For further information please call 954-495-9867 or 520-405-1688
NOTE: The rescission package we offer provides information on the specific loan of the borrower, whether rescission is an option, to whom the rescission letter should be addressed, whether your prior letter of rescission is effective, and how to prepare for further litigation regarding the effective date of rescission and the consequence of having rescinded. If you are unconvinced that this package will do you any good then don’t do it. We won’t try to convince you. We don’t offer guarantees or warranties. But we do believe in what we are doing. And note that this article (or anything else on this blog) is no substitute for advice from an attorney who is licensed in the jurisdiction in which your property is located.
Confusion still reigns on the issue of TILA rescission. You go to a lawyer about it and he says no, the loan is too old (statute of limitations) or you don’t qualify (purchase money mortgage) or some other reason. And then the discussion turns to equitable tolling and whether the loan was really a purchase money mortgage and so the seeds of doubt are planted and take root without the banks lifting a finger. That is what they want.
The lawyers and judges and pundits were all wrong on TILA rescission. Before now, they were all saying that the rescission couldn’t be effective without the borrower filing a lawsuit and/or without tendering money or property. It all comes down to the same thing: when is rescission effective? And the answer is plainly stated by the TILA statutes, by the Federal Reserve in Reg Z and reaffirmed by a unanimous Supreme Court in Jesinowski. Rescission is effective upon mailing of the notice of cancellation of the loan deal. There is nothing that is contingent about that. You don’t need to file a lawsuit (in fact that is not the statutory procedure), you don’t need to tender anything (it is the banks and servicers who must pay borrowers for every penny they paid under the deal), and it is still effective in all events without any contingency regardless of whether the statute of limitations has run or the loan was a purchase money mortgage or anything else.
For corroboration of this, simply refer to the many arguments that banks and servicers offered when non-judicial foreclosure was invoked in those states that allow it. There, it was the banks who argued that the specific statutory scheme for starting a loan and foreclosing on it must be followed. The brief window (as short a 3 weeks in some states) for the borrower to stop a foreclosure sale has been allowed and confirmed in every case. The 20 day window for the banks to set aside a rescission that by operation of law is effective the date it was mailed is no different.
ANYTHING that might be used as an attack on rescission must be done by way of a lawsuit by the banks or servicers against the borrower and they must do it within 20 days of the effective date of the rescission. Right or wrong the rescission is effective upon mailing. If they file the action within 20 days, then the rescission for a brief window in time becomes voidable but never void. That is what Justice Scalia was telling all of us. So why won’t Judges, lawyers and borrowers believe it? The reason is simple — they are all intimidated by the power of TILA rescission and they all think that no borrower could level of the playing field by the stroke of a pen. AND they are confused by their understanding of common law rescission based upon fraud. But as Justice Scalia showed us, the rules governing common law rescission do not apply to an unambiguous statutory scheme in TILA. Courts have no right or discretion to interpret a statute that is unambiguous.
So what can a borrower expect if they have sent or is ending a notice of rescission? Be aware you are on their radar. We have emerged from the muck and ooze of primeval environment. That is why they bringing out the big guns. Holland and Knight is NOT a foreclosure mill and never will be. They want to do battle because they know the issue of rescission is a nuclear option that could blow up the entire “securitization” scheme of the banks.
What they are going to try to do is say that the rescission should not be considered effective because of the statute of limitations or because of something else like that it was a purchase money mortgage. They will say they could bring that up at any time because the rescission was void when sent. In other words they are seeking ways to make the rescission contingent upon being valid based upon some particular fact pattern they wish to represent.
That would mean that the rescission is NOT effective until there is a judicial determination that it is valid. AND THAT runs against the express wording of the statute, the express wording of the Federal Reserve’s Reg Z, and the express wording of Jesinowski. The rescission may be VOIDABLE if they file a lawsuit challenging the cancellation of the loan deal, but it isn’t VOID.
But the banks are not filing those lawsuits. They seek to raise “defenses” to affirmative allegations of rescission long after the 20 day window has expired. The Banks MUST attack rescission in this way. They can’t file the lawsuit within 20 days because of the problems with standing. If they don’t attack and try to weaken the “effective” (i.e., the day that by operation of law the deal was canceled) rescission they are admitting that their so-called mortgage backed securities are worthless junk — which is exactly what they are. Even in the current market, and even if they were doing it right, investors would need to be told that there is a risk that one or all of the mortgage loans in the pool are susceptible to being rescinded; and, here is the kicker: they would need to disclose that any attempt to challenge such rescissions would require a proof of standing which is at the very least “difficult.” [It is difficult because standing would need to be established WITHOUT THE NOTE AND MORTGAGE, WHICH ARE VOID].
Effective means effective. It means the deal is canceled unless the banks get it set aside. But they can’t get it set aside without some action at law. A letter telling you that you are outside the statute of limitations or that your loan was a purchase money mortgage does NOTHING — except provide proof that they received the notice. And here is another kicker: those people who sent their notice of rescission years ago but were “foreclosed” anyway have a claim that every action taken after they sent their notice of rescission was VOID by operation of law. And any title company that issued a title policy without exempting transactions involved in securitized loans is probably liable for the damages. But they probably can’t get out of the cloud of liabilities created by securitization if it was a notice of rescission that was sent — because that applies regardless of securitization.
Filed under: foreclosure Tagged: | 20 day window, standing, statute of limitations, TILA rescission