judgment and opinion.



                                                  OPINION

¶1         On October 14, 2010, plaintiff, OneWest Bank N.A.1 filed a complaint against defendant,
       Standard Bank and Trust Company, as Trustee u/t/a dated 03/18.1991 a/k/a Trust No. 5193
       (Standard), along with unknown beneficiaries of that trust to foreclose a mortgage on
       property held by the trust. In response, Standard filed an answer and counterclaim on July 19,
       2011. In the counterclaim, Standard sought to rescind the mortgage, alleging violations of the
       Truth in Lending Act (TILA). 15 U.S.C. § 1601 et seq. (2006). The circuit court of Cook
       County granted plaintiff’s motion to dismiss the counterclaim pursuant to section 2-619.1 of
       the Code of Civil Procedure (Code) (735 ILCS 5/2-619.1 (West 2010)) and Standard
       appealed. The appellate court affirmed, with one justice dissenting. 2014 IL App (1st)
       120982. We granted Standard’s petition for leave to appeal. For the reasons that follow, we
       reverse the judgment of the appellate court and remand this cause for proceedings consistent
       with this opinion.

¶2                                           BACKGROUND
¶3          On July 9, 2009, Mary Jane Muraida (Mary) and Standard entered into a consumer credit
       transaction for an adjustable rate home equity conversion mortgage, also known as a reverse
       mortgage, along with an adjustable rate note with Marquette National Bank.2 The note was
       secured by a condominium located at 10420 South Circle Drive, Unit 21B, Oak Lawn,
       Illinois, which was the property held in Trust No. 5193 and Mary’s principal dwelling.
¶4          The mortgage identified the mortgagor and borrower as “Standard Bank & Trust as
       Trustee under trust agreement dated March 18 1991 and known as Trust No. 5193” and the
       note was signed by both Mary and Standard. Attached to and made a part of the mortgage
       was an exculpatory clause, which provided:
                “This MORTGAGE is executed by STANDARD BANK & TRUST COMPANY, not
                personally but as Trustee as aforesaid in the exercise of the power and authority
                conferred upon and vested in it as such Trustee (and said STANDARD BANK &
                TRUST COMPANY, hereby warrants that it possesses full power and authority to
                execute this instrument), and it is expressly understood and agreed that nothing herein
                or in said Note contained shall be construed as creating any liability on the said
                Trustee or on said STANDARD BANK & TRUST COMPANY personally to pay the
                said Note or any interest that may accrue thereon, or any indebtedness accruing
                hereunder, or to perform any covenant either express or implied herein contained, or
           1
            This action was originally filed by Financial Freedom Acquisitions, LLC. On November 2, 2011,
       OneWest Bank N.A. was substituted as party plaintiff.
           2
            Marquette subsequently transferred its interests to Financial Freedom, which later transferred its
       interest to OneWest Bank.

