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Johnson v. GMAC Mortgage Corp.2/22/2005
Likewise, none of the other cases cited by respondents require the borrower to plead tender or an offer of tender to be entitled to exercise the right of rescission. Like Ehlert , they merely hold that the courts may condition the grant of rescission upon tender. See Yamamoto, 329 F.3d at 1171; Large, 292 F.3d at 55; Fed. Deposit Ins. Corp, 938 F.2d at 890; Rudisell v. Fifth Third Bank, 622 F.2d 243, 254 (6th Cir. 1980) ("Since Congress clearly intended to give a right to rescind to persons in appellants' situation, this Court feels it must grant them that right. However, since appellants have kept the aluminum siding, this Court feels that appellants should tender the reasonable value of the property they received since they cannot give back what they actually received . . . . The rescission and return of monies paid to appellee is thus conditioned upon the return to appellee by appellants the reasonable value of the property received."); Riopta, 101 F.Supp.2d. at 1331-32, 1334-35.
Or they hold that a lender does not forfeit its rights to the property until the borrower first tenders the proceeds. See Mayfield v. Vanguard Sav. & Loan Ass'n , 710 F. Supp. 143, 148 (E.D. Pa. 1989) (holding that borrower was entitled to rescind loan agreement based upon lender's violations of TILA but that lender would not be deemed to have forfeited proceeds of loan absent tender by the borrower); Bustamante v. First Fed. Sav. & Loan Ass'n , 619 F.2d 360, 365 (5th Cir. 1980) (dealing with TILA forfeiture provision and holding that the forfeiture provision is not triggered without tender by borrower). This is consistent with the language of the statutory forfeiture provision, which says, "If the creditor does not take possession of the property within 20 days after tender by the obligor , ownership of the property vests in the obligor without obligation on his part to pay for it." 15 U.S.C.A. section 1635(b) (emphasis added). Thus, while tender by the borrower may not be a prerequisite to exercising the right to rescind, it does appear to be a prerequisite to forfeiture.
Forfeiture is not the issue presented here, however. The issue presented here is simply whether Mr. Johnson has pled enough to entitle him to a declaration of rights in the security instrument. Because that is the issue and because the court may condition any decision requiring respondents to release the security interest upon tender if equity demands it, respondents' concerns about Mr. Johnson obtaining a "windfall" or a "free house" are misplaced. The trial court can address those concerns. See, e.g ., Ray v. Citifinancial, Inc ., 228 F.Supp.2d 664, 667 (D. Md. 2002) ("Within the meaning of the law, 'rescission' does not mean an annulment that is definitively accomplished by unilateral pronouncement. Rather, it contemplates a remedy that restores the status quo ante . If a party has a legal or equitable right to annul a transaction, he may do so, but only upon returning any benefit he has received.").
D. Mr. Johnson Stated a Claim to Quiet Title
In his second amended petition, Mr. Johnson added a count for quiet title against GMAC. In that count, he alleged that GMAC might claim some right, title or interest in his property under the deed of trust. He further alleged that GMAC's security interest in his property was void because of his "valid and lawful cancellation of the loan" under TILA. He asked the court to quiet title to the property in him, free of any claim by GMAC.
The trial court dismissed this count as well because the court found that "Defendant GMAC has not asserted a claim to a fee title interest but rather relies on a lien interest based on valid consideration."
Sectio
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