Financial Freedom Acquisition, LLC v. Standard Bank and Trust Company

Bank filed complaint against trustee to foreclose adjustable rate home equity conversion mortgage (also known as "reverse mortgage") and adjustable rate note secured on condominium held by land trust which was principal dwelling of consumer, now deceased, who had entered into mortgage and note. Trustee filed answer and counterclaim, seeking to rescind mortgage, alleging violations of Truth in Lending Act (TILA). Court erred in granting motion to dismiss counterclaim. Reverse mortgages are consumer credit transactions covered by TILA. Under Regulation Z, enacted by Federal Reserve Board to carry out purposes of TILA, right to rescind extends to each consumer whose ownership interest is or will be subject to security interest or is subject to risk of loss. Trustee of land trust is a consumer, whose ownership interest is subject to security interest. Thus, trustee was entitled to TILA disclosures and has the right to rescind the transaction. When a consumer timely exercises its right to rescind a consumer credit transaction through proper notice to creditor, a sale of property does not terminate a consumer's right to rescind. (GARMAN, FREEMAN, THOMAS, KILBRIDE, KARMEIER, and THEIS, concurring.)