                                                      -2-
             on account of any warranty or indemnification made hereunder, all such liability, if
             any, being expressly waived by Mortgagee and by every person now or hereafter
             claiming any right or security hereunder, and that so far as the Trustee and its
             successors and said STANDARD BANK & TRUST COMPANY personally are
             concerned, the legal holder or holders of said Note and the owner or owners of any
             indebtedness accruing hereunder should look solely to the premises hereby conveyed
             for the payment thereof, by the enforcement of the lien hereby created, in the manner
             herein and in said Note provided or by action to enforce the personal liability of any
             guarantor, if any.”
¶5       Under the terms of the note, Standard had no personal liability and the only means of
     enforcing a security interest was through the property itself. In addition, the note provided
     that the loan became immediately due upon the death of the borrower, the sale of the
     property by the borrower, or if the borrower failed to use the property as his/her principal
     dwelling for more than 12 consecutive months.
¶6       Under TILA, in all consumer credit transactions in which a security interest is retained in
     any property which is used as the principal dwelling of the person to whom credit is
     extended, the lender is required to provide the borrower with certain disclosure statements,
     including a notice that the borrower has a right to rescind the transaction until midnight of the
     third business day following consummation of the transaction. 15 U.S.C. § 1635(a) (2006). A
     failure to provide such information is a violation which gives the consumer an extended right
     to rescind for up to three years after the consummation of the transaction. Mary received the
     TILA disclosures. Although the same documents were prepared for Standard as trustee,
     plaintiff never delivered them to Standard.
¶7       On May 20, 2010, Mary died. On October 14, 2010, plaintiff filed a complaint against
     Standard to foreclose the mortgage. On June 2, 2011, Standard sent plaintiff a notice that it
     was exercising its right to rescind the transaction. Plaintiff did not respond. Thereafter, on
     July 19, 2011, Standard filed an answer to plaintiff’s complaint and a counterclaim. In the
     counterclaim, Standard alleged violations of TILA and sought rescission of the transaction,
     termination of the security interest, statutory damages for the TILA violations, statutory
     damages for plaintiff’s failure to respond to the rescission notice, and reasonable attorney
     fees. In response, plaintiff filed a combined motion to dismiss under section 2-619.1 of the
     Code. 735 ILCS 5/2-619.1 (West 2010). On January 5, 2012, following a hearing, the circuit
     court ordered the dismissal of Standard’s counterclaim with prejudice.
¶8       It appears from the record that, on January 18, 2012, Standard provided plaintiff with the
     full amount due on the mortgage and note and then terminated the trust, deeding its interest
     in the subject property to a third party. Thereafter, plaintiff filed a motion to voluntarily
     dismiss its complaint for foreclosure, and on March 2, 2012, the court dismissed the action
     with prejudice. Standard then appealed the dismissal of its counterclaim.
¶9       In the appellate court, Standard argued that, as trustee, it had the right to rescind and it
     timely exercised that right. In addition, Standard argued it had a contractual right to rescind.
     2014 IL App (1st) 120982, ¶ 13. Plaintiff disagreed, arguing that a land trust is not a
     “consumer” as that term is defined in TILA and, therefore, Standard, as trustee, had no
     standing to rescind. Plaintiff also argued that Standard had no right to rescind because the
     property was not Standard’s principal dwelling and because Standard was not a party to the


