                                         2015 IL 117950



                                            IN THE
                                  SUPREME COURT
                                               OF
                            THE STATE OF ILLINOIS



                                      (Docket No. 117950)

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


                               Opinion filed September 24, 2015.



         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

         1
         This action was originally filed by Financial Freedom Acquisitions, LLC. On November 2,
     2011, OneWest Bank N.A. was substituted as party plaintiff.
     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 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
         2
            Marquette subsequently transferred its interests to Financial Freedom, which later transferred
     its interest to OneWest Bank.
                                                    -2-
         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,

                                               -3-
       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 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 were 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 were no
       set of facts Standard could assert to state a claim for rescission. Id.



                                                 -4-
¶ 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 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,

                                                -5-
       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.



           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.
                                                     -6-
¶ 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. 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:
           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.

                                                  -7-
          “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 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
                                                -8-
       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 these cases examined or interpreted

                                               -9-
       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.
                                                - 10 -
¶ 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:

              “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.


                                                - 11 -
¶ 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 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
                                               - 12 -
       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;

                                                       ***

                                              - 13 -
             (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 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
                                                - 14 -
       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.




                                             - 15 -
