                           RECOMMENDED FOR FULL-TEXT PUBLICATION
                                Pursuant to Sixth Circuit Rule 206
                                         File Name: 09a0079p.06

                  UNITED STATES COURT OF APPEALS
                                     FOR THE SIXTH CIRCUIT
                                       _________________


                                                 X
                          Plaintiff-Appellee, -
 UNITED STATES OF AMERICA,
                                                  -
                                                  -
                                                  -
                                                     No. 08-3062
           v.
                                                  ,
                                                   >
                                                  -
                       Defendant-Appellant. -
 PATRICIA PETROFF-KLINE,
                                                  -
                                                N
                  Appeal from the United States District Court
                   for the Northern District of Ohio at Akron.
               No. 06-02103—Solomon Oliver, Jr., District Judge.
                                      Argued: January 23, 2009
                                Decided and Filed: March 3, 2009
                                                                                                            *
Before: GIBBONS and McKEAGUE, Circuit Judges; SHADUR, Senior District Judge.

                                         _________________

                                               COUNSEL
ARGUED: D. James Petroff, FAULKNER, MUSKOVITZ & PHILLIPS, Cleveland,
Ohio, for Appellant. Lori White Laisure, ASSISTANT UNITED STATES
ATTORNEY, Cleveland, Ohio, for Appellee. ON BRIEF: D. James Petroff,
FAULKNER, MUSKOVITZ & PHILLIPS, Cleveland, Ohio, for Appellant. Lori White
Laisure, ASSISTANT UNITED STATES ATTORNEY, Cleveland, Ohio, for Appellee.
                                         _________________

                                               OPINION
                                         _________________

         SHADUR, Senior District Judge.                   Patricia Petroff-Kline (“Petroff-Kline”)
appeals the district court’s grant of summary judgment to the United States and its
corresponding denial of Petroff-Kline’s cross-motion for summary judgment. Acting on


         *
           The Honorable Milton I. Shadur, United States District Judge for the Northern District of Illinois,
sitting by designation.


                                                      1
No. 08-3062                 United States v. Petroff-Kline                         Page 2


behalf of the Department of Health and Human Services (“HHS”), the Government
brought the action against Petroff-Kline to collect the amount of Health Education
Assistance Loan (“Health Education Loan”) indebtedness that Petroff-Kline had incurred
while she was a student at Tufts University’s School of Dentistry (“Tufts”). After
considering the parties’ cross-motions for summary judgment and supplemental briefing
as to the amount of Petroff-Kline’s indebtedness, the district court granted the
Government’s motion for summary judgment in the amount of $208,349.20 plus interest
accrued from August 15, 2007. We affirm.

                                            I.

       Patterned after the United States’ Guaranteed Student Loan (“Student Loan”)
program, the Health Education Loan program was enacted to meet the needs of health
profession students who had to borrow substantially more than the borrowing limit under
the Student Loan program. Health Education Loans were made available to full-time
students in certain health profession schools. Administered by the Public Health
Services of HHS, the Health Education Loan program employs a three-party structure:
(1) private lenders make the loans, (2) the schools administer their application and
disbursement and (3) HHS guarantees the loans. Lenders often sell their Health
Education Loans to the Student Loan Marketing Association (“Sallie Mae”), a secondary
loan market established by statute.

       After the borrower’s graduation or departure from school, the lender establishes
a repayment schedule that begins the first day of the tenth month after the borrower
ceases to be a full-time student at a Health Education Loan school and allows the
borrower up to 33 years to repay the loan. After the repayment period begins the
borrower may request a forbearance, which provides an extension of time for making
loan payments to avoid the borrower’s default on his or her payments.