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       transaction. Id. In a divided opinion, the appellate court affirmed the circuit court’s judgment.
       Id. ¶ 14.
¶ 10       The appellate court majority analyzed the circuit court’s dismissal order under section
       2-615 (id. ¶ 16) and concluded there was no set of facts under which Standard could assert a
       claim for rescission under TILA. The majority concluded that, although Standard’s
       counterclaim was timely filed, Standard was not an “obligor” under TILA and, therefore, was
       not entitled to rescind the transaction. Id. ¶ 24. Noting that neither TILA nor Regulation Z
       (the regulations interpreting TILA) define “obligor,” the appellate court looked to the
       dictionary definition, to find that an “obligor” is “ ‘[o]ne who has undertaken an obligation; a
       promisor or debtor.’ ” Id. (quoting Black’s Law Dictionary 1181 (9th ed. 2009)). Relying on
       Ferreira v. Mortgage Electronic Registration Systems, Inc., 794 F. Supp. 2d 297 (D. Mass.
       2011), the appellate court then held that the right to rescind can “be exercised only by the
       obligor, i.e. the person to whom credit is extended.” (Emphasis omitted.) 2014 IL App (1st)
       120982, ¶ 24.
¶ 11        According to the appellate court, although both Mary and Standard signed the note,
       Standard “executed an exculpatory clause expressly disclaiming” any obligations under the
       loan documents. Id. ¶ 26. Thus, the appellate court held “[t]his complete disclaimer of all
       liability left Standard Bank ‘free of any reciprocal responsibilities whatever.’ ” Id. Moreover,
       the court held there was no evidence Standard received any benefit from the transaction.
       Accordingly, the appellate court reasoned that Standard’s disclaimer of all liability left Mary
       as the only obligor and because TILA only gives obligors the right to rescind, Standard had
       no right to rescind. Id. For these reasons, the appellate court concluded there was no set of
       facts Standard could assert to state a claim for rescission. Id.
¶ 12        The appellate court also held that Standard forfeited any right it might have had to
       statutory damages because of its failure to raise the issue on appeal. Id. ¶ 28. In a footnote,
       the appellate court suggested this claim might be barred by the statute of limitations. Id. ¶ 28
       n.8. Accordingly, the appellate court affirmed the circuit court’s dismissal of Standard’s
       counterclaim with prejudice.
¶ 13        Justice Gordon dissented, finding Standard alleged sufficient facts to support its claim for
       rescission. Relying on the plain language of section 1635(a) of TILA, Justice Gordon wrote
       that to assert a claim for rescission, Standard needed to allege that: “(1) ‘in the case of any
       consumer credit transaction,’ (2) ‘a security interest *** is or will be retained or acquired in
       any property’ and (3) the property ‘is used as the principal dwelling of the person to whom
       credit is extended.’ [Citation.]” Id. ¶ 36 (Gordon, J., dissenting).
¶ 14        With respect to the first element, Justice Gordon opined that, while Standard had to allege
       a “consumer credit transaction” was involved, this was different than requiring Standard to
       show it was a consumer in that transaction. Noting that “consumer” is used as an adjective to
       describe the type of transaction, Justice Gordon concluded that, because a reverse mortgage
       is clearly a consumer credit transaction, the first element was established. Id. ¶ 38.
¶ 15        Justice Gordon found that the second element also was satisfied because Standard
       attached a copy of the mortgage to its counterclaim which showed that a security interest was
       acquired in the property. Id. ¶ 39. With respect to the third element, Justice Gordon reasoned
       that the property need not be the principal dwelling of the obligor, but rather the principal
       dwelling of the party to whom credit was extended. Id. ¶ 40. Finding that “the statute uses the


                                                   -4-
       word ‘obligor’ to describe the entity that has the right to rescind, and the words ‘the person to
       whom credit is extended’ to denote the consumer who lives in the dwelling as his or her
       principal dwelling place,” Justice Gordon concluded that TILA’s “use of two very different
       terms indicates—contrary to the majority’s assumption—that these terms are not
       interchangeable.” Id. Thus, Justice Gordon found that all three elements of a claim for
       rescission had been alleged by Standard. Id.
¶ 16       Justice Gordon also found the majority erred by denying Standard’s claim on the basis
       that Standard was not an “obligor.” Id. ¶ 41. TILA provides: “in a consumer credit
       transaction where a security interest is retained ‘in any property which is used as the
       principal dwelling of the person to whom credit is extended, the obligor shall have the right
       to rescind.’ ” (Emphasis in original.) Id. (quoting 15 U.S.C. § 1635(a) (2006)). Justice
       Gordon concluded that, because the statute juxtaposes the term “the person to whom credit is
       extended” against the term “the obligor,” these terms are not identical. Id.
¶ 17       Finally, Justice Gordon pointed out that the transaction here is a reverse mortgage, which
       means the consumer pays nothing to the bank and, therefore, has no obligations under the
       transaction. Id. ¶ 42. Thus, he concluded that the appellate court majority erred in denying
       Standard’s claim on the ground it had no obligation.
¶ 18       We granted Standard’s petition for leave to appeal.

