For further information please call 954-495-9867 or 520-405-1688
We have a pilot program for assistance with rescission — past, present or future. Just call one of the numbers shown above.
NOTE THAT THIS IS FOR GENERAL INFORMATION AND EXPRESSES THE OPINION OF THE WRITER. THIS SHOULD NOT BE USED A SUBSTITUTE FOR ADVICE FROM AN ATTORNEY LICENSED IN THE JURISDICTION IN WHICH YOUR PROPERTY IS LOCATED.
The key issue is that under TILA there is a very specific procedure and a small window of opportunity in which a “lender” can challenge the rescission. The Banks and their lawyers are having trouble with this and I expect that there will be changes in the law. But right now, the statute and Scalia’s opinion makes it very clear that TILA rescission is subject to an entirely different set of rules than common law rescission — the key component of which is that the “Borrower has nothing else to do” to make the rescission effective. It is effective the moment it is dropped in the mail.
And the importance of THAT is there is NO permissible “interpretation” nor “discretion” to find or even consider anything else. And THAT means that even if the “lender” or “creditor” has perfectly legitimate defenses to the rescission, the rescission is still nonetheless effective BY OPERATION OF LAW.
That language “by operation of law” is very important because it means the act of the borrower in signing and sending the notice of rescission is the same as a court order canceling the loan.
And therefore the ONLY thing that could set the rescission aside is a court order from a court of competent jurisdiction. But no court has any jurisdiction to consider the question of whether the rescission is effective, UNLESS they file a lawsuit within 20 days of the notice. This is similar to the deadlines for motions for rehearing, deadline for notice of appeal, or deadline for borrowers to challenge Notice of Sale in non judicial sale. If you miss the deadline, you are done — no exceptions.
The reason why Congress wrote the statute that way is to prevent the Banks from using stonewalling as a technique to hold up the effectiveness of the rescission. They do not have that option, they file or they lose the loan. AND after the 20 day period has expired, the ONLY thing that a Judge can consider is the borrower’s petition to ENFORCE THE RESCISSION.
Hence the “Bank” cannot bring up a defense about whether the rescission was effective when the borrower’s enforcement action is filed. Their only defense would be that they are (a) not the lender and never received any money from the borrower or the borrower’s “closing” or (b) that they performed already as required by statute — return of canceled note,filing of satisfaction of mortgage and return of all money paid by borrower and disgorgement of of all fees and costs at closing (including undisclosed compensation).
I therefore conclude that in the current statutory scheme if the Bank does not file the challenge to the rescission within the 20 day window, they can never bring it up again — no matter how patent the “defense” might appear on the documents or the notice of rescission. I am sure that the bank WILL defend by saying that the notice was not filed within the time limits prescribed by law (statute of limitations) or some that the made all required disclosures. But these are affirmative defenses and not jurisdictional issues that are obvious on the face of the applicable documents. Hence such Bank or Servicer defenses to the borrower’s enforcement action are barred because they missed their window of opportunity to bring them up within the 20 day period in which they could challenge the rescission.
In addition, no claim can be made by anyone for money to pay the balance of the debt (which becomes unsecured the moment the notice of rescission is mailed) unless compliance is complete — return of note, filing satisfaction mortgage and return of money to the borrower.
I therefore conclude that there is nothing illegal about sending a notice of rescission on any existing loan (i.e., existing legally, having not been previously canceled by a notice of rescission). And since both the statute and the US Supreme Court both say that the sending of the notice of rescission or cancellation is effective by operation of law upon dropping a letter into a mailbox, then any loan could be subject to a notice of rescission (although I expect that some changes are being sought by banks to prevent the “abuse” of the TILA rescission).
Accordingly in my opinion, anyone who has an arguable problem with their loan origination should be able to send a notice of rescission and simply wait for 20 days, or perhaps a few more for mailing, to see if anyone sues them challenging the rescission. If they don’t sue, then there is nothing to prevent the borrower from seeking to enforce the rescission which was effective when they dropped it in the mail.
And I think that anyone who has a copy of such a rescission notice but doesn’t have either a return receipt or a response from the “lender” showing that it was received can nonetheless seek enforcement of that rescission, which was effective whenever they say it was mailed, whether dated or not. Testimony from the borrower that it was sent on, for example, October 1, 2009 is sufficient.
If the defense is that the notice of rescission or notice cancellation (SAME THING) was never received, the Bank is going to be required to prove that it was not received because of the presumption of notice upon mailing. Given the horrible record-keeping and fabrication of records that the Banks have established, the credibility of the Banks is not likely to carry the day.
In summary I think that any claim that any rescission notice is invalid can ONLY be brought in the 20 window. Any other interpretation would violate the expressed opinion by the US Supreme Court and TILA and Reg Z that “nothing further is required” from the borrower. The notice is simply effective when sent. If anyone wants to contest that, they have a short window in which to do it. I have no doubt that the Banks will defend TILA rescission enforcement actions with defenses that essentially say that the notice of void on its face for one reason or another. My point is that whatever is their point of defense is barred if they did not file the required challenge during heir window of opportunity.
Remember that issue as to the date of consummation, the statutes of limitations, the disclosures that were made are all issues predicated upon real facts and legal interpretation. TILA rescission was written so that a borrower could cancel a loan without a lawyer. That much is true. But it is obvious that the banks are not going to comply with TILA rescission requirements and that enforcement actions will be required on behalf of borrowers. Judges tend to hate TILA and they hate TILA rescission even more. But there really is no discretion and no jurisdiction here unless some Judge thinks he or she can overrule the US Supreme Court. Based upon the US Constitution, that could only work in some other country with a different law of the land.
My best guess is that the right to rescind is going to get more narrow as time goes by rather than broadening. I don’t think we will see the door open this wide ever again.