LaSalle Bank National Association v. Ziegler

Joseph C. Ziegler (defendant) obtained a $97,600 loan and mortgage from Alliance Funding to pay off an existing mortgage held by Washington Mutual and two judgment liens held by William Knapp & Co. The closing instructions for the Alliance Funding loan established that its mortgage would have first priority. The settlement statement showed that the loan’s proceeds would be used to record the release of the Washington Mutual mortgage and the William Knapp liens. The settlement statement set forth a $75 fee that was deducted from Ziegler’s loan proceeds to record the releases. However, the payoff letter for the Washington Mutual mortgage set forth a $23.50 recording fee that was paid by Washington Mutual. Ultimately, only the Washington Mutual release was recorded. The releases for the two judgment liens were never recorded. LaSalle Bank National Association (LaSalle) (plaintiff), as successor in interest to Alliance Funding, later attempted to foreclose on the Alliance Funding mortgage, filing a motion for summary judgment. Ziegler filed a cross-motion and claimed that because the Alliance Funding mortgage did not disclose the $75 fee as a finance charge, the loan was in violation of the Truth in Lending Act (TILA) and, therefore, Ziegler was entitled to rescind the loan. LaSalle denied that the $75 fee was a finance charge under TILA. Moreover, LaSalle alleged that even if the Alliance Funding mortgage did violate TILA, as successor in interest it did not have liability unless the violation was apparent from the TILA disclosure.