                                  2018 IL App (1st) 170921


                                                                        FIRST DIVISION
                                                                        January 22, 2018



No. 1-17-0921

GREENPOINT MORTGAGE                                )      Appeal from the
FUNDING, INC.,                                     )      Circuit Court of
                                                   )      Cook County.
       Plaintiff and Counter-Defendant-Appellee, )
                                                   )
                v. 	                               )
                                                   )
CYNTHIA HIRT, MORTGAGE REGISTRATION )
SYSTEMS, INC., GREENPOINT FUNDING INC.,)                  No. 08 CH 16652
TOWNE PLACE CONDOMINIUM                            )

ASSOCIATION, UNKNOWN OWNERS                        )

and NONRECORD CLAIMANTS,                           )

                                                   )

       Defendants                                  )

                                                   )

(Cynthia Hirt,	                                    )      Honorable
                                                   )      Darryl B. Simko,
       Defendant and Counter-Plaintiff-Appellant). )      Judge Presiding.

       JUSTICE HARRIS delivered the judgment of the court, with opinion.
       Presiding Justice Pierce and Justice Mikva concurred in judgment and opinion.

                                         OPINION

¶1     GreenPoint Mortgage Funding, Inc. (GreenPoint) initiated this action when it filed a

mortgage foreclosure complaint against Cynthia Hirt. Hirt filed both affirmative defenses and

counterclaims seeking rescission of the loan and statutory damages pursuant to the Truth in

Lending Act (TILA) (15 U.S.C. § 1601 (2012)). During the course of the litigation, GreenPoint

assigned the mortgage to U.S. Bank National Association (U.S. Bank). U.S. Bank and Hirt
No. 1-17-0921


agreed to refinance the mortgage. As part of refinancing, U.S. Bank dismissed the foreclosure

action. 1

¶2      GreenPoint and Hirt then proceeded to litigate Hirt’s counterclaim for rescission and

statutory damages. On February 17, 2016, the circuit court of Cook County granted GreenPoint

summary judgment as to the rescission claim but denied it as to the statutory damages claims. On

March 13, 2017, after GreenPoint brought a motion to reconsider, the circuit court granted

summary judgment in GreenPoint’s favor as to Hirt’s damages claims. This timely appeal

followed.

¶3      For the reasons stated below, we reverse in part and affirm in part. A question of fact

remains as to whether Hirt had three days or three years to seek rescission. We therefore reverse

the portion of the February 17, 2016, order that granted summary judgment in favor of

GreenPoint on Hirt’s rescission claim. We affirm that portion of the March 13, 2017, order that

granted summary judgment in favor of GreenPoint as to Hirt’s statutory damages claim related to

the failure to honor the rescission. We also affirm the portion of the March 13 order that granted

summary judgment in favor of GreenPoint as to Hirt’s statutory damages claim stemming from

GreenPoint’s failure to make certain disclosures when the loan closed.

¶4                                        JURISDICTION

¶5      GreenPoint filed this foreclosure action on May 5, 2008. On April 9, 2009, Hirt filed her

counterclaim for rescission and damages. On October 29, 2015, the foreclosure action was

dismissed without prejudice. On February 17, 2016, the circuit court granted summary judgment

in favor of GreenPoint as to Hirt’s rescission claim. On March 13, 2017, the circuit court granted


        1
        U.S. Bank was substituted in as party-plaintiff on August 11, 2014. Hirt never amended her
counterclaim to include U.S. Bank. U.S. Bank is not a party to this appeal.

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summary judgment in favor of GreenPoint as to Hirt’s statutory damages claims. Thereafter, on

April 11, 2017, Hirt filed her notice of appeal. Accordingly, this court has jurisdiction over this

matter pursuant to article VI, section 6 of the Illinois Constitution, and Illinois Supreme Court

Rules 301 and 303. Ill. Const. 1970, art. VI, § 6; Ill. S. Ct. R. 301 (eff. Feb. 1, 1994); R. 303 (eff.

May 30, 2008).

