Rescission Summary As I see It

If you read my blog for the last 3 weeks or so you should get a good idea of where I am coming from on this. If you still have questions or need assistance call me at 954-495-9867 or 520-405-1688. The basic thrust of my argument is that

  1. BOTH Congress and US Supreme Court agree that there is nothing left for the borrower to do other than dropping notice of rescission in the mail. It is EFFECTIVE BY OPERATION OF LAW at the point of mailing. The whole point is that you don’t need to be or have a lawyer in order to cancel the loan contract, the note and the mortgage (deed of trust) with the same force as if a Judge ordered it. No lawsuit, no proof is required from the borrower. No tender is required as it would be in common law rescission. The money for payoff of the old debt is presumed to come from a new lender that approves a 1st Mortgage loan without fear that they will lose their priority position.
  2. Lender(s) must comply within 20 days — return canceled note, satisfy mortgage, and return money to borrower.
  3. Lenders MUST file a lawsuit challenging the rescission within 20 days or their defenses are waived. Any other interpretation would make the rescission contingent, which is the opposite of what TILA and Scalia say is the case.
  4. Therefore a lawsuit by borrower to enforce the rescission need only prove mailing.
  5. Any attempt to bring up statute of limitations or other defenses are barred by 20 day window.
  6. The clear reason for this unusual statutory scheme is to allow borrower to cancel the old transaction and replace with a new loan. This can only happen if the rescission is ABSOLUTE. It can be declared void or irregular or barred or anything else ONLY within the 20 day window. If the 20 day window was not final (like counting the days for filing notice of appeal appeal, motion for re-hearing, etc.) then no new lender or bank would fund a loan that could be later knocked out of first priority position in the chain of title because the rescission was found to be faulty in some way. This is the opposite of what TILA and Scalia say.
  7. The content of the rescission notice should be short — I hereby cancel/rescind the loan referenced above. You merely reference the loan number, recording information etc. at which point the note and mortgage become VOID by operation of law.
  8. BY OPERATION OF LAW means that the only way it can be avoided is by getting a court order.
  9. If any court were to allow “defense” in a rescission enforcement action AFTER the 20 day window the goal of allowing the borrower to get another loan to pay off the old lender(s) would be impossible.
  10. Hence the ONLY possible logical conclusion is that they MUST file the action within 20 days or lose the opportunity to challenge the rescission. And any possible defenses are waived if not filed during that period of time. That action by the “lender” or “creditor” must be an equitable action to set aside the rescission, which is already “effective” by operation of law.

The worst case scenario would be that rescission is the most effective discovery tool available. If the lender(s) file the 20 day action they would need to establish their positions as creditors WITHOUT the note and mortgage (which are ALREADY VOID). This would require proof of payment and proof of economic interest and proof of ownership and balance. Any failure to plead these things would fail to establish standing. The attempt to use the note and mortgage as proof or the basis of pleading should be dismissed easily. The note and mortgage are void by operation of law by the time the bank or servicer files its action.

In all probability the only parties who actually have an interest in the debt are clueless investors who by contract have waived their right to enforce or participate in the collection process. The problem THEY have is they gave their money to a securities broker. They can neither show nor even allege that they know what happened to their money after they gave it to the broker.

The important thing about TILA Rescission is that it is a virtual certainty that the borrower will be required to file an enforcement action. In that action they should not allow themselves to get sucked into an argument over whether the rescission was correct, fair, barred by limitations or anything else, all of which should have been raised within the 20 day window. AND that recognition is the reason why we have been inundated to prepare pre-litigation packages, analysis and reports to assist lawyers in filing actions to enforce rescissions, whether filed today or ten years ago.

Caveat: I have no doubt that attempts will be made to change the law. The Supreme Court has made changing the law impossible by a ruling from the bench, That means state legislatures and Congress are going to be under intense pressure to change this law or the effect of it. But as it stands now, I don’t think any other analysis covers all the bases like the one expressed here.

