## Facts

- Joseph C. Ziegler obtained a $97,600 residential loan and mortgage from Alliance Funding.
- The loan proceeds were intended to pay off (1) an existing mortgage held by Washington Mutual and (2) two judgment liens held by William Knapp & Co.
- Alliance Funding’s closing instructions contemplated that Alliance’s mortgage would have first-priority status once the prior encumbrances were released.
- The settlement statement reflected that the loan proceeds would be used to record releases of the Washington Mutual mortgage and the William Knapp judgment liens.
- The settlement statement included a $75 fee, deducted from Ziegler’s loan proceeds, described as a charge to record the releases.
- Washington Mutual’s payoff letter identified a $23.50 recording fee and indicated that Washington Mutual would pay it.
- After closing, only the Washington Mutual release was recorded; the releases for the two William Knapp judgment liens were never recorded.
- LaSalle Bank National Association, as successor in interest to Alliance Funding, later filed a foreclosure action on the Alliance Funding mortgage and moved for summary judgment.
- Ziegler filed a cross-motion for summary judgment, asserting that the $75 fee should have been disclosed as a Truth in Lending Act (TILA) finance charge and that the alleged disclosure failure entitled him to rescind the loan.
- LaSalle disputed that the $75 fee was a TILA finance charge and argued that, even if there were a TILA disclosure violation, assignee/successor liability was limited to violations apparent on the face of the assigned TILA disclosure materials.

## Issues

1. Whether the $75 settlement-statement charge for recording releases had to be treated and disclosed as a TILA “finance charge.”
2. If the $75 charge was not properly disclosed, whether that alleged disclosure error supported Ziegler’s claimed right to rescind the loan in response to foreclosure.
3. Whether LaSalle, as successor in interest/assignee, could face TILA liability for the alleged disclosure violation when the violation was not apparent on the face of the disclosure documents.

## Decision

- The court rejected Ziegler’s attempt to defeat foreclosure through a TILA rescission theory based on the $75 recording-related charge.
- The court concluded that the $75 item, described on the settlement statement as a recording/release-related fee, did not establish a TILA disclosure violation requiring rescission on this record.
- The court also held that LaSalle, as successor in interest/assignee, was not subject to TILA liability for a violation that was not apparent from the face of the assigned disclosure documents.
- As a result, Ziegler was not entitled to summary judgment on rescission, and his TILA theory did not bar LaSalle’s foreclosure claim at summary judgment.

## Legal Principles

- TILA and Regulation Z define a “finance charge” as the cost of consumer credit, but bona fide and reasonable real-estate settlement charges—such as certain fees for recording or for perfecting or releasing a security interest—are generally excluded from the finance charge.
- A borrower asserting TILA rescission to avoid enforcement of a mortgage must show a qualifying, material disclosure failure; a dispute about how a specific settlement charge should be characterized does not automatically establish a rescission right.
- Under 15 U.S.C. § 1641, an assignee’s civil liability for TILA disclosure violations is generally limited to violations that are apparent on the face of the disclosure statement or other assigned documents.
- On summary judgment, the party relying on a TILA-based rescission defense must present a record showing (a) an actionable TILA disclosure violation and (b) when the plaintiff is an assignee/successor, a basis for assignee liability within § 1641’s limits.

## Conclusion

In *LaSalle Bank National Association v. Ziegler*, a borrower facing foreclosure argued that a $75 settlement-statement fee for recording releases was an undisclosed TILA finance charge supporting rescission, but the court rejected rescission on that basis and held that the successor/assignee was not liable for a non-facial TILA disclosure violation.


LaSalle Bank National Association v. Ziegler, 2007 WL 1405350 (2007)