UNANIMOUS SCOTUS: TILA Rescission Effective on Notice: No Borrower Lawsuit Required

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





see TILA Rescission

The decision is merely a statement of the obvious. Scalia, writing for a UNANIMOUS court said that the statute means what it says. All the decisions in all the states requiring the borrower to file suit to enforce rescission are wrong. The court says the rescission is effected upon notice to the “lender.” What that means to me is that the subsequent foreclosure, non-judicial or judicial is void because there is no mortgage. TILA says that unless the “lender” files suit within a specified period of time the rescission is effective as of the date of notice. It goes on to say that the “lender” just send back all payments and a satisfaction of mortgage and canceled note.

The three year statute of limitations applies to notice — not a lawsuit filed by borrower. The burden is on the lender to contest the rescission and failing to do so within the 20 days (the time varies depending upon when you sent your notice of rescission) the deal is over.

What you have left is an unsecured debt that can be discharged in bankruptcy because TILA says the mortgage is gone. What effect this will have on the thousands of cases in which borrowers sent notices of rescission and were foreclosed remains to be seen, but it sure will be interesting to see what the courts do.


“Held: A borrower exercising his right to rescind under the Act need only provide written notice to his lender within the 3-year period, not file suit within that period. Section 1635(a)’s unequivocal terms—a borrower “shall have the right to rescind . . . by notifying the creditor . . . of his intention to do so” (emphasis added)—leave no doubt that rescission is effected when the borrower notifies the creditor of his intention to rescind. This conclusion is not altered by §1635(f), which states when the right to rescind must be exercised, but says nothing about how that right is exercised. Nor does §1635(g)—which states that “in addition to rescission the court may award relief . . . not relating to the right to rescind”—support respondents’ view that rescission is necessarily a consequence of judicial action. And the fact that the Act modified the common-law condition precedent to rescission at law, see §1635(b), hardly implies that the Act thereby codified rescission in equity. Pp. 2–5.”

729 F. 3d 1092, reversed and remanded.

SCALIA, J., delivered the opinion for a unanimous Court.

While there are certain parts of this statute that are not completely clear, I have always felt that this law would eventually be the downfall of the entire foreclosure mess.

As for the statute of limitations it is not yet determined when the “transaction” has been “Consummated.” But one thing is clear — the three year period and the more narrow three day period for rescission is not “fixed.” The framers of this law understood that there might be defective disclosures that would and should defeat the claim of the “lender” that the transaction was consummated on the date that the documents were signed. If the disclosures were incomplete or just plain wrong, it appears that the framers did not want the time limit running on borrowers until the disclosures were correct and proper.

If the disclosures had the wrong numbers (more than $35 deviation from true numbers) then delivery of the disclosures has not yet occurred. And the statute is very specific in stating that the “closing” is not complete until those disclosures have been made to the borrower and accepted by the borrower.

There remains many questions that will need to be answered in the Courts. Probably the biggest one is what happens in cases where the borrower properly gave notice of rescission, and where some entity initiated foreclosure after the notice of rescission. Since TILA says that the mortgage no longer exists, the foreclosure would logically be void. Any sales of the property pursuant to the foreclosure of a nonexistent mortgage would also be void.

And any claim for quiet title directed against the parties who claim interests in the recorded mortgage would appear to be a slam dunk in cases where the notice of rescission is effective. The right to receive a satisfaction of mortgage, which TILA calls for, means that the mortgage should not be in the chain of title of the owner of the property.

But that doesn’t clear up the question of what to do about events that have long since passed. There is no statute of limitations (except perhaps adverse possession) on title defects. If the title defect exists, it is there, by law, for all time. People who have purchased property that was involved in foreclosure and where the former owner canceled the mortgage by giving notice of rescission have a built in title defect. None of the sales of such property either through forced sale in foreclosure or third party sales would be anything more than a wild deed.

For more free information about TILA Rescission use the search engine on this blog going back to 2007-2008. The Supreme Court has unanimously confirmed what I wrote back when I was the sole voice in the wilderness. Opinions ranging from scathing orders from trial judges to lofty opinions from appellate courts in the state court and federal system unanimously stated that I was wrong. Now the U.S. Supreme Court — the final stop in any dispute — has also been unanimous, stating that all those orders, opinions and judgments were wrong on this issue. As a result millions of homes were subject to foreclosure actions on mortgages that no longer existed. And millions more, hearing advice from attorneys, failed to send the notice of rescission to take advantage of this important remedy.

23 Responses

  1. Ok, I did the Rescission. They received the letter on February 14, and of course they responded with the normal letter that I was beyond the 3 years and they will not honor the rescission. I received the response on March 14. So what is my next course of action?