¶ 19                                           ANALYSIS
¶ 20       Before addressing the issues, we find it helpful to provide some background on TILA. In
       1968, Congress enacted TILA (15 U.S.C. § 1601 et seq. (2006)) to ensure credit terms are
       disclosed in a meaningful way so consumers can readily and knowledgeably compare the
       credit options available to them. Lanier v. Associates Finance, Inc., 114 Ill. 2d 1, 11 (1986).
       From the time of its enactment, Congress granted the Federal Reserve Board (Board) the
       authority to prescribe regulations to carry out the purposes of TILA. 15 U.S.C. § 1604
       (2006). Pursuant to that authority, the Board enacted a comprehensive set of rules, known as
       Regulation Z (12 C.F.R. pt. 226 et seq. (2010)). Lanier, 114 Ill. 2d at 11.3 In addition, official
       staff interpretations of Regulation Z are published in a commentary. 12 C.F.R. pt. 226, Supp.
       I (2010). See also FDIC Compliance Examination Manual V-1.4 (May 2015),
       https://www.fdic.gov/regulations/compliance/manual/5/V-1.1.pdf. The commentary provides
       more detailed information on disclosures and other actions required of creditors. See id. The
       Compliance Examination Manual, itself, provides “[i]t is virtually impossible to comply with
       Regulation Z without reference to and reliance on the commentary.” Id.
¶ 21       Although not binding on the courts, we have held that the Board’s interpretations of
       TILA are entitled to a great degree of deference. Lanier, 114 Ill. 2d at 13. In Ford Motor
       Credit Co. v. Milhollin, 444 U.S. 555 (1980), the United States Supreme Court noted that
       deference to administrative views is founded upon respect for the expertise of the agency. Id.
           3
             Following the events in this case, Congress transferred the authority to promulgate rules
       implementing TILA to the Consumer Finance Protection Bureau. See Dodd-Frank Wall Street Reform
       and Consumer Protection Act, §§1061(b)(1), 1100A(2), 1100H, 124 Stat. 1376, 2036, 2107, 2113.
       Thereafter, the Bureau issued an interim final rule, which added Part 1026 to Chapter X and established
       a new Regulation Z. Truth in Lending (Regulation Z), 76 Fed. Reg. 79,768-832 (Dec. 22, 2011). We
       cite to the version in effect at the time of the occurrence here.

                                                      -5-
       at 566 n.9. For this reason, the Supreme Court has stated that “[u]nless demonstrably
       irrational, Federal Reserve Board staff opinions construing the Act or Regulation [Z] should
       be dispositive.” Id. at 565. See also Anderson Bros. Ford v. Valencia, 452 U.S. 205, 219
       (1981) (Board’s interpretation of its own regulation should be accepted by the courts absent
       some obvious repugnance to TILA). In addition, Congress has expressed that compliance
       with Regulation Z and the official staff interpretations must be accorded substantial weight.
       We recognized in Lanier, “[s]ection 1640 evinces a clear congressional determination to treat
       the Board’s administrative interpretations under [TILA] as authoritative.” Lanier, 114 Ill. 2d
       at 14. With these principles in mind, we turn to the relevant TILA provisions and the
       corresponding provisions in Regulation Z, as well as the Official Staff Commentary.
¶ 22       Section 1635 of TILA provides, in relevant part:
                    “(a) Disclosure of obligor’s right to rescind
                        Except as otherwise provided in this section, in the case of any consumer
                    credit transaction *** in which a security interest *** is or will be retained or
                    acquired in any property which is used as the principal dwelling of the person to
                    whom credit is extended, the obligor shall have the right to rescind the transaction
                    ***.” 15 U.S.C. § 1635(a) (2006).
       The corresponding provision of Regulation Z relating to rescission provides:
                    “(a) Consumer’s right to rescind. (1) In a credit transaction in which a security
               interest is or will be retained or acquired in a consumer’s principal dwelling, each
               consumer whose ownership interest is or will be subject to the security interest shall
               have the right to rescind the transaction ***.” (Emphasis added.) 12 C.F.R.
               § 226.23(a)(1) (2010).4
       Regulation Z defines “consumer” as:
               “a cardholder or a natural person to whom consumer credit is offered or extended.
               However, for purposes of rescission under §§226.15 and 226.23, the term also
               includes a natural person in whose principal dwelling a security interest is or will be
               retained or acquired, if that person’s ownership interest in the dwelling is or will be
               subject to the security interest.” 12 C.F.R. § 226.2(a)(11) (2010).
       The Official Staff Commentary provides a further definition of “consumer” in this context:
                    “2. Rescission rules. For purposes of rescission under §§ 226.15 and 226.23, a
               consumer includes any natural person whose ownership interest in his or her principal
               dwelling is subject to the risk of loss. Thus, if a security interest is taken in A’s
               ownership interest in a house and that house is A’s principal dwelling, A is a
               consumer for purposes of rescission, even if A is not liable, either primarily or
               secondarily, on the underlying consumer credit transaction.” 12 C.F.R. pt. 226, Supp.
               I, § 226.2(a)(11), Note 2 (2010).
¶ 23       As the appellate court pointed out, TILA states that an “obligor” has the right to rescind
       but does not define the term. However, based on the corresponding provisions in Regulation
       Z and the commentary, we conclude Congress did not intend to limit rescission rights to only