¶6                                        BACKGROUND

¶7     On May 13, 2005, Hirt refinanced her mortgage on her property located at 125 Stirling

Lane, Schaumburg, Illinois. In connection with this transaction, GreenPoint lent Hirt $219,200 to

be secured against the property.

¶8     On February 1, 2008, Hirt failed to make the required service payment on the GreenPoint

loan. On February 12, 2008, Hirt, through her attorney, sent GreenPoint a notice of rescission

pursuant to TILA asserting that GreenPoint had failed to comply with TILA’s various disclosure

requirements and that she was therefore entitled to rescind the loan. On February 15, GreenPoint

received Hirt’s notice of rescission. On May 5, 2008, GreenPoint filed a complaint to foreclose

the mortgage based on Hirt’s failure to make the required payments.

¶9     On January 8, 2009, Hirt, by her attorney, filed her appearance, answer, and affirmative

defenses to GreenPoint’s foreclosure action. In her affirmative defenses, she asserted that the

foreclosure action should be dismissed with prejudice because she had rescinded the loan.

¶ 10   On April 9, 2009, Hirt filed her counterclaim against GreenPoint asserting that it had

violated TILA and corresponding regulations (12 C.F.R. § 226 (2008) (Regulation Z)) by

(1) failing to provide her with two copies of the notice of the right to cancel, (2) failing to take

any action necessary to terminate the security interest in Hirt’s property within twenty days of

receipt of Hirt’s notice of rescission, and (3) failing to properly and accurately disclose the

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finance charge. As a result of these violations, Hirt asserted that her right to rescind the loan

under TILA had extended from three days to three years. Therefore, she asserted she timely

exercised her right to rescind when GreenPoint received her notice of rescission on February 15,

2008. Hirt also sought statutory damages based on GreenPoint’s failure to make disclosures

when the loan closed and its failure to honor the rescission.

¶ 11   On August 18, 2009, Hirt was deposed. At the deposition, she acknowledged signing a

receipt stating she had been provided with two copies of her right to cancel. Despite signing the

receipt, she stated she walked out with one copy of the notice. She testified that she did not

realize she had been provided with only one copy until she reviewed her entire closing packet

with her foreclosure attorney in 2008. She stated that after she left the closing with the loan

documents in the folder given to her, she went home and placed the folder into a file cabinet. The

folder remained in the cabinet from the time of the closing until she turned it over to her

attorney. She claimed to have never looked at the folder during that period, nor did she review

the folder prior to meeting with her attorney.

¶ 12   Hirt understood that she would have to return the money she borrowed from GreenPoint

as a result of the rescission. When asked whether she had more than $200,000 available, she

stated that she did not know and that she would have to review her finances to determine whether

she could return the money she borrowed. She also did not know the value of her home.

¶ 13   On July 22, 2014, GreenPoint filed a motion to substitute U.S. Bank as party plaintiff.

The motion stated that “subsequent to filing the complaint, servicing rights of the subject loan

were transferred from GreenPoint Mortgage Funding, Inc. to Ocwen Loan Servicing, LLC and

Ocwen Loan Servicing, LLC would like to proceed in the name of the investor, U.S. Bank

National Association, as Trustee, successor in interest to Wachovia Bank, National Association

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No. 1-17-0921


as Trustee for Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed

Certificates, Series 2005-A6, as plaintiff.” On August 11, 2014, the circuit court granted the

motion and allowed U.S. Bank to be substituted as party-plaintiff.

¶ 14   On September 29, 2015, U.S. Bank moved to dismiss its foreclosure action without

prejudice because Hirt had accepted a loan modification, which brought her loan current. On

October 29, 2015, the circuit court granted the motion and dismissed the foreclosure action

without prejudice.

¶ 15   On November 6, 2015, GreenPoint moved for summary judgment as to Hirt’s

counterclaim. On February 17, 2016, after briefing from the parties, the circuit court granted the

motion for summary judgment as to Hirt’s rescission claim but denied it as to Hirt’s damages

claims. On December 23, 2016, GreenPoint moved for reconsideration of the circuit court’s

denial of summary judgment as to Hirt’s damages claims. On March 13, 2017, the circuit court

granted GreenPoint’s motion to reconsider. Hirt timely appealed.