       In the event of the borrower’s default, death, total and permanent disability or
bankruptcy, HHS will pay off the lender’s loss in principal and interest if the lender has
complied with the terms of the Health Education Loan insurance contract, the statute and
the regulations. HHS is then assigned the borrower’s notes.
No. 08-3062                 United States v. Petroff-Kline                        Page 3


       While Petroff-Kline was a student at Tufts, she applied for and obtained six
Health Education Loans, and Tufts approved all the requests. Petroff-Kline signed
promissory notes for the Health Education Loans, and Bay Bank Norfolk Trust Company
(“Bay Bank”) approved Petroff-Kline for all six loans: (1) $13,060 on September 12,
1986, (2) $6,940 on December 4, 1986, (3) $14,675 on August 15, 1987, (4) $18,730 on
August 8, 1988, (5) $1,261 on January 5, 1989 and (6) $6,355 on October 13, 1989.

       Sallie Mae later purchased Petroff-Kline’s Health Education Loans from Bay
Bank. Following five periods of forbearance from April 1, 1991 to May 6, 1993, Sallie
Mae provided Petroff-Kline with repayment schedules on or about June 9, 1993 and
notified her that payments were to begin on July 6, 1993. Petroff-Kline filed for Chapter
7 bankruptcy on July 31, 1995, and on September 9, 1995 she filed an adversary
proceeding to seek an undue hardship discharge of the Health Assistance Loans.
Although she was discharged from bankruptcy on October 3, 1997, her Health Education
Loan debt was not discharged.

       As a result of the adversary proceeding, Sallie Mae filed an insurance claim with
HHS on September 19, 1995. About a week later HHS paid the claim in the amount of
$105,495 and received an assignment of Petroff-Kline’s promissory notes.             On
September 29, 1995 HHS sent Petroff-Kline a letter telling her that the promissory notes
for her Health Education Loans had been assigned to the Government.

       HHS informed Petroff-Kline about March 3, 1998 that her Health Education
Loan debt had been referred to Payco American Corporation for collection and that her
account would be referred to the United States Department of Justice (“DOJ”) if she
failed to either remit payment in full or enter into a repayment agreement. Petroff-Kline
did not comply.

       Then HHS wrote Petroff-Kline a March 26, 1998 letter stating that it intended
to refer her Health Education Loan debt to other federal agencies for the purpose of
administrative offset under the Debt Collection Improvement Act of 1996. Petroff-Kline
was advised that a written response and repayment agreement or payment in full within
No. 08-3062                 United States v. Petroff-Kline                         Page 4


60 days from the date of the letter would terminate administrative offset action. Again
Petroff-Kline did not respond.

       Six years passed without full compliance by Petroff-Kline (as indicated later, she
made some payments on account during that period). Then in an April 6, 2004 letter
HHS notified her that she had 60 days to resolve her delinquent debt. She was further
advised that if she was unwilling to establish a repayment agreement, her case would be
referred immediately to the Office of the Inspector General for exclusion from
participation in the Medicare and Medicaid programs. HHS also told Petroff-Kline that
her debt would be transferred to the DOJ for enforced collection if she did not enter into
a repayment agreement. Once more Petroff-Kline did not respond.

       HHS thereafter warned Petroff-Kline repeatedly -- in letters dated July 23, 2004,
April 18, 2005, September 12, 2005 and January 26, 2006 -- that if she did not enter into
a repayment agreement her debt would be referred to the DOJ. Petroff-Kline still
remained unresponsive. HHS finally referred Petroff-Kline’s Health Education Loan
debt to the DOJ for enforced collection on May 26, 2006.

       Petroff-Kline had made payments totaling $9,764.11 to Sallie Mae on her Health
Education Loans from September 20, 1990 to April 14, 1995. Sallie Mae refunded
$66.96 to Petroff-Kline’s account on April 5, 1996. Although not pursuant to any
repayment agreement, Petroff-Kline also made 71 payments totaling $22,450 on the
loans from October 20, 1998 to November 15, 2006. Thus the total amount paid on
account by Petroff-Kline over the years came to $32,281.07.            According to the
Government, as of August 15, 2007 Petroff-Kline’s outstanding debt on her Health
Education Loans totaled $208,349.20.