           4
            The parties also cite to section 226.15 of Regulation Z which contains almost identical wording.
       This provision, however, relates to open-end credit transactions, not closed-end transactions as the type
       here.

                                                       -6-
       obligors, as that term is generally defined. Regulation Z and the commentary provide that
       “each consumer whose ownership interest is or will be subject to the security interest”
       (emphasis added) (12 C.F.R. § 226.23(a)(1) (2010)) or “is subject to the risk of loss” (12
       C.F.R. pt. 226, Supp. I, § 226.2(a)(11), Note 2 (2010)) is entitled to rescind. More
       particularly, the commentary makes it evident that to possess the right to rescind one need
       not be liable (i.e., an obligor) on the underlying consumer credit transaction. See 12 C.F.R.
       pt. 226, Supp. I, § 226.2(a)(11), Note 2 (2010).
¶ 24       Section 226.2(a)(11) along with the commentary related to that section have been in
       existence since 1968. More importantly, Congress has not amended TILA to exclude
       consumers who are not liable on the underlying credit transaction from having the right to
       rescind. Accordingly, we must presume Congress agrees with the expanded definition of
       “obligor” with respect to the right to rescind.
¶ 25       We note, further, that Congress recently moved authority from the Federal Reserve Board
       to the Consumer Finance Protection Bureau to oversee TILA. The Bureau has adopted a new
       Regulation Z which includes the identical definitions and commentary. Certainly, had
       Congress disagreed with Regulation Z or the Official Staff Commentary it would have taken
       appropriate action to rectify the matter in conformity with its intent.
¶ 26       Moreover, it is important to remember this case involves a reverse mortgage. A reverse
       mortgage is a nonrecourse consumer credit transaction, secured by the consumer’s principal
       dwelling. Dee Pridgen & Richard M. Alderman, Consumer Credit and the Law § 9A:11
       (2014). This type of mortgage is known as “reverse” “because the lender makes the payments
       to the consumer over a period of years, rather than the consumer making payments to the
       lender.” Id. In the case of reverse mortgages, the borrower has not undertaken any obligation
       to make payments. There is no personal liability of any kind in such a transaction since the
       only recourse is against the property itself. As such, there is no obligor within the ordinary
       meaning of that term.
¶ 27       The appellate court majority failed to take into account the fact a reverse mortgage was at
       issue in this case and the nature of such mortgages. Under the appellate court’s reasoning,
       which limits disclosure and the right to rescind to an obligor in the narrow sense, there would
       be no disclosure requirements at all when a reverse mortgage is involved because, as
       explained above, there is no person or organization that is liable for the underlying credit
       transaction. Reverse mortgages are consumer credit transactions and clearly covered by
       TILA. In fact, reverse mortgages have disclosure requirements in addition to those applicable
       to other consumer credit transactions. See 12 C.F.R. §§ 1026.31-1026.45 (2015). Thus, the
       appellate court erred in affirming the circuit court’s finding that Standard has no right to
       rescind because it was not an “obligor” within the meaning of TILA.
¶ 28       We note, further, that because of the nature of reverse mortgages, the exculpatory clause
       contained in the mortgage, and relied upon heavily by the appellate court, is simply
       irrelevant. Standard was not personally liable nor did it undertake any type of obligation
       because the only recourse in a reverse mortgage is against the property itself.
¶ 29       Finally, we find the appellate court’s reliance on Ferreira v. Mortgage Electronic
       Registration Systems, Inc., 794 F. Supp. 2d 297 (D. Mass. 2011) misplaced. In Ferreira and
       the cases it relied upon, the party seeking to rescind was not a party to the transaction and
       had not signed the note. Therefore, the cases are factually distinguishable. Further, none of