¶ 16                                      ANALYSIS

¶ 17   In the first issue, Hirt contends the circuit court erred in granting summary judgment in

favor of GreenPoint on her rescission claim. Summary judgment is proper only when “the

pleadings, depositions, and admissions on file, together with the affidavits, if any, show that

there is no genuine issue as to any material fact and that the moving party is entitled to a

judgment as a matter of law.” 735 ILCS 5/2-1005(c) (West 2014). “A genuine issue of material

fact exists where the facts are in dispute or where reasonable minds could draw different

inferences from the undisputed facts.” Morrissey v. Arlington Park Racecourse, LLC, 404 Ill.

App. 3d 711, 724 (2010). A material fact is one that “might affect the outcome of the suit” under

the applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

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Summary judgment is a drastic measure and should only be granted if the movant’s right to

judgment is clear and free from doubt. Outboard Marine Corp. v. Liberty Mutual Insurance Co.,

154 Ill. 2d 90, 102 (1992). On appeal, our review of a summary judgment order is de novo, and

“we afford no deference to the trial court’s decision and instead, we consider anew the pleadings,

affidavits, depositions, admissions, and exhibits on file to determine whether the trial court’s

decision was correct.” Jackson v. Graham, 323 Ill. App. 3d 766, 779 (2001).

¶ 18   Hirt argues a question of fact remains as to whether she timely rescinded. “[W]hen a loan

made in a consumer credit transaction is secured by the borrower’s principal dwelling,” TILA

permits the borrower to “rescind the loan agreement” (Beach v. Ocwen Federal Bank, 523 U.S.

410, 411 (1998)) up to three business days after the transaction. 15 U.S.C. § 1635(a) (2012).

When the lender “fails to deliver certain forms or to disclose important terms accurately” to the

borrower, the Act extends the borrower’s right to rescind the transaction to three years. Beach,

523 U.S. at 411; 15 U.S.C. § 1635(f) (2012). The Act permits borrowers to rescind “the

transaction” (15 U.S.C. § 1635(a) (2012)), which includes the removal of the security interest on

the property and the return of certain fees incurred during the transaction. Id. § 1635(b). A party

does not need to file a lawsuit in order to effectuate a rescission. See Jesinoski v. Countrywide

Home Loans, Inc., 574 U.S. ___, ___, 135 S. Ct. 790, 792 (2015) (concluding that so long as the

borrower sends notice within three years after the transaction is consummated, the rescission is

timely and no lawsuit need be filed).

¶ 19   After a review of the record, we agree that summary judgment should not have been

entered on the rescission claim because a question of fact remains as to whether Hirt had three




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days or three years to rescind. 2 In this case, the transaction was consummated on May 13, 2005.

Under normal circumstances, Hirt would only have three days to rescind the transaction. 15

U.S.C. § 1635(a) (2012). However, Hirt maintains that her right to rescind was extended to three

years or May 13, 2008. Id. § 1635(f).

¶ 20    Hirt argues that her time to rescind was extended to three years because GreenPoint failed

to provide two copies of the notice of her right to rescind. Hirt acknowledged that at the time of

closing she signed a written acknowledgment indicating she had been provided with all the

required forms including two copies of the rescission notice. Hirt points to section 1635(c) that

such a form creates only a “rebuttable presumption of delivery” (Id. § 1635(c)) and she rebutted

this presumption at her deposition when she testified that her physical review of the packet showed

she had only been provided with one copy. Hirt contends this conflict between her deposition

testimony and the written acknowledgment is sufficient to create an issue of material fact.