Anatomy of a Winning Case in Foreclosure Defense: Special Guest Patrick Giunta Tonight!

Click in to tune in at The Neil Garfield Show

Or call in at (347) 850-1260, 6pm Eastern Thursdays

Tonight we will discuss a foreclosure case that was recently won in Broward County, Florida. Our guest tonight is Patrick Giunta, one of the risking stars in the legal community.

Beach v Ocwen: 1997 Decision that will be used by banks and servicers against rescission

For Further information and assistance please call 954-495-9867 and 520-405-1688.

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See Beach v Ocwen Fla. Supreme Court

I have no doubt that the Banks will attempt to use this decision — but it still is trumped by Jesinowski and other Federal decisions on equitable tolling. Having the right to cancel/rescind is described as extinguished by TILA regardless of the circumstances — including the absence of any enforceable loan contract.
This decision (1998) was rendered far before the idea of securitization was introduced into mortgage litigation. The interpretation of the extinguishment of the underlying right made sense in the context of loans from Bank A to Borrower B. In the era of securitization you have all kinds of questions — like when the transaction was “commenced”. The courts say it is when the “liability” arose. I agree — if we are saying that the consummation of the transaction begins when the lender loans money to the borrower. But in most cases we see that the lender did not loan money to the borrower and that is corroborated by the absence of anypurchase transaction, for value, when the alleged loan is “transferred.” There is no reasonable business explanation of why anyone would release an asset worth hundreds of thousands of dollars without receiving payment — unless it wasn’t an asset of the “seller” in the first place.The presumption is that TILA rescission rights run from the date the liability arose from the Borrower to the Lender. If the Lender was not properly disclosed, then one of two things are true: (1) there is no loan contract which means a nullification and quiet title action is appropriate or (2) until the real lender was disclosed, the transaction was not consummated. That might mean that both the three day rescission and the three year rescission are in play. If the position of the foreclosing party is that a REMIC Trust was finally disclosed to the borrower — and that the Trust was the lender, then disclosure is complete. But that isn’t what happened.

The ultimate decision here is going to be on the question of whether there is in fact a loan contract, and, if so, who were the parties to it? If there was no contract, it is the same as rescission by operation of law. No new rights arise on assignment or even sale of the loan from a pretender lender — unless the purchase was in good faith FOR VALUE and occurred without notice of borrower’s defenses and NOT when the loan was already in “default.” This narrow exception arises under the UCC for a Holder in Due Course to be Protected if they meet the narrow criteria stated in the UCC, article 3, and the narrow enforcement criteria for the mortgage expressed in Article 9.

