Rescission and Res Judicata

A little pressed for time writing briefs and pleadings BUT I wanted to address something that is coming up with increasing frequency.

Rescission removes jurisdiction of the court. If there is no subject matter jurisdiction, no court can confer jurisdiction on itself by denying a claim or defense based upon lack of jurisdiction over the mortgage and note which are by definition void under REG Z pursuant to 15 USC §1635. There cannot be foreclosure after rescission for the simple reason that all foreclosures are empowered by either a mortgage or deed of trust.

Rescission cancels and voids the mortgage or  deed of trust. Unless the claimants are actually the creditor(s) the case is dead because there is no subject matter to adjudicate — and even then the claim must be changed from foreclosure to enforcement of the borrower’s duty to tender because the creditor complied with the statutory duties imposed by the Rescission Statute.

And the current rising bank practice of claiming res judicata on the issue of rescission is as worthless as the loan they seek to enforce. Jurisdiction can be brought up at any time, even on appeal. Res judicata is being used as a vehicle to create the illusion of jurisdiction. No matter how many times courts have ruled that the claim of lack of jurisdiction and standing is wrong, they cannot create jurisdiction by denying the claim or defense.

BUT THAT depends upon you NOT boxing yourself into a corner by filing a lawsuit asking for rescission in which you are undermining your own position. Rescission either happened or it did not. Nothing can happen in court that will make rescission effective. The statute already did that. Hence any foreclosure action is void along with the mortgage on which it is based, if there has been a rescission under TILA.

Pleading otherwise reduces your claim for injunction (against foreclosure of mortgage) to a “claim” of rescission rather than an event that bars action by the defendants or respondents. You are opening the door to a counterargument that otherwise would not be present. You are inviting the court to consider your complaint as a waiver of the event of rescission and to consider it now to be a claim, which is probably now probably barred by the statute of limitations and perhaps even res judicata.

The mistake is to not understand the difference between rescission as a claim (which it is under common law rescission) and an event (which it is under statutory law). It is also to not understand that the note and mortgage are contracts that are expressly replaced by a statutory “agreement” 15 USC §1635 i.e. a new agreement that is mandated by the statute. That is the event. The note and mortgage are no longer existing in any meaningful factual or legal way. After rescission, nobody has standing if they are claiming any rights from the loan contract.

Thus TILA rescission is both procedural and jurisdictional.

Approaching it any other way waives defenses to foreclosure and undercuts defenses to the debt itself. Because after rescission the right to collect the debt emanates from the statute, not the contract. And if the creditor fails to (1) obey the statute and (2) ignore its claim for the debt, it is then barred from collecting on either the contract (by rescission) or barred from ever collecting the statutory debt by the statute of limitations on claim based upon TILA duties and liabilities.

When investors finally understand this they will understand that not only did they buy worthless paper, but that the worthless paper they bought was also based on worthless paper. And THAT is when TBTF banks will fail.

11 Responses

  1. I am currently in my 11th year of fighting since BOA instructed me to stop paying my mortgage in order to get a mod. That never happened. Trial was given verbally, paid as per instructions and went nowhere. Controller of Currency gave me a grand woohoo! Original loan American Brokers Conduit, MERS assignment to Resurgent (by a Resurgent employee in diapers) then to Shellpoint. Endorsement is a forgery by Danielle Sterling. My third lawyer has a team of folks trying to help. I spoke to Dominick Sammarone last night via text. I told him that I was considering TILA Rec. because of your posts. He said he knows you and that all TILA rec’s must be accompanied by a cashier’s check. I read ever single thing you write and I never saw that. He wants me to get a new loan and send the money with the TILA Rec. I’m still believing that there is no party to enforce so why would I give up more than needed? I truly believe that if they could have foreclosed they would have done it by now. I could really use some advice.

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  2. TILA Rescission, Res Judicata and More…. with reader comments.

    https://tinyurl.com/ydzakgz2

    I thought I might share an interesting ‘side-bar’ commentary / conversation between Greg (CementBoots) and a few anonymous “learned” friends regarding this hotly contested topic…now with reader comments.

    This is not intended to divert the conversation away from here but rather to support it… It is just that the commentary is quite long and would “gum up the works” of Neil’s blog if added in its entirety.

    greg/Boots

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  3. Probably not since there is no longer any loan contract to cancel.

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  4. 1 year from date rescission was effective.

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  5. 1 year from date rescission was effective.

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  6. Hi Jim

    If what Neil say sis true when he says

    “barred from ever collecting the statutory debt by the statute of limitations on claim based upon TILA duties and liabilities.”

    My question is

    What are the statute of Limitations and when did the clock start on those Statute of Linitations?

    Mike

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  7. This is the best Neil —

    “When investors finally understand this they will understand that not only did they buy worthless paper, but that the worthless paper they bought was also based on worthless paper. And THAT is when TBTF banks will fail.”

    Investors bought the cash flows to worthless paper. They bought debt collection cash flows. Unsecured. Pushing the issue may finally disclose the true nature of the debt.

    Liked by 1 person

  8. I thought I might share an interesting ‘side-bar’ commentary / conversation between CementBoots and a few anonymous “learned” friends regarding this hotly contested topic…

    View here: https://tinyurl.com/ydb8edt9

    Liked by 1 person

  9. Anon- I believe TILA states that rescission is available prior to the 3 year statute of repose OR the sale of the property. Otherwise the horses are out of the barn…

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  10. Is it possible to file rescission even after a non-judicial foreclosure?

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  11. Neil – I know you were short on time when you wrote the above, so I offer this bit of clarification…

    You said in paragraph 5- “Pleading otherwise reduces your claim for injunction to a claim rather than an event that bars action by the defendants or respondents.”

    I think you meant to say that:

    ‘Pleading a claim’ instead of ‘filing a motion for injunction and declaratory judgment’ reduces your “fact” of TILA rescission down to a mere claim in which you then erroneously confer onto the court jurisdiction over you and your TILA rescission to rule “up or down” on its validity or efficacy, rather than leaving it alone as an established statutory event which really happened and which bars further action by the purported plaintiff or defendant attempting to operate under the now “defunct” note and mortgage instead of the terms under TILA.

    Just ask the court to examine your TILA rescission document and proof of delivery (mail receipt or affidavit) and have them rule on whether the supporting evidence you provide shows that it exists on the date you show, or not. DO NOT ask them to decide “what it means”.

    gg

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