¶ 21    We agree with Hirt that her testimony that she received only one copy of the rescission

notice is sufficient to rebut the presumption created by the acknowledgment and create a genuine

issue of material fact. In civil proceedings, Illinois case law has recognized and applied the

“bursting bubble principle.” Franciscan Sisters Health Care Corp. v. Dean, 95 Ill. 2d 452,

460-64 (1983). Pursuant to this principle, a rebuttable presumption creates only a prima facie

case of the particular issue involved. Lipscomb v. Sisters of St. Francis Health Services, Inc., 343

Ill. App. 3d 1036, 1041 (2003). The introduction of evidence contrary to the presumption “bursts

the bubble” and nullifies the presumption. Id. In order to burst the bubble and rebut the


        2
          We note the parties dispute the basis of the February 2016 grant of summary judgment on Hirt’s
rescission claim. The order itself only states that summary judgment was granted in favor of GreenPoint on
Hirt’s rescission claim. Ultimately, the basis is immaterial, as our review is de novo. Jackson, 323 Ill. App.
3d at 779.

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No. 1-17-0921


presumption, the contesting party must present evidence sufficient to support a finding of

nonexistence of the challenged fact. Id. If accomplished, the contested fact loses the presumption

of validity and must be left for the finder of fact to resolve. In re Estate of Pawlinski, 407 Ill. App.

3d 957, 965 (2011). Failure to introduce evidence to rebut the presumed fact allows the

presumption to prevail, and the party relying on the presumption will be entitled to summary

judgment. Lipscomb, 343 Ill. App. 3d at 1041.

¶ 22    Applying this theory to the case before us, Hirt’s deposition testimony was sufficient to

“burst the bubble” and rebut the presumption created by the written acknowledgment. At her

deposition, Hirt stated that she walked out of her closing with only one copy of the notice of the

right to rescind. After the closing, she did not look into the packet, went home, and placed it into

her filing cabinet. The folder remained in the cabinet until she went to meet with her attorney. It

was only after reviewing the contents of the folder with her attorney in February 2008 that she

realized only one copy of the rescission notice had been provided. This deposition testimony is

sufficient to rebut the presumption created by the signed acknowledgment. In viewing this

evidence in a light most favorable to Hirt, a genuine issue of material fact exists as to whether she

received the requisite TILA disclosures. 3

¶ 23    GreenPoint does not respond to Hirt’s argument that a material fact exists concerning the

number of disclosures she received but instead argues that we should affirm for two separate

reasons. GreenPoint argues the issue of rescission is moot since U.S. Bank substituted in as the

foreclosing plaintiff, allowed Hirt to refinance, and then dismissed the foreclosure action. It


        3
         While not binding, we note that several federal circuits have taken a similar position regarding a
borrower’s testimony rebutting the presumption of delivery. Marr v. Bank of America, N.A., 662 F.3d 963,
968 (7th Cir. 2011); Cappuccio v. Prime Capital Funding LLC, 649 F.3d 180, 189 (3d Cir. 2011); Stutzka v.
McCarville, 420 F.3d 757, 762 (8th Cir. 2005).

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argues since it can no longer effect rescission, Hirt’s rescission claim is moot. It also argues that

the summary judgment can be affirmed because Hirt has not shown an ability to tender

repayment as required by section 1635(b). 15 U.S.C. § 1635(b) (2012).

¶ 24   After reviewing the applicable statute and case law, we reject GreenPoint’s argument that

its assignment of the loan to U.S. Bank moots Hirt’s rescission claim. Section 1635(b) states in

relevant part, “[w]ithin 20 days after receipt of a notice of rescission, the creditor [(GreenPoint)]

shall return to the obligor [(Hirt)] any money or property given as earnest money, downpayment,

or otherwise, and shall take any action necessary or appropriate to reflect the termination of any

security interest created under the transaction.” (Emphasis added.) Id. Based on the language of

the statute, a creditor must take two steps if a valid rescission notice is received: (1) return

certain monies and (2) release the security interest. GreenPoint’s argument that it cannot release

the security interest fails to address the requirement that it return “any money or property given

as earnest money, downpayment, or otherwise” while still the holder of the mortgage.

