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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?
Filed under: foreclosure