                                                  -7-
       these cases examined or interpreted Regulation Z or the commentary. Thus, we find their
       lack of relevant analysis renders them unpersuasive.
¶ 30       Based on Regulation Z and the commentary, we hold the right to rescind extends to “each
       consumer whose ownership interest is or will be subject to the security interest” or “is subject
       to the risk of loss.” We now consider whether a trustee under a land trust maintains an
       ownership interest subject to the security interest such that it is entitled to TILA disclosures
       and may exercise the right to rescind.
¶ 31       A land trust is “a unique creation of the Illinois bar.” (Internal quotation marks omitted.)
       Passalino v. City of Zion, 237 Ill. 2d 118, 132 (2009) (Freeman, J., dissenting, joined by
       Burke, J.). It is a form of land ownership where a trustee holds title to property for the benefit
       of the true owner/beneficiary of the trust. 5 Illinois Real Property Service, Land Trusts
       § 31:1, at 9-10 (1989). Over the years, land trusts have “served as *** useful vehicle[s] in
       real estate transactions for maintaining secrecy of ownership and allowing ease of transfer.”
       (Internal quotation marks omitted.) Passalino, 237 Ill. 2d at 132 (Freeman, J., dissenting,
       joined by Burke, J.).
¶ 32       Generally, the land is deeded by the property owner to the trustee, which is normally a
       corporate entity. 17 Robert S. Hunter, Illinois Practice § 51:2 (4th ed. 2007). Legal and
       equitable title of the property rests with the trustee, including the right to transfer and
       encumber the property. Passalino, 237 Ill. 2d at 132 (Freeman, J., dissenting, joined by
       Burke, J.). However, the trustee must deal with the property and title as the beneficiary
       directs. 17 Robert S. Hunter, Illinois Practice § 51:2 (4th ed. 2007). The trustee is responsible
       for maintaining trust documents, including an updated list of beneficiaries. It must respond to
       directions from the beneficiary and receive communications for the beneficiary from third
       parties. 5 Illinois Real Property Service, Land Trusts § 32:1, at 9 (1989). The trustee is
       similarly responsible for giving the beneficiary prompt notice of loans, defaults, foreclosures,
       and other judicial proceedings. Id. § 32:21, at 26. Additionally, the trustee owes fiduciary
       duties to the beneficiary. 16 Solomon Gutstein & Eileen Murphy, Illinois Practice § 15:237
       (3d ed. 2006). Ordinarily, trust documents contain an exculpatory clause which protects the
       trustee from any personal liability. Id. Similarly, trustees “almost universally” require that
       any contracts, notes, or mortgages they sign on behalf of the trust contain an exculpatory or
       nonrecourse clause relieving them from personal liability. Id.
¶ 33       Conversely, the beneficiary’s interest in the real property changes to a personal property
       interest in the trust. Passalino, 237 Ill. 2d at 132. The beneficiary’s name does not appear
       publicly as an owner of record either in title documents or tax records and generally the
       trustee is required to keep the beneficiary name(s) confidential. Id. The beneficiary retains
       certain ownership rights such as the right of possession, operation, maintenance and control
       along with the right to use and enjoy the property. Id.; 17 Robert S. Hunter, Illinois Practice
       § 51:2 (4th ed. 2007).
¶ 34       The Official Staff Commentary to Regulation Z addresses land trusts in two provisions:
       section 226.2(a) which provides: “[c]redit extended to land trusts, as described in the
       commentary to §226.3(a), is considered to be extended to a natural person for purposes of the
       definition of consumer” (12 C.F.R. pt. 226, Supp. I, § 226.2(a)(11), Note 3 (2010)); and
       section 226.3(a), which states:



                                                   -8-
                    “10. Land trusts. Credit extended for consumer purposes to a land trust is
               considered to be credit extended to a natural person rather than credit extended to an
               organization. In some jurisdictions, a financial institution financing a residential real
               estate transaction for an individual uses a land trust mechanism. Title to the property
               is conveyed to the land trust for which the financial institution itself is trustee. The
               underlying installment note is executed by the financial institution in its capacity as
               trustee and payment is secured by a trust deed, reflecting title in the financial
               institution as trustee. In some instances, the consumer executes a personal guaranty of
               the indebtedness. The note provides that it is payable only out of the property
               specifically described in the trust deed and that the trustee has no personal liability on
               the note. Assuming the transactions are for personal, family, or household purposes,
               these transactions are subject to the regulation since in substance (if not form)
               consumer credit is being extended.” 12 C.F.R. pt. 226, Supp. I, § 226.3, Note 10
               (2010).
¶ 35       In section 226.23(a)(1) of Regulation Z, the right to rescind extends to “each consumer
       whose ownership interest is or will be subject to the security interest.” (Emphasis added.) 12
       C.F.R. § 226.23(a)(1) (2010).
¶ 36       As set forth above, the trustee has legal and equitable title to the property. In fact, the
       trustee is the only party with an ownership interest in the property since the beneficiary’s
       interest is in the trust itself and is considered personal property. As such, it is the trustee’s
       ownership interest which is subject to the security interest.
¶ 37       Credit extended to a land trust is credit extended to a natural person. Thus, the trustee of
       the land trust is a consumer, whose ownership interest is subject to the security interest.
       Accordingly, we conclude Standard, as trustee, was entitled to TILA disclosures and has the
       right to rescind the transaction. We reverse the appellate court’s holding to the contrary.
¶ 38       In this appeal, plaintiff argues in the alternative that any right to rescind which Standard
       possessed was terminated upon the sale of the property. We disagree. Section 1635(f) of
       TILA, entitled “Time limit for exercise of right” provides: “An obligor’s right of rescission
       shall expire three years after the date of consummation of the transaction or upon the sale of
       the property, whichever occurs first ***.” 15 U.S.C. § 1635(f) (2006). Section 226.23 of
       Regulation Z provides:
                    “(3) *** If the required notice or material disclosures are not delivered, the right
               to rescind shall expire 3 years after consummation, upon transfer of all of the
               consumer’s interest in the property, or upon sale of the property, whichever occurs
               first.” 12 C.F.R. § 226.23(a)(3) (2010).
       See also 12 C.F.R. pt. 226, Supp. I, § 226.23(a)(3), Note 3 (2010). However, as Standard
       argues, section 1635(f) addresses only the time for exercising the right to rescind. Because
       Standard gave notice to plaintiff that it was exercising that right, its right to rescind did not
       terminate upon the sale of the property.
¶ 39       Dawson v. Thomas (In re Dawson), 437 B.R. 15 (Bankr. D.D.C. 2010), is instructive. In
       Dawson, the plaintiff filed suit to rescind a loan transaction on September 23, 2004. Id. at 16.
       Thereafter, on July 13, 2006, Dawson sold the property securing the loan. Id. at 17. Thomas
       maintained the sale of the property terminated Dawson’s right to rescind. Id. The court
       disagreed, concluding that, because Dawson timely exercised her right to rescind, the