¶ 25   If we accepted GreenPoint’s position, any lender could avoid returning the monies by

simply assigning the loan. Moreover, section 1641 of TILA deals with the liability of an assignee

like U.S. Bank when the initial creditor (GreenPoint) violated the disclosure requirements. Id.

§ 1641(a). We note that the Seventh Circuit has come to a similar conclusion regarding a

recession claim under TILA. In Handy v. Anchor Mortgage Corp., 464 F.3d 760, 765 (7th Cir.

2006), the lender argued that recession was inappropriate because the subject loan had recently

been paid off. In rejecting the argument, the court stated that section 1635 encompasses the right

to rescind the entire transaction, not just the security interest. Id. (citing Barrett v. JP Morgan

Chase Bank N.A., 445 F.3d 874, 877 (6th Cir. 2006)). Based on the above, we reject

GreenPoint’s argument that its assignment of the loan mooted Hirt’s rescission claim. If Hirt’s

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rescission claim was timely, GreenPoint would be required to return the monies described in

section 1635 even if it could no longer release a security interest on the subject property.

¶ 26   We also reject GreenPoint’s argument that Hirt’s inability to tender repayment of the loan

bars her claim because it is contrary to the statutory requirements found in TILA. The default

rule under both section 1635 and Regulation Z requires the creditor to release the security

interest in the property and return the monies before the borrower must tender to the creditor. 15

U.S.C. § 1635(b) (2012); 12 C.F.R. § 226.23(d) (2008); Johnson v. Thomas, 342 Ill. App. 3d

382, 398-99 (2003). Admittedly, both TILA and Regulation Z provide that a court may modify

the default rule, denying rescission where there is an inability to tender. 15 U.S.C. § 1635(b)

(2012); 12 C.F.R. § 226.23(d)(4) (2008). However, before a trial court can modify the process it

must first determine whether a TILA violation even occurred. As noted above, it is unknown

whether a TILA violation occurred because a question of fact remains as to whether Hirt

received the requisite number of disclosures. Given the statutory language requiring the lender to

act first and the current procedural posture of this case, it would be inappropriate to enter

summary judgment in favor of GreenPoint based on Hirt’s alleged inability to tender.

¶ 27   In light of the arguments presented to this court and the record before it, we reverse the

entry of summary judgment as to Hirt’s rescission claim. A genuine issue of material fact exists

as to whether Hirt received the required disclosures pursuant to TILA. If the finder of fact

concludes Hirt did not receive the required notices, then her rescission letter sent within three

years of the loan closing would be timely.

¶ 28   In her second issue, Hirt contends that the circuit court erred in granting summary

judgment in favor of GreenPoint on her statutory damages claims. In her counterclaim, Hirt

sought statutory damages based on GreenPoint’s failure to make certain disclosures and provide

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two notices of rescission when the loan closed on May 13, 2005. She also sought damages for

GreenPoint’s failure to honor the rescission notice of February 2008. Before this court, Hirt only

addresses the statutory damages arising out of GreenPoint’s failure to honor the rescission.

Accordingly, we only address that issue, and Hirt has forfeited review of that portion of her

damages claim which arises out of violations of TILA that occurred at the closing on May 13,

2005. Ill. S. Ct. R. 341(h)(7) (eff. July 1, 2017) (points not argued are waived and shall not be

raised in the reply brief, in oral argument, or on petition for rehearing).

¶ 29   Initially, we reject GreenPoint’s argument that Hirt’s claim must fail as a matter of law

because her rescission claim failed. As stated above, a question of fact remains as to whether Hirt

could properly invoke rescission. Therefore, whether Hirt can claim damages based on the

failure to rescind remains an open question.

¶ 30   GreenPoint also claims that even if the claim is not time barred, it cannot survive the

dismissal of the primary foreclosure action. TILA allows for statutory damages if a creditor fails

to honor a borrower’s rescission (15 U.S.C. § 1640(a) (2012)), but such a claim must be brought

within one year of the violation (Id. § 1640(e)). Section 1640(e) provides a savings clause for

untimely claims:

       “This subsection does not bar a person from asserting a 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.”

       Id.

