Saturday, August 20, 2011

FYI: 3rd Cir Says Borrower's Testimony Alone Rebuts Presumption of Delivery of TILA Disclosures

The U.S. Court of Appeals for the Third Circuit recently held that the
testimony of a borrower alone is sufficient to overcome TILA's presumption
of delivery of TILA disclosures.

A copy of the opinion is available at:

The borrower brought a TILA rescission claim, specifically alleging that
she did not receive the notices of her right to cancel at the closing on
her home, and further, that to the extent she did receive the notices in
the mail after the closing, they were not clear and conspicuous as
required by TILA because they listed the wrong final rescission date and
because they were received only after the loan funds had been disbursed.
Thus, according to the borrower, TILA's three-year extension of the right
to rescind under the mortgages was triggered. The jury entered a verdict
in favor of the lender on this TILA rescission claim.

On appeal, the borrower challenged various aspects of the jury
instructions, including the District Court's instruction that because her
signature was on the notice of right to cancel, "something more than just
[her] testimony . . . is needed to rebut the presumption that she
received" the notice.

Examining the jury instruction at issue, the Court noted that, unless
Congress or the Rules of Evidence provide otherwise, "a presumption in a
civil case imposes the burden of production on the party against whom it
is directed, but does not shift the burden of persuasion." Further, "the
introduction of evidence to rebut a presumption destroys that presumption,
leaving only that evidence and its inferences to be judged against the
competing evidence and its inferences to determine the ultimate question
at issue."

The Court then examined the language within TILA, specifically the
provision stating that when a borrower signs a "written acknowledgment of
receipt" of the disclosures required by TILA, his or her signature "does
no more than create a rebuttable presumption of delivery thereof." The
Court concluded that this language in TILA indicated that Congress did not
intend that something more than the testimony of a borrower was required
to overcome TILA's rebuttable presumption of receipt. Thus, the District
Court's jury instruction to the contrary was in error.

Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874

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