       On August 31, 2006 the Government filed an action in the Northern District of
Ohio on behalf of HHS to recover the asserted amount of Petroff-Kline’s Health
Education Loan indebtedness. As stated earlier, both the Government and Petroff-Kline
then filed motions for summary judgment. On October 17, 2007 the district court
granted the Government’s motion as to the existence of Petroff-Kline’s indebtedness but
denied summary judgment to the Government as to the amount of that indebtedness.
No. 08-3062                United States v. Petroff-Kline                        Page 5


       Just a few weeks later -- on November 5, 2007 -- the district court held a
telephonic conference during which it vacated its partial order denying summary
judgment as to the amount of indebtedness and allowed Petroff-Kline to file a
supplemental motion on that issue. After permitting the Government to file a response,
the district court then reconsidered the Government’s motion for summary judgment on
the issue of the amount of indebtedness, and on November 14, 2007 it granted the
Government’s motion. Petroff-Kline timely filed her notice of appeal from the district
court’s orders and judgment on December 12, 2007.

                                          II.

       We review the district court’s order granting summary judgment de novo (Sigler
v. American Honda Motor Co., 532 F.3d 469, 482 (6th Cir. 2008)). In reviewing a grant
of summary judgment on cross-motions seeking such relief, we apply the same legal
standards as the district court: whether, with the evidence viewed in the light most
favorable to the non-moving party, there are no genuine issues of material fact, so that
the moving party is entitled to a judgment as a matter of law (Relford v. Lexington-
Fayette Urban County Gov’t, 390 F.3d 452, 456-57 (6th Cir. 2004)).

                                          III.

       To recover on a promissory note the government must first make a prima facie
showing that (1) the defendant signed it, (2) the government is the present owner or
holder and (3) the note is in default (United States v. MacDonald, No. 93-1924, 1994
WL 194248, at *2 (6th Cir. May 16) (per curiam); United States v. Lawrence, 276 F.3d
193, 197 (5th Cir. 2001)). For that purpose the government may introduce evidence of
the note and a sworn transcript of the account or certificate of indebtedness (United
States v. Davis, 28 Fed. Appx. 502, 503 (6th Cir. 2002)). Once such a prima facie case
is established, defendant has the burden of proving the nonexistence, extinguishment or
variance in payment of the obligation (id.).

       First, Petroff-Kline argues that the Government cannot establish a prima facie
case of indebtedness because it has not established that she signed the promissory notes
No. 08-3062                 United States v. Petroff-Kline                           Page 6


at issue. Although she acknowledges that the Government gave her copies of the alleged
notes, Petroff-Kline contends that she does not recognize the copies with her alleged
signature on them. According to Petroff-Kline, without presenting the original notes the
Government has not produced any admissible evidence that Petroff-Kline signed the
notes on which the Government seeks to recover.

        At the outset, Petroff-Kline’s argument is wholly disingenuous. In its opinion
denying Petroff-Kline’s motion for hardship discharge in her 1997 bankruptcy
proceedings, the bankruptcy court noted that Petroff-Kline testified “that she did review
the loan documents before signing them and understood that the documents represented
loans that she would have to repay” (Kline v. Educ. Loan Serv. (In re Kline), Case No.
95-1300, Adv. No. 95-5102, slip op. at 4 (Bankr. N.D. Ohio Mar. 28, 1997)). In light
of those admissions, Petroff-Kline’s now-asserted amnesia regarding her Health
Education Loan debt can scarcely be credited as establishing a genuine issue of material
fact.

        But even aside from that, Petroff-Kline’s argument fails on its own merits.
United States v. Williams, No. 04-73603, 2005 WL 1343389 (E.D.Mich. May 26), the
only case on which Petroff-Kline seeks to rely, is not at all comparable to this case (quite
apart from the fact that, as a district court opinion, it is non-precedential). In Williams
the government sought to collect an alleged student loan debt from defendant based on
promissory notes that defendant claimed he had never signed. Williams found that a
genuine issue of material fact existed as to whether the notes were in fact signed by
defendant, so that the court denied the government’s motion for summary judgment (id.
at *2). On that score the defendant there presented evidence that the social security
number and middle initial of the “Kenneth Williams” on the alleged notes were different
from his own (id.). Considering that evidence in the light most favorable to defendant,
Williams concluded that an ambiguity existed regarding the identity of the “Kenneth
Williams” on the promissory note (id. at *3).