¶ 31   This provision allows a borrower to bring an untimely TILA damages claim if it is

brought as a defensive recoupment or set-off, “except as otherwise provided by State law.” Id.;

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U.S. Bank National Ass’n v. Manzo, 2011 IL App (1st) 103115, ¶ 51 (citing Mt. Vernon

Memorial Estates, Inc. v. Wood, 88 Ill. App. 3d 666 (1980)). Based on this, Illinois courts allow

untimely TILA damages claims if the requirements of section 13-207 of the Code of Civil

Procedure are met. 735 ILCS 5/13-207 (West 2014); Beneficial Illinois Inc. v. Parker, 2016 IL

App (1st) 160186, ¶¶ 18-20. Section 13-207 states:

       “A defendant may plead a set-off or counterclaim barred by the statute of

       limitation, while held and owned by him or her, to any action, the cause of which

       was owned by the plaintiff or person under whom he or she claims, before such

       set-off or counterclaim was so barred, and not otherwise.” 735 ILCS 5/13-207

       (West 2014).

GreenPoint does not dispute that Hirt’s damages claim would meet the timing requirements of

section 13-207 if she properly invoked rescission. Instead, it argues that since Hirt’s claim is

purely defensive, it cannot survive the dismissal of the foreclosure action.

¶ 32   We agree with GreenPoint. Hirt’s counterclaim is limited by the language found in

section 1640(e) of TILA allowing for an untimely claim only if it is brought as a set-off or

recoupment. 15 U.S.C. § 1640(e) (2012). Under both Illinois and federal law, a set-off or

recoupment is a unique type of counterclaim that can only be utilized to reduce or defeat a

plaintiff’s claim of damages. General Motors Acceptance Corp. v. Vaughn, 358 Ill. 541, 548

(1934); Distribution Services, Ltd. v. Eddie Parker Interests, Inc., 897 F.2d 811, 812 (5th Cir.

1990). More recently in Nadhir v. Salomon, this court explained that “a setoff is a type of

counterclaim that is designed to mitigate damages that a liable defendant owes a plaintiff.”

(Emphasis omitted.) 2011 IL App (1st) 110851, ¶ 37. It logically follows that where a plaintiff



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dismisses the original action and ceases to claim any damages from the defendant, the defendant

will be unable to reduce or defeat the nonexistent damage claim.

¶ 33   Hirt argues that under Illinois law, courts have held that a claim revived by section

13-207 survives the dismissal of the primary complaint. In re Estate of Rice, 154 Ill. App. 3d

591, 593 (1987). As explained, section 13-207 “ ‘opens the door and exposes the initiating party

to otherwise stale claims. The clause does not contain a provision which closes the door if the

initiating party’s claim is later dismissed. In sum, once the statute of limitations is waived, it

remains waived even if the claim which triggered the waiver is later dismissed.’ ” (Emphasis

omitted.) Id. (citing Ogg v. City of Springfield, 121 Ill. App. 3d 25, 34 (1984)). While this

proposition is true, as mentioned above, Hirt’s counterclaim for statutory damages is limited by

the language found in section 1640(e). Given that section 1640(e) limits untimely statutory

damages claims to a set-off or recoupment, counterclaims brought pursuant to it cannot survive

dismissal of the primary complaint.

¶ 34   Based on the above, the March 13, 2017, order, which granted summary judgment in

favor of GreenPoint on Hirt’s statutory claims, is affirmed.

¶ 35                                      CONCLUSION

¶ 36   Based on the foregoing, we reverse the February 17, 2016, grant of summary judgment in

favor of GreenPoint as to Hirt’s rescission claim. On remand, the trial court is instructed to hold an

evidentiary hearing to resolve the disputed factual question as to whether Hirt received the

requisite disclosures when the closing took place on May 13, 2005.

¶ 37   We affirm the grant of summary judgment in favor of GreenPoint as to Hirt’s statutory

damages claims.



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¶ 38   Affirmed in part, reversed in part, and remanded for further proceedings consistent with

this opinion.




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