                                                   -9-
       subsequent sale did not extinguish that right. Id. at 18. As the Dawson court explained, if the
       right to rescind terminated because of a sale subsequent to exercise of the right to rescind, the
       borrower would be deprived of its rights, under paragraph (b) of section 1635, to recover
       damages from the lender for a breach of the lender’s obligations under that paragraph and the
       lender would be rewarded “for dragging its heels.” Id. at 20.
¶ 40       We conclude, as the Dawson court did, that when the lender fails to comply with its
       obligations under paragraph (b), and the borrower timely sues to enforce his rescission rights,
       “those rights are not subject to loss at a subsequent date by reason of the passage of three
       years or, it logically follows, by reason of a sale of the property.” Id. at 21. If a sale of the
       property subsequent to the exercise of the right to rescind served to extinguish the right, a
       consumer would lose the right to damages based on the creditor’s failure to rescind when it
       was legally required to do so.
¶ 41       For the foregoing reasons, we conclude that when a consumer timely exercises its right to
       rescind a consumer credit transaction through proper notice to the creditor, a sale of the
       property does not terminate a consumer’s right to rescind.
¶ 42       Finally, we address Standard’s contention that it has a right to statutory damages for
       plaintiff’s breach of its obligations. Because the circuit court dismissed Standard’s
       counterclaim, it did not address this question.
¶ 43       Section 1640 of TILA provides in pertinent part:
                   “(a) Individual or class action for damages; amount of award; factors determining
               amount of award
                   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 in an
               amount equal to the sum of—
                       (1) any actual damage sustained by such person as a result of the failure;
                       (2)(A)(i) in the case of an individual action twice the amount of any finance
                   charge in connection with the transaction, *** (iv) in the case of an individual
                   action relating to a credit transaction not under an open end credit plan that is
                   secured by real property or a dwelling, not less than $400 or greater than $4,000;
                   or
                       ***
                       (3) 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 or 1638(e)(7) of this title, the costs of the action, together with a
                   reasonable attorney’s fee as determined by the court;
                                                    ***
                   (e) Jurisdiction of courts; limitations on actions; State attorney general
               enforcement
                       Except as provided in the subsequent sentence, any action under this section
                   may be brought in any United States district court, or in any other court of
                   competent jurisdiction, within one year from the date of the occurrence of the
                   violation ***. *** This subsection does not bar a person from asserting a


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                    violation of this subchapter in an action to collect the debt which was brought
                    more than one year from the date of the occurrence of the violation as a matter of
                    defense by recoupment or set-off in such action, except as otherwise provided by
                    State law.” 15 U.S.C. § 1640 (2012).
¶ 44       Initially, we find that the appellate court erred in holding Standard forfeited its claim for
       statutory damages. The circuit court never addressed this issue and, therefore, there was no
       order from which Standard could appeal. Further, we find Standard’s claim for damages
       resulting from plaintiff’s failure to rescind is not time-barred as plaintiff contends. In Herzog
       v. Countrywide Home Loans (In re Hunter), 400 B.R. 651 (Bankr. N.D. Ill. 2009), the court
       held “[f]or claims of failure to effectuate rescission, the date of the occurrence of the
       violation is the earlier of when the creditor refuses to effectuate rescission, or twenty days
       after it receives the notice of rescission.” Id. at 657. Here, notice of rescission was sent to
       plaintiff on June 2, 2011. Plaintiff did not respond to the notice. Standard then filed its
       counterclaim in the foreclosure proceeding on July 19, 2011. Clearly, Standard’s claim for
       statutory damages was brought within one year of the occurrence. Accordingly, Standard’s
       claim for statutory damages based on plaintiff’s failure to rescind is not time-barred.

¶ 45                                       CONCLUSION
¶ 46       As set forth above, we hold that Standard, as Trustee u/t/a dated 03/18.1991 a/k/a Trust
       No. 5193, was entitled to receive TILA disclosures, including notice of the right to rescind
       after it entered into the consumer credit transaction with plaintiff on October 14, 2010.
       Because TILA disclosures were not provided to Standard, the three-day right to rescind
       period was extended to three years. Standard timely exercised its right to rescind when it
       gave notice to plaintiff on June 2, 2011. Further, because sale of the subject property
       subsequent to timely and proper notice of the right to rescind does not terminate the right to
       rescind, Standard may proceed on its claim for damages. We reverse the appellate court
       judgment and remand this cause to the circuit court for further proceedings consistent with
       this opinion.

¶ 47      Appellate court judgment reversed.
¶ 48      Cause remanded.




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