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MISSION STATEMENT: I believe that the mortgage crisis has produced manifest evil and injustice in our society. I believe our recovery will never reach the majority of struggling Americans until we restore equal protection for all citizens and especially borrowers in our debt-ridden society. LivingLies is the vehicle for a collaborative movement to provide homeowners with sufficient resources to combat bloated banks who are flooding the political market with money. We provide thousands of pages of free forms, articles and discussion of statutes, case precedent and policy on this site. And we provide paid services, books and products that enable us to maintain an infrastructure to provide a voice to the victims of Wall Street corruption.

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Rescission Litigation: 3 days from when? 3 years from when?

For further information please email or call 954-495-9867 or 520-405-1688.

This is not a legal opinion on any person’s case. Consult with licensed legal counsel in the jurisdiction in which your property is located.


This wraps things up for the week, and a reminder that there is no show tonight.

I think the following rules should be applied to the letter of rescission. Remember that Congress explicitly stated that borrowers have the right to effectuate rescission with a mere letter. Congress did not state that the lenders could reject the rescission with a letter. They MUST file a legal action alleging whatever defects they wish to assert. Since the rescission is effective by operation of law it is ONLY through operation of law that the rescission could be vacated.

1. Don’t refer to the date of origination. You don’t know when your liability, if any, arose. You only know when you signed papers. Consummation of the loan commences the moment your liability arises and that is a question of fact for the alleged “lender” to allege and prove IF THEY WANT TO. The alleged lender has the option of accepting the rescission and all the reasons they could have attacked the rescission are voluntarily waived. If they don’t get an order vacating the rescission within 20 days of receipt, they have involuntarily accepted the terms of rescission in the TILA statute. Congress explicitly cut off any right of a lender to stonewall the rescission.

2. Don’t offer any reasons for the rescission. You might be putting those reasons in dispute yourself thus raising the question about whether the rescission was  proper or warranted.

3. Send it to everyone who was ever claiming a right to collect, own or service the loan.

4. To make sure that they know you are traveling under TILA, you can add that they have 20 days in which to comply with Federal statutes.

5. The Beach v Ocwen decision (1997, Supreme Court) can be used for the borrower since the “lender” was not challenged as to standing to contest the rescission, the 3 years was admitted to have run and the alleged “lender” DID file papers in court to get relief from the rescission, which the court gave them. No allegation appears to have been made as to the running of 20 days and perhaps Great Western actually filed their contest of the rescission within 20 days. Both the State and Federal Court have jurisdiction over TILA federal Questions. But it is important to note that Beach says that the 3 years is not a statute of limitations, it is statute of expiration. So the question becomes whether the lender wishes to use that defense, whether the time has run from “Consummation” and whether consummation has actually occurred between the parties who who arguing about it and if so when that point in time was that consummation occurred between the parties identified as borrower and lender.

6. The question of whether the alleged lender has standing, or has good grounds to vacate the rescission are all factual questions that must be alleged in a pleading or complaint and proven at trial or final hearing, with the burden squarely on the party attacking the rescission.

7. The basic thrust is that the rescission is effective by operation of law by mailing a letter from the borrower(s). The ability to counter that by letter from the lender is not in the statute and therefore not available. They must file something in court.

8. During the 20 days running from the date of receipt of the notice the “lender” has the option of accepting the rescission. If they wish to get relief from the rescission, they must file a lawsuit or raise their objections in a pleading in a court of competent jurisdiction — and possibly ask for immediate relief within the 20 days in order not to be in violation of TILA statutes.

Quicken Loans and FHA Fight it Out on Illegal Loan Practices

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Not much time today for discussion but this fight between Quicken Loans, who pretended to be making loans even though they were just a naked nominee at loan closings, is instructive about what really happened.

REAL enforcement cannot begin until everyone starts with the right premise, to wit: that investment banks sold an IPO for thousands of inactive, empty entities and called them REMIC Trusts. No money went to the Trusts or the Trustees; and the investment banks, who are the only people who have proof of what happened with the same of mortgage backed securities, kept the money. No loan ever entered the trusts.

The money that appeared in loans to borrowers was received by the closing agent hours, days, weeks, months and maybe years after the borrower thought the closing was complete. And that money came from a pool of money extracted from investors under false pretenses. Since the investors had apparently contracted away their right to have any direct relationship with the borrowers, there was effectively no legal lender at closing.