The so called default is another hidden issue. If someone “acquires” the note and mortgage where the Borrower has already not paid or stopped paying on the alleged loan, then (1) it isn’t negotiable paper and (2) it provides notice that the borrower might not be paying because they don’t owe the party or successor on the note and mortgage (and never did).
When the mortgage crisis began, the banks and servicers were claiming that there were no Trusts and that they could file suit or initiate non-judicial foreclosure without any reference to trusts. That was why forensic audits were initially required — when we thought that REMIC Trusts were the true players. Banks and servicers argued convincingly in court that the Trust was irrelevant. Now in most cases (with some notable CitiMortgage, Chase and BOA exceptions) the Plaintiff or beneficiary is identified as a Trustee, bank or servicer (US Bank usually is the Trustee these days) on behalf of a REMIC Trust. They are now saying that they have the right to be in court or initiate foreclosure because (1) the Trust received an assignment and endorsement of the note and mortgage (2) the servicer has a right to represent and even testify for the the Trustee on the basis of the rights set forth in the Pooling and Servicing Agreement or by virtue of Powers of Attorney that magically appear at trial.
So the banks, servicers and their attorneys are side-stepping the issue of consummation of the transaction. They are withholding the information where the right of rescission would first become apparent to the borrower. When they withhold the information longer than 3 years from the date of the purported “loan closing”, they claim the right of rescission has expired. That is cynical and circular reasoning. That “closing” may be the point in time that the borrower’s “liability” arose, but the liability did NOT arise with the creditor being the party named on the note, mortgage and required disclosure documents.
Instead, the Payee was a naked nominee regardless of whether the “lender” was a thinly capitalized mortgage broker or a 150 year old bank.
Neither one loaned the money. In both cases there were using money essentially stolen from clueless investors on Wall Street who advanced money for the purchase of shares (mortgage backed securities) issued by an unregistered Trust that existed only on paper, had no bank account, and never received the proceeds of the shares that were supposedly sold to pension funds and other “investors” (actually victims of a fraudulent scheme).
The real answer is, as I have repeatedly said, that there was no loan contract and therefore the note and mortgage were induced to sign by both fraud in the inducement and fraud in the execution.  But the courts may turn to a foggier notion that the disclosures were intentionally withheld and that this entitles the borrower to equitable tolling of the 3 day or three year statute of limitations. It seems highly doubtful that the US Supreme Court will reverse itself.
If they deny equitable tolling by allowing stonewalling from the Banks then no new Bank would be able to enter the picture which is the whole purpose of the TILA rescission. While courts might find the argument from the banks and servicers as appealing, history shows that the US Supreme Court is just as likely to effectively reverse thousands of decisions based upon the wrong premise that rules and doctrines for common law rescission can be applied to TILA rescission.
Yet my point goes further. The express wording of the TILA rescission as affirmed by a unanimous Supreme court in Jesinowski is that the rescission is effective by operation of law when it is dropped in the mailbox — and that there is nothing else required by the borrower. If the “lender” wants to challenge that rescission it must do so before the 20 day deadline for compliance — return of canceled note, satisfaction of mortgage and disgorgement of all money paid. This makes it very clear that stonewalling or bringing up defenses later when the borrower seeks to enforce the rescission is not permissible. The idea behind TILA rescission has been to allow a borrower to cancel one transaction and replace it with another — which means that title is clear for a new lender to offer a first or second mortgage free from claims of the prior pretender lender.
Thus the expected defense from the banks and servicersis going to be that the rescission was void ab initio because of the statute of limitations or some other reason. But these are affirmative defenseswhich is to say they are pleas for affirmative relief in a formal pleading with a court of competent jurisdiction. That court does not have any jurisdiction or discretion to find that the rescission was void ab initio if more than 20 days has expired after the notice of cancellation or rescission was made.Thus procedurally, the express wording of TILA and Jesinowski totally bars the banks and servicers from raising any defenses to the effectiveness of the rescission after 20 days from the date of notice of rescission. To interpret it any other way is to overrule Justice Scalia in Jesinowski. It would mean that the banks and servicers and Trustees could later bring up defenses to the rescission which would completely bar the ability of the borrower to apply for a substitute loan. No lender is going to offer a mortgage loan where they are taking on the risk that they are not getting the lien priority that is required to assure payment and collateral protection.

And the reason why there is no qualifying creditor to bring the action within 20 days will be taken up in an upcoming article “What if a Broker Sold an IPO and Kept the Proceeds? — The True Explanation of Securitization Fail.” Also see Adam Levitin on that.

“Trustworthy” Business Records: Matt Weidner Takes on the Elephant in the Room

It is quite clear under hundreds of years of legal precedent that documents cannot be introduced as evidence of anything. They are clearly hearsay. Some Banks are trying to use the phrase “self-authenticating” which simply does not apply to self-serving fabrications of documents. The real strategy is using the “business records exception” to hearsay, and all  eyes seem to be on Florida now. Matt Weidner has written an excellent article on the subject at http://mattweidnerlaw.com/calloway-v-bony/. And from the other side see http://www.jdsupra.com/legalnews/congratulations-you-now-own-the-loan-18283/

But I think there is a basis to use information in the public domain to challenge the business records exception. We already know of findings by administrative agencies and Congressional hearings and law enforcement that the banks were fabricating documents and wrongfully foreclosing on as many as 95% of all the foreclosure (See Elizabeth Warren’s questioning of FDIC investigator).