  2. Can someone assist me with an issue. I submitted a Rescission with all the required documents, but having trouble getting it recorded in Baltimore County public records. Any ideas on how I can get it recorded? James Smith, jsmith5915@msn.com. 443 677 2799. Thanks

  3. From Consumer Rights Defenders News Desk from our legal department:

    We agree with the above and warn that to “enforce” rescission under TILA may require a lawsuit and court orders. We can help if you call us at 818.453.3585. …..On another front…..

    Maryland homeowners beware of waiting to sue the banks….from an article from 2008, It may have been superseded but read on…..
    January 2008
    With mortgage foreclosures increasing……… in Maryland here is the state of the law as of 2008 on “tolling” of statutes of limitations…..


    In MacBride v. Pishvaian, Maryland’s highest court affirmed that the 3-year statute of limitations applicable to claims for unfair and deceptive trade practices under Maryland’s Consumer Protection Act begins to run from the date a potential plaintiff discovers, or should have discovered, the injury. Importantly, the court ruled that the limitations period cannot be tolled based on a “continuation of events” theory, absent a fiduciary relationship between the parties, and cannot be tolled by the “continuing harm” rule where the plaintiff alleges only continuing ill effects of a single violation, and not continuing, separate violations.

    In this case, a jury found that a landlord had engaged in unfair and deceptive trade practices and awarded $100,000 in damages. Although it was not instructed on the impact of the statute of limitations, the jury also found that the tenant knew or should have known of the violations from the date she signed the initial lease more than 6 years before she filed suit. As a result of the jury’s factual findings, the trial court entered judgment in favor of the landlord based on the tenant’s failure to file her claim within the 3-year limitations period. On appeal, the Court of Appeals rejected the tenant’s statute of limitations tolling arguments. The court explained that the “continuation of events” rule applies to toll the statute of limitations on a claim where a fiduciary relationship exists because such relationships reasonably give the confiding party the right to rely on the good faith of the other party so long as the relationship exists.

    On the issue of whether the “continuing harm” rule applied, the court held that the rule applies only in circumstances where there are continuing but separate violations (e.g., engaging in the same violation every month) and not in cases where the plaintiff’s claims are based on the continuing harmful effects of a single, prior violation of the Act.

    Our attorneys advise that the argument in all courts should urge that in contract actions even if a tort claim is made also, that the “acts” triggering the wrong “vest” each month under the Note or Novation since payments are due every month and thus a new breach occurs monthly. This can avoid the “ONE INJURY/WRONG” exception to the tolling rule that limits the time to file the suit based arguably on “continuing multiple wrongs.” Some courts are very open to such a position, others, not so much.

    We are here to field questions at 818.453.3585, homeowners.

  4. Call Consumer Rights Defenders at 818.453.3585 today for more….on your TILA rights and how to commence your action.

    Here is the short summary provided by counsel. CRD does not vouch for this article or its accuracy but believes it to be correct

    In theory, this is the process of rescission:

    Borrower finds violations of the TILA that offer rescission as a remedy.

    Borrower notifies lender of rescission by letter.

    The security interest (the Note and Deed of Trust) automatically becomes void and the lender has 20 days within which to take any and all actions necessary to reflect the termination of the security interest.

    The lender is obligated to return any money or property given as earnest money or down payment within those twenty days.

    The borrower is not liable for any finance or other charges and is entitled to recover all fees incurred in the transaction.

    The borrower is obligated to return to the lender any money or property the borrower received as part of the credit transaction within twenty days, as their part of the rescission.

    If the lender does not take possession of the property or money within 20 days, then the property is retained by the borrower and is held

  5. From Consumer Rights Defenders reachable at 818.453.3585
    Read this re: TILA, taken from the Code of Federal Regulations citing from TILA:

    Rescission Rights (Open-End and Closed-End Credit)—
    12 CFR 1026.15 and 1026.23
    TILA provides that for certain transactions secured by the consumer’s principal dwelling, a consumer has
    three business days
    after becoming obligated on the debt to rescind the transaction.

    The right of rescission allows consumer(s) time to reexamine their credit agreements and cost disclosures and to reconsider whether they want to place their homes atrisk by offering them as security for the credit. A higher-priced mortgage loan (whether or not it is a HOEPA loan) having a prepayment penalty that does not conform to the prepayment penalty limitations (12 CFR 1026.32(c) and (d) and 12 CFR 1026.43(g), subject
    to certain exclusions) is also subject to a
    >>>>three-year right of rescission. <<<>>>> a notice<<<<>>>>

    >>>>>third business day<<<<< after the latest of three events:
    • Consummation of the transaction; OR
    • Delivery of material TILA disclosures; OR
    • Receipt of the required notice of the right to rescind.

