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The U.S. Court of Appeals for the 7th Circuit has revived a borrower’s case against Bank of America and a title company for giving him one instead of two copies of a notice advising of a three-day right to cancel a refinancing. On Dec. 6, a unanimous panel reversed a February 2011 summary judgment in favor of the bank by Eastern District of Wisconsin Judge J.P. Stadtmueller and remanded the case. The case, Marr v. Bank of America N.A., was brought under the federal Truth-in-Lending Act (TILA). TILA’s Regulation Z requires a creditor to give a borrower two copies of a notice of his right to rescind a loan within three business days. That notice must be given at the end of a closing. Failure to comply extends the rescission period to three years. In February 2007, Richard Marr refinanced his mortgage with Bank of America predecessor Countrywide Bank. Summit Title Services LLC, a title insurance company that worked with Countrywide, closed the loan. Marr’s lawyer learned of the absence of the two copies two years later, when he looked at Marr’s folder of closing documents during preparation for an unrelated lawsuit. In the Eastern District of Wisconsin, Marr claimed that the closing agent did not review any documents with him at the end of the closing and gave him the single notice “somewhere near the beginning or in the middle of the closing,” not at the end as required. Marr sued the bank in March 2009. He sought an award of about $17,000 for reimbursement of his interest payments, statutory damages for the bank’s failure to rescind and attorney fees. The Bank of America had a third-party claim against Summit in case Marr won his TILA case against the bank, but those claims were dismissed by stipulation in March. Judge Diane Wood wrote the opinion, joined by judges David Hamilton and John Tinder. Wood began by noting, “We have called TILA ‘hypertechnical’ in the past,…and this case provides yet another opportunity to see this level of precision in operation.” Wood wrote that if the borrower is correct, “then he had not a measly three days, but a more generous three years in which to rescind the transaction.” “We note…that although the difference between one and two copies may seem to be an empty formality, Regulation Z demands two copies,” Wood wrote. “This is not a situation in which there is any room for some kind of substantial compliance rule. Two copies means two copies, not one. Marr is entitled to the opportunity to convince the trier of fact that he did not receive all that the Regulation promised him, and thus that he may proceed with his suit to rescind the loan.” Bank of America’s lawyer on the case David Muth, a partner at Milwaukee’s Quarles & Brady, did not respond to requests for comment. The bank declined to comment. Marr’s lawyer, John Blythin of Cudahy, Wis.-based Ademi & O’Reilly, declined to comment. Summit and its lawyer, Terry Johnson of Milwaukee’s Peterson, Johnson, & Murray, who joined Bank of America’s brief but did not make oral argument, also did not respond. “It’s a tremendous victory for the plaintiff and it’s a justified victory,” said E. Michelle Drake, a partner at Minneapolis-based Nichols Kaster, who isn’t involved in the case. Drake said the firm has filed TILA cases against Bank of America and other banks. “This case was a real invitation to the 7th Circuit to engage in a substantial compliance analysis, or no-harm, no-foul analysis, and the court rejected that invitation,” Drake said. “The court held Bank of America’s feet to the fire as it should have and said, ‘If you are going to engage in meaningful, potentially life-changing mortgage transactions with individual borrowers than you have to comply with every aspect of the law.’ “ “We see what happens when banks can play fast and loose whit the rules,” she added. “That’s why these rules were created. This decision is one step in the right direction.” Sheri Qualters can be contacted at [email protected].

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