I would argue that the bank or servicer is not entitled to use the business record exception because of all the cases and information we have on the internet, including governmental proceedings, where it was revealed that most of the foreclosures were based upon false premises. References to the Katherine Ann Porter investigation, the San Francisco Report (65% of all foreclosures were by strangers to the transaction”) would be helpful. The Consent Orders and Settlements also give rise to a presumption that the records of the banks and servicers are NOT trustworthy nor are they actual business records. They are instead reports prepared for trial about which the presenting witness knows nothing.

Accordingly, I would argue, the records are inherently untrustworthy which is what has been found on thousands of cases where the bank lost and the homeowner won. And I would further argue that this exception is for convenience, not proof. If there is any doubt about the existence of a loan in the chain relied upon by the foreclosing party, or any doubt about whether there was a purchase or sale of the loan, the note, the mortgage, the deed of trust, or the authenticity of a MERS executive authorization or Power of Attorney, I would say that the proponent of such an assertion must prove it rather than rely on the presumptions used in connection with “negotiable” instruments — particularly when the “negotiation” took place when the loan was already in default, meaning that it was NOT a negotiable instrument. If not a negotiable instruments there are no presumption to apply.

And lastly I would argue lack of prejudice. If the transactions were fictitious, the court should certainly want to enter a judgment on the real facts than the lies proffered by parties in court. If anything, the prejudice is to the homeowner in letting the bank or servicer use self serving documents of unknown origination in lieu of presenting real facts by real witnesses with real knowledge carrying real documents.

If the transactions were real, they should have no problem showing proof of the movement of money in consideration for the purchase of a loan. How hard is that? They supposedly did it when they sold the loans — why can’t they do it now when they are saying they have the right to foreclose the loans? Maybe because the entire securitization scheme was a fraudulent scheme using the court system to legitimize illegal acts.

About the Rescission Package

The internet store is being re-constructed. So all information must be obtained through our customer service lines — 520-405-1688 or 954-495-9867.

I have extended for a few days, the deadline on the pilot program simply because of the huge volume, which caused us to reduce the price. People who paid the higher price will get an appropriate refund, depending upon the complexity of their case.

If you are calling with a question about rescission or any of our other products and services (1/2 hour consult, one hour consult, DVD sets, workbooks, litigation assistance, title and securitization report, file review and analysis, or expert witness declaration, please fill out the form found at the following url without any obligation on your part — GTC – LivingLies Registration Statement No Obligation

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Virtually all the questions being asked (except by a few lawyers across the country who “get it”) are the wrong questions and seek partial information on a complete problem with a complete solution. We cannot give advice to you or your lawyer unless we have analyzed your loan files and any other public records, including court records.

Most questions basically consist of “Isn’t it t rue that I can’t send a notice of rescission because … [fill in the blank]” or “who should I send the notice to?” This is a recent answer I gave in an email:

FOR GENERAL INFORMATION
This is precisely why we are offering a rescission package and why borrowers need it. Sending the letter of rescission has a huge legal impact — but the banks have plainly indicated their intent to stonewall the rescission. Thus where to send it and when to enforce it, and how to enforce it and what NOT to do, is all part of the package. While legally this is akin to a “magic bullet” as a practical matter, the banks are using a strategy to cause homeowners to make mistakes when they seek to enforce the rescission. Nobody can properly instruct you on the answer to your questions without analyzing your loans and any court papers filed.

As with all legal matters, time might be of the essence. Move quickly. Perhaps schedule a consult with me (either 1/2 hour ($325) or 1 hour ($650). Part of this is as simple as it appears, and part is going to be ground combat.