        Nothing of the sort is presented here. No evidence even suggests that Petroff-
Kline is not the “Patricia Petroff” who signed the promissory notes introduced by the
No. 08-3062                 United States v. Petroff-Kline                         Page 7


Government. Indeed, Petroff-Kline admits that she attended Tufts (as did the “Patricia
Petroff” who signed the promissory notes). All that she advances is an amorphous
disclaimer that she does not recognize the notes containing that signature, insisting that
the Government must therefore produce the original promissory notes. But it is well
established that “[p]hotocopies are allowed into evidence as if they were originals”
(Buziashvili v. Inman, 106 F.3d 709, 717 (6th Cir. 1997), invoking Fed. R. Evid.
(“Rule”) 1003). Thus the district court properly concluded that the Government
established, as a matter of law, the first element of its prima facie case.

       Next Petroff-Kline contests the third element of the Government’s prima facie
case, arguing that the declaration offered by the Government to establish the fact and
amount of her indebtedness is unauthenticated and is inadmissible hearsay under Rule
803. But an analysis of the applicable evidentiary rules confirms the bogus nature of
that contention as well.

       In support of its summary judgment motion the Government presented a
declaration (“Declaration”) by Barry Blum (“Blum”), the Chief of the Referral Control
Section of the Debt Management Branch of HHS. Petroff-Kline contends that because
Blum lacks personal knowledge about the loan documents, default, amount of payments
and calculation of interest -- all matters generated by Bay Bank and Sallie Mae -- that
the Declaration does not qualify as a business record under Rule 803(6):

       A memorandum, report, record, or data compilation, in any form, of acts, events,
       conditions, opinions, or diagnoses, made at or near the time by, or from
       information transmitted by, a person with knowledge, if kept in the course of a
       regularly conducted business activity, and if it was the regular practice of that
       business activity to make the memorandum, report, record or data compilation,
       all as shown by the testimony of the custodian or other qualified witness, or by
       certification that complies with Rule 902(11), Rule 902(12), or a statute
       permitting certification, unless the source of information or the method or
       circumstances of preparation indicate lack of trustworthiness. The term
       “business” as used in this paragraph includes business, institution, association,
       profession, occupation, and calling of every kind, whether or not conducted for
       profit.
No. 08-3062                 United States v. Petroff-Kline                          Page 8


       In that respect this case is parallel to Lawrence, 276 F.3d at 195, where the debtor
also challenged the district court’s grant of summary judgment to the United States in
its action to enforce promissory notes. With its motion the United States had submitted
copies of the notes, certificates of indebtedness, computerized loan records and an
affidavit from a government loan analyst authenticating the loan records. Debtor
Lawrence asserted (id. at 196) that “the certificates of indebtedness were not competent
evidence because they were not based on personal knowledge and did not affirmatively
show that the affiant was competent as required by rule 56(e)” and that the statements
of Lawrence’s indebtedness constituted “conclusory hearsay statements.”

       Those contentions were flatly rejected on the ground that any claimed defects in
the certificates were cured by the affidavit of the loan analyst that “she is familiar with
how the [Department of Education] maintains records related to students, that she was
in custody and control of Lawrence’s student loan records, that these records are kept
in the course of DOE’s regularly conducted student loan business” and that the
promissory notes were true copies of the original documents (id.). Lawrence, id. at 196-
97 concluded that the affidavit “satisfies the requirements of both rule 56(e) and the
‘business records exception’ to the hearsay rule,” so that the district court had properly
granted summary judgment to the United States on that basis.

