I have received a copy of the comments made at a very recent seminar for lawyers who represent the servicers, trustees and the alleged trusts. While they fail to commit to writing the issues regarding standing to challenge a rescission, the rest of it is pretty much spot on. Their message is that ignoring or even rejecting the rescission by a letter is not a good idea and that anyone who does so, is acting at their own peril.
They also point out, as have others who have been writing on the subject for the last couple of weeks, that the rescission law, as it now stands, makes it perilous to trade in consumer loans, especially mortgage loans.
In short, the other side has come to the same conclusion that I came to in 2007. They don’t like it, but they understand what the TILA rescission statutes say about procedure, and that a unanimous Supreme Court in Jesinoski v Countrywide, essentially puts every mortgage loan “at risk” — an admission with enormous implications. They are not out of strategies to change things but they recognize they have an uphill battle.
The point about standing is, in my opinion, the most important by far. The TILA rescission is effective upon mailing by operation of law. It is a specific statutory remedy with its own procedures, although there is a cryptic provision in there that allows a judge to change the procedures. But in order to do anything about the rescission once it is effective, which means that the note and mortgage are void, the servicers et al must come up with a real creditor — without which they have nobody who has standing. This puts them on the grill. They have been fighting successfully to keep this information from the borrowers under claims of privacy and confidentiality.
Most lawyers are contesting these claims in a timid way. I ask the fundamental question: why not give the name of the real creditor who could show proof of payment and vault the claim to that of a holder in due course, instead of a holder or attorney in fact? I have represented banks in foreclosure actions. If these defenses were thrown at me I would be proactive — I’d show the creditor, show the proof of payment, and shut the borrower down on all of his defenses. Case over. But the truth is that there is no one party or even one single group that can be identified as the creditor, with or without the empty trusts whose names are used to create the illusion of negotiation of instruments under the UCC.
My sources and my understanding of what they did prevents them from even KNOWING the name of the creditor, which of course opens the door for the servicers to keep the money instead of passing it on to a defined creditor. How can this be? We know the homeowner got the benefit of money being put on the table. How hard can it be to determine whose money was put on the table?
The answer is simple even if it is incredible: they cannot identify the name of the creditor becasue (a) they don’t know and (b) because they have no way of figuring it out. At any one time the huge slush funds controlled by the Investment Banker acting as Master servicer for a nonexistent trust (no res), had money going in and out of it in thousands of ways per minute. At whatever the time was that funding traveled to the closing agent through a sham conduit, the banks simply don’t know which investors had money in that fund and what interest any of the investors had in a particular loan. It is like putting different fruits in a blender and setting it on puree. If someone now asks to have the banana that went into the blender, it is impossible to do.
THAT is the problem with standing in foreclosure actions and the same problem exists for challenging rescissions. But in rescission the issue is laid bare — they can’t rely on the void note and void mortgage for standing. They have to show the real transaction.