Using TILA Rescission as Jurisdictional Issue

I think TILA Rescission should be approached as a jurisdictional issue since it focuses on the procedural aspects of the TILA Rescission statute. In other words it should always be front and center.

I think a problem with TILA Rescission is that not even borrowers understand that the rescission issue is over. By asking a court to  make rescission effective you underline the correct premise that rescission has already occurred. All your pleadings after that should be based upon that premise or you undermine yourself.

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The plain wording of the statute says that rescission is effective, as a matter of law, when delivered (or sent via USPS). SCOTUS says no lawsuit is required to make rescission effective. The fact that the banks treat it as ineffective is something they do at their own peril. The statute explicitly says otherwise along with REG Z procedures based on the statute 15 USC §1635 and the Jesinoski decision.
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Under the statute and Reg Z the loan contract is eliminated and replaced with a new relationship under the statute — a set of procedures creating a statutory claim for the debt. It follows that ONLY a party who is an actual creditor or owner of the debt can even appear much less claim or defend anything about rescission. If they claim standing from the loan contract, they have no standing.
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Hence if the formers holders of the now nonexistent note and mortgage are also creditors they have no problem. They can plead anything they want, including defenses to or motions (or lawsuits) to vacate TILA Rescission. 
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BUT usually the former holders of the loan contract (note and mortgage) were using the loan CONTRACT as the sole basis of their standing — desiring to raise legal presumptions from the existence of those contracts (note and mortgage).
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What happens next is incontrovertible by logic or legal reasoning. Although they might be named parties to an action pending in court such ex-holders have lost their standing in that court action or they never had it to begin with. By operation of law the note and mortgage from which all their claims derive do not exist. That is a jurisdictional issue and it MUST be decided against the banks — by operation of law. Failure to present this has resulted in a number of escape hatches for judges who don’t like TILA Rescission. Your job is to close those hatches.
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The whole point of the rescission strategy is to remove any possibility of an arguable claim for standing to foreclose on the now nonexistent mortgage or deed of trust. Unless the claim for standing is based upon ownership of the debt subject matter jurisdiction is absent.
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This means that no claim or defense against the effectiveness of the rescission can be raised by anyone other than the owner of the debt.  
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This also means that there can be no foreclosure because the loan contract has been replaced by a statutory “contract.”
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Borrowers undermine this premise by filing lawsuits asking the court to declare that the rescission is effective. The TILA Rescission statute 15 USC §1635 has already answered that and THAT is what should be pled. SCOTUS has also already answered that in the Jesinoski case. Asking the court to declare it so means that you take the position that the statute has not already answered that question, that SCOTUS has not already ruled and that therefore it is now up to the trial court to make a ruling.
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You are opening the door for argument when there is no such argument intended by the statute or the US Supreme Court. Upon being invited to do so a judge who doesn’t like the statute will come with reasons not to declare the rescission effective — usually based upon objections from parties who could not possibly have standing to raise such objections.
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If that is true (and it is true by definition in our legal system once the highest court has ruled) then a party seeking relief from rescission would need to allege that they are the owners of the debt and then  prove it without reference to the note or mortgage. In other words they would need to prove they funded the debt or they purchased it with actual money.
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We all know that the fake securitization scheme was entirely dependent upon illegally funding the origination and purchase of the loans in the fictitious name of the trust for the account of the underwriter and that the investors were cut off contractually from having any right, title, interest or even opportunity to review or audit the portfolio of loans claimed to be in a fictitious pool that was being managed by a trust that did not exist, which in turn was managed by a trustee that had no powers of administration for the benefit of nonexistent beneficiaries.
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Hence the problem of the banks is clearly that they can’t prove funding or purchase because doing so would expose their illegal activities. Whether this would actually lead to a free house is debatable, depending upon the exercise of equitable jurisdiction in the courts.
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What is clear is that the banks were told by their own lawyers not to ignore rescission or they would lose everything. They ignored it anyway believing they could steamroll through the courts, which was in fact an accurate measurement of their own power.
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BUT as the banks persist along this strategy they continually build the inventory of homes that by operation of law are still owned by the borrowers, all other actions being void ab initio, not voidable by any stretch of the imagination.
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AND the banks are by their own actions and inaction causing the debt to slip away from them as well. Under TILA Rescission the old loan contract is replaced with a new statutory contract. Actions for enforcement under that contract must be based on violation of TILA. TILA has a statute of limitations. Thus claims beyond the statute of limitations are barred. And THAT means that claims for the debt are barred after the statute of limitations (on claims arising from TILA) has run — as result of plain arrogance of the banks — and no fault of any borrower.