       Here too the Government filed the Declaration in addition to a certificate of
Petroff-Kline’s indebtedness. As the district court noted, the Declaration was similar to
the affidavit that the Lawrence court found satisfied the requirements of Rule 803(6)
and Fed.R.Civ.P. 56(e):

       Blum’s Declaration sets forth that, “as Chief of the Referral Control Section
       (“RCS”), [he] is authorized to examine the records and claims of the HHS and
       to execute a Declaration of Facts based on these examinations; that “all
       documents attached hereto and referenced above are true and correct copies of
       official records maintained by HHS”; that “these files are kept in the ordinary
       course of HHS’ regularly conducted activities and are made at or near the time
       by, or from, information transmitted by a person with knowledge”; and that HHS
       took assignment of the loans from Sallie Mae, and Sallie Mae took assignment
       of the loans from Bay Bank.
No. 08-3062                  United States v. Petroff-Kline                           Page 9


Indeed, to qualify under the business records exception to the hearsay rule a “witness
need only have knowledge of the procedures under which the records were created,” not
knowledge of the actual entries in the records (United States v. Wables, 731 F.2d 440,
449 (7th Cir. 1984)).

        Petroff-Kline also contends that the Declaration is inadmissible because it was
not properly authenticated. But that is wholly at odds with the self-authentication
provision of Rule 902(11), which the Declaration tracks directly. Hence the Declaration
was clearly admissible and was properly considered by the district court as part of the
Government’s prima facie case.

        In sum, the Government established each of the three elements essential to a
prima facie case as to Petroff-Kline’s indebtedness as a matter of law. We turn then to
Petroff-Kline’s effort to escape the vise of that indebtedness.

                                            IV.

        Petroff-Kline first argues that purported judicial admissions by the Government
bar any recovery as a matter of law. On May 18, 2007 Petroff-Kline issued her initial
discovery requests asking that the Government admit paragraphs in her amended answer
that would have relieved her of liability for her alleged indebtedness. It was on June 20,
2007 that the Government filed its responses. Because that was 33 days after the
requests were served -- three days beyond the 30 day timetable prescribed by
Fed.R.Civ.P. 36(a)(3) -- Petroff-Kline maintains that the requested admissions must be
deemed to have been admitted and that the district court erred by granting the
Government leave to withdraw those admissions without any formal motion.

        It must be said at the outset that Petroff-Kline has a skewed perception of
Fed.R.Civ.P. 36, which is essentially intended to facilitate proof at trials by obviating the
need to adduce testimony or documents as to matters that are really not in controversy.
Thus Fed.R.Civ.P. 36(a)(1)(A) permits requests for admissions as to “facts, the
application of law to fact, or opinions about either.” As summarized in 7 Moore’s
Federal Practice § 36.10[8] at 36-26 (3d ed. 2008) (footnotes omitted):
No. 08-3062                   United States v. Petroff-Kline                       Page 10


        Requests for admission may relate to the application of law to fact. Such
        requests should not be confused with pure requests for opinions of law, which
        are not contemplated by the rule. Nor are requests seeking legal conclusions
        appropriate when proceeding under Rule 36.
To the same effect, see 8A Charles Wright, Arthur Miller and Richard Marcus, Federal
Practice and Procedure § 2255, at 534 & n.8 (2d ed. 1994) and cases cited there,
especially cases in the 2008 pocket part.

        Yet, for example, Petroff-Kline sought to have the Government admit such
statements as “Plaintiff has failed to state a claim upon which relief can be granted,”
“Plaintiff’s claims are barred by the applicable statute of limitations and/or laches” and
“Defendant does not owe money to Plaintiff.” Plainly the first of those requests does not
fit the prescribed mold, and the second is at least problematic in the same respect. Even
the third, though it might perhaps be stretched into an effort to elicit a factual response,
targets the ultimate legal issue in the case.

        Thus there is a serious question as to whether Petroff-Kline could rely on the
Government’s purported admissions-by-silence even on her own terms. But we need not
peg our rejection of Petroff-Kline’s draconian argument on questions as to the proper
scope of requests for admissions. Instead we look to the understandable discretion
vested in district courts to permit a longer time for a written answer to a request for
admissions and to accept “the filing of an answer that would otherwise be untimely”
(Gutting v. Falstaff Brewing Corp., 710 F.2d 1309, 1312 (8th Cir. 1983)). Hence “the
failure to respond in a timely fashion does not require the court automatically to deem
all matters admitted” (id.). That point of view is all of a piece with such judicial
proclivities as the strong reluctance to default defendants for a few days’ delay in filing
their responsive pleadings.