    For purposes of rescission, business day means every calendar day except Sundays and the legal public holidays (12 CFR 1026.2(a)(6)). The term “material disclosures” is defined in 12 CFR 1026.23(a)(3) to mean the required disclosures of the APR, the finance charge, the amount financed, the total of payments, the payment schedule, and the disclosures and
    limitations referred to in 12 CFR 1026.32(c) and (d) and 12 CFR 1026.43(g).

    33 12 CFR 1026.15(b) and 1026.23(b)(1) were amended to include the electronic delivery of the notice of the right to rescind. If a paper notice of the right to rescind is used, a creditor must deliver two copies of the notice to each consumer entitled to rescind. Under the final rule on electronic delivery of disclosures, however, if the notice is in electronic form, in accordance with the consumer consent and other applicable provisions of the ESign Act, only one copy to each customer is required.


    If Rescission is what your seeking, read this carefully. We can assist you by calling our legal team at 818.453.3585. Free consultations are provided. Contact Sara or Steve at CRD today.

  6. Reblogged this on patrickainsworth and commented:
    get rid of ocwen

    from Steve Nelson, J.D., Executive Director

    If you get into a lawsuit and your deposition is noticed, have your
    list of objections and careful responses ready to prevent torpedoing
    your case!!! We can assist you with this task. Call us today at
    818.453.3585 for litigation support.

    You have a right under virtually all Evidence Codes
    in every state NOT to ADMIT to various “uncertain,
    unclear, ambiguous, confusing questions” as they can be
    used against you. Read our article which we found from
    learned trial counsel recently.

    “In a typical deposition [pre-trial question and answer proceeding,
    called Discovery, the “borrower” is asked by the lawyer for the “lender” whether THAT is his or her signature on the note and the deed of trust or mortgage. The initial response may be “yes.” But, not so fast. Was the question based on you being shown the wet ink original or merely a copy??? And did counsel for the bank show you the entire document?

    By admitting the signature is yours on a COPY, you likely have
    validated the note (and mortgage) and that you signed it
    and that the foreclosing party has it in their possession when
    in truth none of these assumptions are correct! The Original if presented, may also be attacked if you know how.

    My question to you is whether you have answered truthfully. Ask
    yourself the following: “Do you really remember what you signed, what was written on the documents and exactly how you signed each document?”

    In most cases it is years before and you won’t recall. Usually, the homeowner answers “yes” because he or she knows they went to a closing and signed a bunch of papers. This is especially true if you never got a copy of the documents and compared them with the originals the notary took with them.”

    Solution? For most people, the true answer is “I don’t know.” Or possibly “I don’t remember.” Unless you are positive that the document is the same note or mortgage you were shown at closing —
    not a copy of it made to look “like” an original.

    If you have no recall about exactly what was signed at the alleged “closing” you should not pretend otherwise.

    Unless you have had an expert forensic document examiner authenticate the “original” documentation relied upon by the bank,
    then you probably don’t actually know if you put your signature on
    the page instead of a robot. Signatures can be attacked in a myriad of ways.The fact that you know you signed something doesn’t mean THAT document is real. The fact that the robot [or outright forger] did a good job doesn’t mean it is your signature… .”
    CRD adds:

    Most bank attorneys only have copies of docs at depositions and most counsel actually don’t have the wet ink – ORIGINAL Note. And at depositions, no one has authenticated the integrity of the ORIGINAL Note. If not, the entire document must be objected to and attacked as “not genuine or authenticated by anyone.”

    With forgeries, photo shop document tampering, and other means of providing “look alike” copies, the original is the only way to
    eliminate any suspicion of a fake being shown to the deponent, YOU.
    The problem is very critical if the Note was securitized to another entity that is a TRUST.

    So, when your deposition is scheduled, call us at Consumer Rights Defenders and let our legal team assist you in protecting against giving a deposition answer that is based on misidentity of a document as an “original.” This is particularly important if a trust or their loan servicer or trustee is foreclosing as a plaintiff or you sue them as a defendant. USE YOUR ARSENAL OF RIGHTS at all stages of foreclosure proceedings.

    Call Steve or Sara or our legal department today for support if your matter is in or likely to be in litigation.


  8. Totally agree with you. Now we see why Wilbur Ross dumped Ocwen and took his ball elsewhere.

  9. Ocwen is a criminal company the excutives of Ocwen are guilty of
    RICO! Ocwen should be suspended from doing business in every state.

  10. Go for it with all you got neidermeyer. Your right, you are trying to do the RIGHT thing.

  11. @ Poppy ,

    Agreed , just playing the game until 30 more business days pass and my $$$$ is released , then I can F them royally.

  12. @ neidermeyer

    From the courts mouth: modification is not effective. Ocwen has no authority. And many ledgers have original amounts deducted with “no” evidence of a valid mod (payment unchanged). LOL Playing games with the books I think!