Hence, the note and mortgage were executed in favor of an originator who posed as the lender, like Quicken loans. The only “creditor” for these loans were the defrauded investors (pension funds etc.). But they only had actions for fraud against the banks or potentially unjust enrichment against the borrowers, but no claim to foreclose on a defective mortgage. My solution is to send the rescission letter which is effective upon mailing. Whether it was timely or the loan did not possess the attributes of a loan that could be rescinded is a question of fact that needs to be raised by the lender, if there is one.

The question is whether there was factually a consummation of the loan and when — or if no consummation then the action by borrower should be to get back the note, get the mortgage satisfied and get back all money that was fraudulently taken from them or paid to others as compensation for the origination of the loan. Those are the exact same remedies as rescission. If the other side brings an action to declare the rescission vacated they must prove the loan, which they cannot do. They cannot rely upon instruments that are void (note and mortgage) to raise affirmative defenses or bring a lawsuit. They lack legal standing unless they can show that the transactions (origination and purchases of the loan) were real.

Until regulators actually accept the truth as a starting point they will be arguing around the problem rather than solving it.

Bank of America: The End Is In Sight


It’s always hard to imagine that some giant corporation will crumble all at once. But that has happened repeatedly over our economic history and BofA has trended on the edge throughout its 111 year history. The article in the above link tracks those events and comes to the conclusion that BofA has finally learned its lesson and could be a gigantic opportunity for investors. I beg to differ. As anyone who is involved with foreclosures will tell you, BofA continues to operate as though it was above the law. Bank management is still so impressed with themselves that they fail to see the precipice they are on.

For too long the public policy has been to save the megabanks who are literally too big to regulate — especially across state boundaries and national boundaries. For too long the public policy has been to force homeowners to shoulder the price of the mortgage meltdown. The banks survived financially but the homeowners didn’t. If the banks had been allowed to fail, the homeowners would not have lost $13 trillion in household wealth and the great recession would never have happened. The spending power would have been hit but not nearly as hard as what resulted from a refusal to do the obvious — take the bad behavior of the banks and spread it over all players, not just the homeowners. Iceland did it and the banks and the homeowners did just fine without a major recession. (Not so much for the bankers, who were thrown in jail for defrauding investors, borrowers and everyone in between).

The amount of liability out there for BofA and other major banks remains staggering. And the rulings regarding rescission and proof of foreclosure are a tightening noose around the necks of the the banks, even if their managers have escaped prosecution for criminal activity. As the pace picks up it is obvious that BofA and other banks are facing huge losses from loans “that never were” and mega write-offs on their balance sheet that will put them, once again, in the official position of what everyone already knows to be the case: insolvent.

BOTTOM LINE: The banks knowingly took money from investors for the “purchase” of mortgage backed securities that were issued by empty, non-operating REMIC Trusts. It was the holy grail of criminal investment banking — do an IPO and keep the money because the issuing entity doesn’t need nor want the money. Then through a series of “remote” or “bankruptcy remote” vehicles they slid money onto the loan closing table, pretending that the originator was the lender. The paperwork at closing should have protected the investors because it was their money). Instead it created fake paperwork creating the illusion of rights under the UCC and other theories to enforce worthless paper without alleging or proving that they ever paid for the paper, the loan or anyone else. In legal speak, the banks have the courts treating them as holders in due course of negotiable instruments without BEING holders in due course, and the paper upon which they rely is neither real nor negotiable.

The investor’s money was the source of the loan and it was fraud and breach of contract that their money ended up on the closing table with borrowers. This was precisely why Congress labeled such behavior as predatory per se — for the protection of borrowers, investors and the marketplace. Government missed its cue and instead geared up to millions of foreclosures instead of taking control of the failed banks and renegotiating the loan terms with adequate protections for the investors and the borrowers — the only real parties in the transaction. The Courts missed their cue as well. Instead of actually learning the details of these transactions, knowing that they knew nothing about securitization judges nevertheless ruled repeatedly in favor of the banks and prevented the borrower from getting discovery and forcing the borrower to absorb the burden of proof of facts that were uniquely in the hands of the banks, hidden away from public and private view.