        Although Petroff-Kline urges that a formal motion was required to grant leave
to withdraw the Government’s admissions, we have held that a formal motion is not
always required (Kerry Steel Inc. v. Paragon Indus., 106 F.3d 147, 153-54 (6th Cir.
1997)). Instead a withdrawal “may be imputed from a party’s actions,” including the
filing of a belated denial (Chancellor v. City of Detroit, 454 F.Supp.2d 645, 666
No. 08-3062                       United States v. Petroff-Kline                                Page 11


(E.D.Mich. 2006) (coincidentally involving denials that, like the Government’s
responses here, were just three days late)). Despite its failure to have filed a formal
motion to withdraw its claimed admissions, the Government’s filing of a slightly
overdue response effectively served as such a withdrawal. Accordingly the purported
admissions neither bar the Government’s recovery nor require that Petroff-Kline be
granted summary judgment on the Government’s claims.

                                                    V.

        Lastly, Petroff-Kline argues that the loans at issue violated the Truth in Lending
Act (“TILA,” 15 U.S.C. §§ 1601 et seq.1) because they did not contain certain required
disclosures and that she is entitled to assert those claims as a defense in this collection
action for set-off or recoupment. That argument fails as well.

        TILA requires that creditors make certain disclosures as to the terms of lending
arrangements and provides for civil liability for failure to comply with its provisions
(TILA § 1640). Pursuant to the authority delegated to it by TILA, the Federal Reserve
System’s Board of Governors have promulgated regulations, known collectively as
Regulation Z (see 12 C.F.R. pt. 2262, to implement its requirements). Although TILA
exempts from its disclosure obligations student loan programs promulgated under the
Higher Education Act of 1965 (Reg. § 226.3(f)), Petroff-Kline’s Health Education Loans
were authorized by a different statute -- the Public Health Service Act -- and therefore
remain subject to TILA’s requirements.

        Reg. §§ 226.17 and 226.18 set forth TILA’s disclosure requirements. Under
Reg. § 226.18 a creditor must disclose applicable information about the loan transaction,
including the amount financed, the finance charge, the annual percentage rate, the
payment schedule, information regarding the variable rate, the total payments and total




        1
          Citations to TILA provisions will take the form “TILA § --,” using the Title 15 numbering but
omitting the prefatory “15 U.S.C.”
        2
            Citations to Regulation Z will take the form “Reg. § --,” omitting the prefatory “12 C.F.R.”
No. 08-3062                 United States v. Petroff-Kline                           Page 12


sale price. But Reg. § 226.17(i) limits those required disclosures as to student loans of
the type at issue here:

       For each transaction involving an interim credit extension under a student credit
       program, the creditor need not make the following disclosures: the finance
       charge under § 226.18(d), the payment schedule under § 226.18(g), the total of
       payments under § 226.18(h), or the total sale price under § 226.18(j).
Both the reasons for and more specifics as to those limitations are provided by the
Official Staff Commentary (“Commentary”) to that provision:

       1. Definition. Student credit plans involve extensions of credit for education
       purposes where the repayment amount and schedule are not known at the time
       credit is advanced. These plans include loans made under any student credit
       plan, whether government or private, where the repayment period does not
       begin immediately. (Certain student credit plans that meet this definition are
       exempt from Regulation Z. See section 226.3(f).) Creditors in interim student
       credit extensions need not disclose the terms set forth in this paragraph at the
       time the credit is actually extended but must make complete disclosures at the
       time the creditor and consumer agree upon the repayment schedule for the total
       obligation. At that time, a new set of disclosures must be made of all applicable
       items under section 226.18.
       2. Basis of disclosures. The disclosures given at the time of execution of the
       interim note should reflect two annual percentage rates, one for the interim
       period and one for the repayment period. The use of section 226.17(i) in
       making disclosures does not, by itself, make those disclosures estimates. Any
       portion of the finance charge, such as statutory interest, that is attributable to the
       interim period and is paid by the student (either as a prepaid finance charge,
       periodically during the interim period, in one payment at the end of the interim
       period, or capitalized at the beginning of the repayment period) must be
       reflected in the interim annual percentage rate. Interest subsidies, such as
       payments made by either a state or the federal government on an interim loan,
       must be excluded in computing the annual percentage rate on the interim
       obligation, when the consumer has no contingent liability for payment of those
       amounts. Any finance charges that are paid separately by the student at the
       outset or withheld from the proceeds of the loan are prepaid finance charges.
       An example of this type of charge is the loan guarantee fee. The sum of the
       prepaid finance charges is deducted from the loan proceeds to determine the
       amount financed and included in the calculation of the finance charge.
       Petroff-Kline’s Health Education Loans were clearly “extensions of credit for
education purposes where the repayment amount and schedule are not known at the
time credit is advanced,” because the repayment schedule for Petroff-Kline’s loans was
No. 08-3062                     United States v. Petroff-Kline                                Page 13


not entered into, and therefore could not be known, until after she completed her
education. So the exemption for interim credit extensions expressly applied to her
Health Education Loans.

         Petroff-Kline nevertheless argues that even so, Regulation Z still requires the
disclosure of two annual percentage rates -- one for the interim period and one for the
repayment period -- and that she never received such disclosures when the loans were
executed. True enough, although Reg. § 226.17(i) excludes the Health Education Loans
from certain disclosures required by Reg. § 226.18, it does not excuse all of that
section’s disclosure requirements. Under both Reg. § 226.18(e) and the Commentary
to Reg. § 226.17(i), the annual percentage rate of the loans and, if applicable,
information regarding the variable rate of the loans still must be disclosed.3 Petroff-
Kline’s contention must be analyzed in terms of those provisions.

         To begin with, Petroff-Kline’s first two promissory notes do contain two annual
percentage rates, so her argument fails at the outset as to those notes. But the other four
notes do not contain any annual percentage rate, and they (or at least the copies
submitted by the Government) are too illegible to conclude that the proper disclosures
regarding the variable interest rate were made. That, however, is not the whole story:
On August 14, 1987, August 8, 1988, December 3, 1988, January 5, 1989, October 13,
1989 and December 19, 1989 Bay Bank did send Petroff-Kline disbursement and
disclosure statements regarding her approved Health Education Loans.                           Those
statements notified Petroff-Kline that her Health Education Loan application had been
approved and that her loan check would be mailed to her educational institutional.
They further stated that Petroff-Kline should make arrangements with the school to sign
the check and advised Petroff-Kline that if she chose not to accept the loan, she should
communicate with Bay Bank immediately.




         3
          Reg. § 226.18(f)(1) requires that for variable rate loans where the annual percentage rate may
increase after consummation of a transaction, the creditor must disclose the circumstances under which
the rate may increase, any limitations on the increase, the effect of an increase, and an example of the
payment terms that would result from an increase.
No. 08-3062                       United States v. Petroff-Kline                                Page 14


        Also included in the disbursement disclosures were two annual percentage rate
estimates for each disbursement (one applicable before, and the other applicable after,
repayment began) and information about the variable rate calculation.4                           Those
disclosures, however, were not made until the loan amounts were disbursed, obviously
months later than when (1) Petroff-Kline had applied for her Health Education Loans
and signed the promissory notes and (2) Bay Bank had approved the amounts of
Petroff-Kline’s Health Education Loans.

        TILA liability arises when a creditor fails to make the required disclosures
“before consummation of the transaction” (Reg. § 226.17(b)), defined as “the time that
a consumer becomes contractually obligated on a credit transaction” (Reg.
§ 226.2(a)(13)). Thus “consummation” occurs when a borrower signs the loan
documents and becomes obligated to pay, despite the fact that the loan may be
contingent on the lender’s approval (Bragg v. Bill Heard Chevrolet, Inc., 374 F.3d
1060, 1066 (11th Cir. 2004), followed in Muro v. Hermanos Auto Wholesalers, Inc.,
514 F.Supp.2d 1343, 1349 (S.D.Fla. 2007); Copley v. Rona Enters., Inc., 423 F.Supp.
979, 982-83 (S.D.Ohio 1976)).

