Illinois Supreme Court, 2015 IL 117950 Opinion Date: September 24, 2015
In this case arising from a 2009 “reverse equity” mortgage, the issue was whether a Bank acting as Trustee of a trust holding property was entitled to the same relief under the Truth in Lending Act (TILA) 15 U.S.C. 1601 as the actual consumer borrowers. Want to guess what happened?
OneWest sued Standard, as Trustee, to foreclose a reverse equity adjustable-rate mortgage: the typical killer loan that Banks promoted to borrowers who later found themselves buried in unsustainable debt. In a stroke of ironic genius, Standard filed a Counterclaim in the foreclosure action based on violations of TILA by OneWest.
The Circuit Court dismissed Standard’s Counterclaim; the decision was affirmed by the Appellate Court because Standard was deemed not to an “obligor” under TILA entitled to rescind the transaction. To this point, Illinois Courts were confirming the common-sense notion that a pro-consumer law should not be used to benefit yet another Bank.