None of the transactions reported by the banks ever took place except as paper trades on their trading desks — with fictional sellers and buyers and fictional money. The reason the banks cling so desperately to the presumptions regarding negotiable paper is that they win no cases if the court allows the borrower to drill down in discovery or the court forces the burden of proof onto the the alleged “holder” to prove the loan or any transaction implied by the false paper they are using in court. They lose every time except in those instances where the originator actually loaned money to the borrower and still has the loan (about 4% of all loans over the last 15 years).

Bank Lawyer’s Seminar: Rescission Changes Everything

QUOTE FROM SEMINAR: “The bottom Line: Until 3 years have elapsed, a mortgage is only as secure as the lender’s proof of compliance with TILA.”


For more information please call 954-495-9867 or 520-405-1688


see tila-right-of-recission-041415

From one of my readers, I received the Power Point Presentation given by a law firm representing the banks. It confirms everything I have been saying. It also offers a glimpse of some of the ways they will try to wiggle out of it. Suffice it to say that in addition to losing far more cases than what has been previously been reported, the banks are now stuck with a problem that they can’t fix, to wit: when they try to “securitize” a pool of new loans they cannot say that the deal is done because the borrower could assert a right to rescind triggering a nightmare of problems for all the parties starting with origination. The appetite for mortgage backed securities is almost certainly going to decline or vanish completely.

Key points from seminar: (You would think I was the presenter!)

  1. Mailing the notice is sufficient to cancel the loan, note and mortgage.
  2. No tender of money or property is required
  3. It is risky for lender to ignore notice of rescission
  4. Rescission is really a borrower’s remorse remedy
  5. Bringing suit immediately is the only way to end the issue — but only if you have absolute proof of the loan and the disclosures conforming to TILA. [Editor’s note: any failure to disclose compensation off the books of the “closing” would probably be evidence of non-disclosure on multiple levels]
  6. AFTER the lender has complied with 1635(b) (termination of security interest), after the lender has returned the canceled note and after the lender has complied with 12 CFR 1026.23(d)(2) (Return of any money or property that has been given to anyone) THEN the borrower must tender [Editor’s Note: This imposes a requirement that will put the trusts in immediate conflict with the investors and the facts. In order to “return” the money to borrower somebody has to pay it. The servicers, the banks sand the trusts don’t have any investment in these loans. They have been getting a free ride for years. They can’t go to the investors for the money and ask them so they can only advance the funds and hope they will get it back or just steal it from investors, which looks eerily like the start of mortgage securitizations]
  7. According to TILA the lien is void upon mailing of the notice.
  8. Banks better do their homework and identify all the loans that are not supported by TILA disclosures. [Editor’s note: My observation is that this is approximately 90%-96% of all alleged mortgage loans. As I said in 2007-2008: In my opinion the vast majority of all loans produced void notes and mortgages or were subject to rescission which results in the same thing — cancellation of the note, cancellation of the encumbrance, and disgorgement of all money paid.]


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The parties were invited to attend a meeting at which the borrowers signed the papers. The originator is usually not in attendance. The closing agent, usually a title agent, takes the signed documents into escrow. At some later time the alleged loan is “funded” by a wire transfer from an unknown source. The borrower believes that the originator is loaning him the money. In truth it was a “table-funded” loan in which the name of the actual lender was actively concealed from the borrower and the actual “loan” was not funded until some time after the meeting. Later the mortgage is recorded and the note is released from escrow and sent to someone whom the closing agent assumes to be authorized to receive it. When was consummation?

Later the successors to the loan documents will allege that the loan closing was “consummated” at the time of signing, but that is not right. If there was a consummation of the loan at all it didn’t occur until hours, days, weeks or months or even years after the meeting. It is a question of fact as to when the alleged loan was consummated. And if there was a table-funded loan there might have been no consummation at all. Instead whoever the real lender is might have some claim for quantum meruit or unjust enrichment to get their money back but if they raise that claim they cannot do it using the note and mortgage. So when does the three day period commence for rescission? When does the three year period begin for rescission? Is there a time when the borrower is prohibited by statute from sending the notice of rescission? And what happens if some company steps up and complies and then asks for the money? They don’t have to object to rescission — they can agree. If rescission is effective when mailed, who can vacate it?