8 Responses

  1. all well and good talking about all this but the courts don’t care, if you don’t file within 3 years you are out of luck even if the banks ignore your rescission notice, The courts say you are out of the 3 year so you cant use tila even if the banks refuse to respond

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  2. Check ALL prior discharges

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  3. Hi Boots — I forgot about consummation. There is so much. New Century is a mess.

    I am assuming yours was a refinance, as rescission cannot be applied to new purchases.

    I have said for years, if any one one of these non-banks is stated as the “Lender” at origination, check the discharge PRIOR to that loan. Trace it.

    These loans never went on anyone’s balance sheet, which means just a transfer of already classified default debt (even if never in default). And, the last loan in question, therefore, was NEVER originated and/or consummated as stated.

    Thanks for reminding me. .

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  4. ANON-
    Thanks.

    I’m not saying that it is a bad idea to employ FDCPA wherever possible.

    The 3 year statute of repose is from “consummation”. Many hold the rebuttable presumption that consummation occurred at closing- but did it?

    In my 2004 refi attempt with New Century – the first indication that the original loan (PinnFund) was discharged occurred in 2008 when a 3rd party stranger, using the services of infamous document fabricator DTI, entered a notice of discharge and satisfaction of the original loan on the county land records. This was also a year after New Century’s Bankruptcy when they could not have done anything without their BK Trustee.

    Even though I know it to be a fabricated document, I claim that on that date, it represents the first evidence of possible “consummation” of the refi.

    My TILA rescission was then executed 1-1/2 years after that, when none of the parties, (OCWEN, New Century, US Bank, or their lawyers) would provide any proof that it was not true. My requests for records went unanswered, or answered by BS letters with no content.

    So yes, an FDCPA attack on that issue might be appropriate.

    I’ve left a lot out of the story because it is much more complex than this blog could take…

    ‘Boots

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  5. CementBoots, — Do not think for a second that courts and government do not know that these loans are just transferred debt – unsecured. Default debt transfers by assignment — not the note. If no one responds to FDCPA debt validation in time — that is a problem.

    Rescission does not apply to default debt. How do you know it is default debt? Once a loan is reported in default to fake trust, and once servicer ceases claimed servicing advancing – the servicer will declare the debt – not collectible. At that point, the debt is removed from the fake trust BACK to the balance sheet of the entity that originally claimed to place the cash flow collection into the trust (nothing but cash flows are passed on). The debt is then charged off. There is no such entity who will take the “debt” onto their balance sheet because it never came from a balance sheet in the first place. .

    Again, rescission does not apply to default debt. The refinances were fake. Also TILA rescission is a statute of repose. Still have to “rescind” within three years — even if it were all valid — which it is not.

    I just don’t see rescission as option unless you are within the three years. Moreover, since just a default debt – “someone” can continue to collect even if successful. Please — correct me if I am wrong. Always open to that. But, I don’t see it your post.

    .

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  6. Anon-
    With all deference and respect… have you not been listening?

    You said, “I think Java is correct. These loans ceased in 2008 (maybe a few went a little longer). No judge is going to give TILA rescission now.”

    How can you not understand that the TILA rescission process is statutory, administrative and “extra judicial”. “Extra Judicial” means OUTSIDE THE REACH OR JURISDICTION OF A COURT.

    Once executed (and hopefully served by way of certified or registered mail with return receipt and just for good measure, recorded on the land records), TILA rescission IS effectuated.

    If the opposing party claiming to be the owner of the debt has not or did not respond as stated in the statute within 20 days of notice, or within one year – IT IS GAME OVER !

    IMHO – after such time has passed, and in the absence of “specific performance under the statute” by the purported aggrieved parties, this also precludes and removes any jurisdictional presumption by any court (trial or appellate) from invoking “de novo” jurisdiction to rule on the validity of the TILA rescission or to alter the outcome – AS LONG AS YOU DO NOT ASK THEM TO DO SO IN A (STUPID) MOTION.

    Got it?
    greg/Boots

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  7. I think Java is correct. These loans ceased in 2008 (maybe a few went a little longer). No judge is going to give TILA rescission now.

    Also, a trust does not manage anything. A trust is a shell. Like a tin can that contains your junk. Worthless on it’s own.

    I would like to see more focus on FDCPA — and how it can be reignited after all these years.
    How many got a debt validation notice at the beginning, and ignored it and threw it away?.
    are there ways to reuse FDCPA? If we can do that first, that maybe can then use rescission – to show fraud at origination. Doesn’t have to be under TILA — can be under Breach of contract.

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  8. Since Fraudclosures have been going on for atleast as long as 10 years now. I don’t understand why we are discussing rescission so many times if there is a 3 year SOL. Seems like just about anyone still fighting is way past the 3 year limit ?????????????

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