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This is for general information only. Get a lawyer.
THIS IS REALLY DIRECTED AT LAWYERS WHO ARE DEALING WITH RESCISSION. NO LAYMAN SHOULD ACT ON THIS WITHOUT CONSULTING WITH A LICENSED ATTORNEY IN THEIR JURISDICTION.
Among the zillions of email requests I have been receiving are emails from lawyers who are trying to get their heads around rescission. It seems to me that their problem is one of procedure rather than substance. So here is the answer I sent to one such lawyer.
I keep wondering about something here with respect to rescission. To be consistent with your position that the rescission was effective upon mailing and that the note and DOT are void, it would seem to me that the proper motion would be a motion to strike those portions of their brief dealing with the effectiveness of the rescission. The Supreme Court has already decided that.
But further — the record is devoid of any evidence that the parties attacking you are or ever were actual creditors. It seems to me that these parties lack standing to attack the rescission because their standing was only as good as them holding the note and mortgage which are now void. I think they are using a magician’s act — getting the court to assume they are lenders or creditors when in fact nothing in the record supports that. They insisted in the trial court that none of your foreclosure defenses were good because they were “holders”. But now they are “holders” of void instruments.
If anyone is going to be contesting the rescission they would need to do the following:
- They must be an injured party with standing — i.e., loss of finance charges on the loan along with fees etc that they loaned or paid for. Such a party cannot rely on void instruments to establish standing.
- They must file an action within 20 days of receipt of the rescission.
- The action would need to allege that the borrower rescinded the loan improperly.
- The prayer for relief would be to enter an order vacating the rescission because of whatever reason they think it was wrong.
Some courts are side-stepping this issue and allowing the foreclosure to proceed without ever granting relief that was sought by the “holder” who is being presumed as creditor. But they do so without ever entering an order vacating the rescission which means that the rescission is still standing and the note and mortgage are still void. It’s another pretender scenario. The banks and courts are pretending that the rescission was not effective even though it clearly is effective by operation of law on the day of mailing because the highest court in the land has accepted that with finality and unanimously.
What your opposition is doing here is creatively attempting to avoid basic pleading requirements and using motion practice and the appeal as a vehicle for sidestepping the basic requirements of getting relief in court. Hence the motions in the trial court and the brief in the appellate court should be struck with prejudice as raising issues that are untimely and on issues in which the jurisdiction of the trial court and the appellate court has not been invoked.
The Motion to Strike is based on jurisdiction which can be raised at any time. What you could be saying is that their brief should be struck because it is a disguised effort to obtain relief without ever having filed a lawsuit alleging a short plain statement upon which relief could be granted.
By filing the Motion to Strike it redirects the appellate court to the focus of your brief.
So in states where the homeowner sues somebody to stop them from attempting to enforce the note and mortgage, there is a tricky question of how to express the objection to standing and jurisdiction. To another lawyer I wrote:
This is legal procedure — not substantive arguments about why the banks are horrible. You need to have California cases on standing and jurisdiction. This is tricky because you are right, you did sue them so how can the court not have jurisdiction to hear arguments? The answer is that if I sue you for throwing a ball through my window, you can’t “answer” or file a “motion to dismiss” on the basis that I ran over your bicycle. You must file a counterclaim. They didn’t. So there is no jurisdiction to hear what is in essence a “Motion” instead of affirmative pleading of facts, standing and prayer for relief. I see no way that I am not right on this in view of the Supreme Court decision. Any other interpretation would mean that the rescission was NOT effective until a judge rules on it — directly opposite to the law of the land.
- You sued them for a TRO to stop them from proceeding with foreclosure.
- Your basis for doing includes the rescission.
- You did not sue them to make the rescission effective — hence you did not invoke the jurisdiction of the court on that point. In fact your point is that they are NOT the right parties to do anything and they have no standing and had no standing in the trial court except as to the issue of why they were acting like creditors when they were not.
- The fact that you sued them for one thing doesn’t mean they can “Defend” a case that was never filed and never needs to be filed — a lawsuit to make the rescission effective.
- Their defensive motions do not ask for the rescission to be vacated. Hence the court’s jurisdiction has NOT been invoked on that issue — neither side is pleading for relief that the rescission is either effective (you) or vacated (them).
- THAT is why the trial court did not and could not enter an order vacating the rescission. And THAT means that the rescission is still effective and time has run out on the ability of anyone to file an action to vacate the rescission.
- Thus THEY are attempting to do a little side step — since they obviously don’t have the ability to plead and prove they are the creditors or that they are representative of creditor X — they instead are trying the “everyone knows that…” defense so they are not required to plead or prove facts that would show the date of consummation, adequacy of disclosures, etc.
- The only way the trial court or any court could have entered an order vacating the rescission would be by pleading facts that include the rescission is complete but wrongful.
- The only way ANYONE could bring that claim for relief (Vacating the rescission) is if they had standing — according to THEIR pleading and their proof. They didn’t do that. They are seeking to walk around the TILA rescission procedures despite the clear language of the statute and a unanimous Supreme Court decision.
- You sued them because they were claiming to be holders of instruments entitling them to foreclose. Now that point is moot because the rescission is effective upon mailing and the instruments they claim to hold are void anyway.
- Thus it is improper for the banks, servicers, trustees etc. to file anything in court “contesting” the effectiveness of the rescission or assuming that the rescission was wrongful without filing a complaint alleging facts that establish standing, injury and the wrongful nature of the rescission. Their argument on appeal is the same as the court below — that the rescission was clearly wrongful or that it was somehow not effective because of no tender, no lawsuit etc.
- Hence their entire position is procedurally incorrect and should be struck. If they want the relief of vacating the rescission they must bring a lawsuit to do that — just as the statute says. Since they blew the time, not even the creditor can do that anymore and couldn’t anyway because they were at no time the actual creditors or “injured parties” by the allegedly wrongful rescission. Neither the trial court nor the appellate court has had their jurisdiction invoked by either the Plaintiff or the Defendant as to the whether the rescission was effective or should be vacated.