        In this case, then, consummation occurred, so that the disclosure requirements
became effective, when Petroff-Kline signed the promissory notes, even though the
loans and their amounts were then subject to approval by Bay Bank. Because four of
the notes did not contain the required disclosures at that time, they concededly violated
TILA.       But that violation does not help Petroff-Kline here, because the later
disbursement notices did contain the information required by TILA, so that the
violations were simply timing violations rather than substantive violations (TILA




        4
            Each disbursement statement contained this information about the variable rate:
                   The Annual Percentage Rate may increase during the term of this transaction if the
                   index to the average of the bond equivalent rates for the ninety-one day U.S. Treasury
                   Bills auctioned during the preceding quarter increases. The rate will not increase more
                   than once every calendar quarter. Any increase will take the form of higher periodic
                   payments, more payments of the same amount, or a larger amount due at maturity,
                   depending upon the precise terms of repayment you agree to with the Lender.
No. 08-3062                 United States v. Petroff-Kline                       Page 15


§§ 1638(a) and (b)). And because that distinction dictates the type of damages
available for such violations, it turns out to be crucial here.

        As a general rule an action under TILA must be brought “within one year from
the date of the occurrence of the violation” (TILA § 1640(e)), but that does not bar a
debtor from asserting a TILA violation as a defense to obtain recoupment in an action
to collect the debt at issue (id.). Recoupment is measured by the amount of damages
that would have been available for the original TILA violation (In re Ramirez, 329 B.R.
727, 732-33 (D. Kan. 2005); In re Gillespie, 110 B.R. 742, 748 (Bankr. E.D. Pa. 1990)).

        TILA § 1640(a) provides for two types of damage awards: statutory damages
and actual damages. But importantly, timing violations alone do not qualify for
statutory damages (Baker v. Sunny Chevrolet, Inc., 349 F.3d 862, 869 (6th Cir. 2003)).
Instead a debtor must prove actual damages to recover for a timing violation (id.), and
actual damages require a showing of detrimental reliance (In re Smith, 289 F.3d 1155,
1157 (9th Cir. 2002) (per curiam), collecting cases, including our decision in Stout v.
J.D. Byrider, 228 F.3d 709, 718 (6th Cir. 2000)). To establish detrimental reliance, the
debtor must demonstrate that he or she would either have received a better interest rate
for the loans elsewhere or would have elected not to take the loan had the required
information been available (id.).

        Here Petroff-Kline has shown neither -- indeed, she has not even made an
attempt in that regard. Consequently she has not established that she is entitled to any
actual damages, and she is thus unable to obtain recoupment from the Government in
this action.

        Indeed, the government has another string to its bow. Even if Petroff-Kline had
been able to establish actual damages from the TILA violation, she could not recoup
that amount from the Government in any event.                Under TILA § 1612(b) the
Government is immune from any civil or criminal penalties for violations of its
provisions. That immunity extends to attempted recoupments such as the one that
Petroff-Kline seeks here (FDIC v. Monterrey, Inc., 847 F.Supp. 997, 1004 (D. P.R.
1994); FDIC v. Webb, 464 F.Supp. 520, 525 (D.C. Tenn. 1978)).
No. 08-3062                United States v. Petroff-Kline                       Page 16


       For more than one reason, then, the timing violation of TILA as to four of
Petroff-Kline’s notes does not provide her with any viable defense. That leaves
unimpaired the Government’s ability to recover Petroff-Kline’s outstanding Health
Education Loan debt.

                                         VI.

       After having taken advantage of a government-guaranteed loan program to
finance her professional education, Petroff-Kline has engaged in extraordinarily
protracted efforts -- and measures -- to evade repayment of her just indebtedness. But
that ungrateful conduct has at last come to the end of the road. We affirm the district
court’s grant of summary judgment to the Government on both the fact and the amount
of Petroff-Kline’s Health Education Loan indebtedness.