Old Habits Die Hard: Rescission Confusion Continues Despite Supreme Court Clarity

You know something stupid is going on when you see tens of millions of dollars spent on ads enticing consumers to get a loan at 2.99%. There is no profit at that rate so something else is going on — leading to the conclusion that disclosure from the start has been misleading — unknown to the borrower.


For more information please call 954-495-9867 or 520-405-1688

This is not a legal opinion on your case. Consult a qualified, knowledgeable licensed attorney in the jurisdiction in which your property is located.


Let me put it this way: even the borrower lacks the authority to undo the rescission which is effective by operation of law. The loan, the note and mortgage are canceled. If the borrower wants to reinstate them, the borrower would need to get together with the creditor and sign new documents for a new loan transaction.

see Hiding-in-Plain-Sight_-Jesinoski-and-the-Consumer_s-Right-of-Rescind

A recent law review article from the law school at Duke University gets a lot of things right. But it still gets some key points wrong. You will see highlighted portions that raise questions if you click on the link above. But overall it does provide excellent background on the Truth in Lending Act and rescission.

Some of the errors I found —-

The twenty days applies to the duties of the “lender” or “creditor” not to the borrower and the writer completely misses the point in that sentence when he says that the lender must “return the property.” The creditor does not have the property. It might be that this is just poor wording. But as it is written, it is wrong.

There is no procedural bar to asserting the rescission. It is effective by operation of law. That means it is a fact — not a claim yet to be determined. Whether he meant to say that he agreed with what the court was doing or he just got it wrong, I don’t know. Once again we see some very intelligent people who have done a lot of study but still can’t get their heads around a very simple proposition — the statute says the rescission is effective by operation of law. There is nothing left to be done. That means the note and mortgage are void (REG Z and Jesinoski). This is substantive law and not subject to change by any procedural rules.

Footnote 102 is also poorly worded indicating that rescission under common law can be effected without suit. It is ONLY TILA rescission that can cancel the loan without suit.

His conclusion is also poorly worded adding to the confusion out there. He should have said that the rescission is effective by operation of law and that from that point forward the loan contract, the note and the mortgage have been nullified and are void, as stated under Reg Z.

Without this point of clarity the simple TILA rescission “procedure” is lost. The big mistake is that people, judges and lawyers continue to view rescission as a pending claim — despite the US Supreme Court stating that courts cannot interpret a statute without finding ambiguity (and being right about that) they don’t have power to change, add, amend or modify the the express wording of the statute. After rescission is sent there is no pending claim. After rescission is sent there is only the fact that the note and mortgage are gone.

My attempt at clarification would be said as follows: if you are in a court or in a transaction after a notice of rescission has been sent, then the previous note and mortgage no longer exist. No court action may be undertaken on an instrument that does not exist. No transaction can ignore the fact that the note and mortgage were canceled and under Reg Z are void.

Lawyers and some scholars continue to miss the point — despite the Jesinoski decision, unanimously in the US Supreme Court (a place where all arguments cease because it is the court of last resort). Old habits die hard. Sanctity of contract seems to be causing a kind of mental pollution causing many people to continue to assert positions based upon the premise that in order for the loan, mortgage and note to be canceled and rendered void upon mailing the notice of rescission, some court action is required or permitted. Let me put it this way: even the borrower lacks the authority to undo the rescission which is effective by operation of law. The loan, the note and mortgage are canceled. If the borrower wants to reinstate them, the borrower would need to get together with the creditor and sign new documents for a new loan transaction.


While it is true that the loan deal is over the moment that the notice of cancellation and/or rescission is put in the mail, there is a different starting date for when the recipient is bound to comply with TILA Rescission statutes. The days for compliance begin upon presumed receipt or actual receipt depending upon the facts of the situation Since nobody has ever filed one of those actions (or at least I have not found one) it doesn’t seem to make much difference. And none of that changes the fact that the loan deal, the note and the mortgage are void the moment the notice is dropped in the mail which is a point in time before the clock starts ticking against the banks to return the canceled note, file the satisfaction of mortgage and pay the money to the borrower. If more than one year elapses after receipt or presumed receipt of the notice then not only is the note and mortgage void, but the debt is too. [But the borrower’s right to collect disgorgement of all money paid or compensated as a result of the subject loan is also lost after one year].

Hat tip to Carol Molloy in Tennessee for pointing this out to me.


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