    Last post by Neil: books and records, have a complaint regarding that, calling it an adjudicative matter and the lawyers have presented them as “fact”…diligence has not been met, not even close. These records come from afar, not readily known by any servicer. Can be altered due to them being electronic. All shit. 7 years at Ocwen to date.

  13. @ Deborah Wynn ,

    I agree with your approach … I (like most) are in a position where I am well beyond 3 years but never received funding as outlined in the note but from an undisclosed party alien to the agreement, it’s hard to disagree with a wire report… I don’t see how an unfinished transaction can start a tolling period… If it did that would stand all kinds of precedent regarding contracts and warranties on their heads.

    I have OCWEN scheduled to call me in about 10 mins about a loan mod … like that’s going to happen.. just buying time before I file a rescission and a suit to match… while simultaneously attacking the title company…

    2015 is going to be sweet…

  14. Off Topic (but delicious)

    OCWEN stock is down HUGE this week because they cannot forge (ahem “find”) documents to satisfy the California regulators … license is about to be yanked.


  15. Dulpec .
    Bite your tongue. .. there is more than one way to skin chicken.


  16. Rescission followed up by BK? Ouch!! Play heads up 7 up? My daughter rescinded in less than 30 days after closing in 07 and Owen said she had to tender….Ocwen was Wrong.

  17. And i think Neil is right on this
    He said
    “But that doesn’t clear up the question of what to do about events that have long since passed. There is no statute of limitations (except perhaps adverse possession) on title defects. If the title defect exists, it is there, by law, for all time. People who have purchased property that was involved in foreclosure and where the former owner canceled the mortgage by giving notice of rescission have a built in title defect. None of the sales of such property either through forced sale in foreclosure or third party sales would be anything more than a wild deed”

  18. Louise i tried to flush them out to get to the real party in interest and the accounting. I got a computer printout as a result if a proper QWR, their response to the qwr was late and as for the rescission i git nowhere either, same big bully tactics they say no you cant knowing full well we can, but it has to go to court and from there, certainly in my case things went pear shaped because they lie to the court.

  19. I tried to rescind my loan years ago, and never received squat. I still think that as long as there are no prosecutions, this krap will still go on.

  20. Scot do not bet your life using info you read on here its a blogg site it promotes discussion its very complicated and we all need a monumentally great lawyer. I struggle with every day for over 5 years and at the start i did rescind. Case law as we see is emerging but the best warriors are already wounded.

  21. I agree FWIW ( not an attorney) tolling re sol, the 3 yrs, cant be time barred if the tolling can be Argued as never having commenced. Thing is when you rescind its wise to rescind the loan, state you are ready and willing to tender payment to the real party in interest – minus equitible setoffs, why is it so hard to get the balance owed right. I have a 1099a says the debt ( from a non lender which is wrong anyway) on the one hand and a trustee deed upon sale that has 90,000 usd takked on to the debt owed.
    That number is huge and needs to be explained ( besides the elephant in the room re who i am obligated to owe my collateral home to)

  22. Thank you, Neil. I rescinded my loan in 2008 and had faced multiple pretend lenders in BK courts since then and have defeated all of them,using the strategies you promote here. When I saw the bulletin in another fora yesterday around 1:30 pm, I called my attorney with the news. In Maryland,without the bankruptcy courts protection and the ability to list the voided mortgage as unsecured,the pretend lenders would have won long time ago. I hope the naysayers here would be courageous enough to eat their words and thank you.

  23. Must I file the notice of rescission within 3 years of the closing or within 3 years of the date I first became aware of the violation. We are in foreclosure and in the appellate process. We became aware that the alleged lender listed on our note and mortgage did not fund our note the alleged lender provided no consideration what so ever. I know this because I have a copy of the wire confirmation that proves this. Because the alleged lender did not provide the considerations as stated in my note the alleged lender is in breach of contract and I no longer wish to move forward with this transaction. It is the fact that it had been 9 years years when I was deceived at the closing table. 9 years and the alleged lender still has not funded my note that I filled a notice of rescission. I sent a notice of rescission to the closing/escrow agent, to all the servicers that claimed to have serviced my note and to the attorney for the Plaintiff that sued my for foreclosure. The closing agent or servicers still have not responded ever after several followups. The attorney for the Plaintiff after several followups finally responded with the following statement. The notice of rescission is void do to the statute of limitations. My questions are;

    When does the statute of limitations kick in? I know it starts the moment I sign the note and mortgage. But whats happens if years later I discover violations. Does the statute of limitations start over from the time I discovered the violations? Could someone please answer this for all of us.

    Second Question. If the alleged lender listed on the note and mortgage did not fund my note than they are in breach of contract and that transaction still has not been completed per the terms of my note. Since this transaction still has not occurred. My question is can I or can I not rescind a transaction that after 9 years still has not occurred.

    Any educated answers would be greatly appreciated not only for myself but for everyone else that is in the predicament. Thank you.

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