You might also have other strong positions — which we could find out doing a title and securitization report and analysis. Also there are books I have written — particularly the first workbook written as companion to the full day seminar in California and which qualified for Florida CLE credits for lawyers. DVD sets are available for purchase as well. And there are “package deals” that Geordan can help you to figure out which things you can use. Remember also that there are thousands of free forms, articles, statutes and cases on my blog that are absolutely free — but no substitute for getting advice from legal counsel.

My suggestion: At this point, Get the DVD (1st Seminar from 2008 which is now directly on point again due to decision in US Supreme court case of Jesinowski) and get the rescission package now. Optional: the Workbook from the 2008 seminars and the title and securitization COMBO. NOT OPTIONAL: GET A LAWYER. We can help if he or she uses our litigation support.
Somehow, despite the unanimous and unequivocal decision penned by Justice Scalia for the the US Supreme Court, people are still not getting it. The burden of proving a bad rescission is on the banks and if they don’t do it within 20 days, the questions are over. But lawyers and homeowners refuse to take yes for an answer, even when it comes from a unanimous Supreme Court, the highest court in the land the final word on any subject.

Instead of the Banks bringing the required lawsuit to challenge the rescission within 20 days which in nearly all cases expired long ago, homeowners and lawyers are letting themselves get ensnared with interpretations of TILA that might prevent a homeowner from thinking he or she can send of enforce a notice of rescission that would have been enforced — if they had only asked.

Since 2007 I have repeatedly said in connection with foreclosure defense, don’t accept the burden of proof. Hundreds of judges and thousands of lawyers expressed their contempt for my analysis, which they called wishful thinking. Events have proven me right in every respect.The courts are increasingly finding for the homeowner in foreclosures. AND the rescission remedy is exactly what I said it was — a nuclear bomb in finance that the banks cannot do anything about except try to scare people into not using it.

Don’t over analyze this. Don’t accept the burden of proof. AND in this case — TILA rescission — you have specific authority NOT to accept the burden of proof. Yet lawyers and homeowners are making the mistakes of hundreds of judges before them. They are applying common law rules for rescission to a statutory remedy that is very clearly NOT common law rescission.

These are all self defeating questions, in my opinion. TILA doesn’t stop you from sending a notice of rescission nor does TILA require you to interpret the statute of limitations whether the property is primary residence, whether the loan was a purchase money mortgage etc. It only provides that as far as the actions of the homeowner are concerned, he or she need only send a letter cancelling the loan and that the letter is the same as a court order — by operation of law.

All the legal arguments and questions arising out of who should have been able to send a notice of rescission are questions that the Banks must raise within 20 days of the notice of rescission. If they fail to raise those issues, the issues are waived.

The answer is technically that the act of sending a notice of rescission applies regardless of whether your particular mortgage in fact qualifies for rescission or not. If it does not qualify, the rescission is STILL EFFECTIVE until challenged by the banks within the 20 day window. We have not seen such a challenge ever filed in any court.

Hence the rescission would be upheld under the US Supreme Court decision because it is effective when dropped in the mailbox and consumers of loans are not required to be lawyers or have a lawyer when they want to cancel the loan. If the rescission is improper the creditor has 20 days to make its claim. After that it is waived and the homeowner is entitled to enforce a rescission — even one that MIGHT have been determined ineffective, had it been properly challenged.

It is the technical legal procedure that puts virtually all borrowers in the driver’s seat. You only need any arguable basis for sending the rescission. Being wrong does NOTHING to effectiveness of the rescission unless a judge says so during the 20 window in which the creditor MUST file their challenge. After that it is all about enforcement of a rescission, which, by operation of law, is valid and effective despite any defects the creditor might want to point out to the court.

This is one of many examples of why the rescission package is essential and why the advice from people who know nothing about the law, nothing about the Jesinowski decision and nothing about rescission other than “what hey have heard” is so important. And it is why we have received nearly a thousand inquiries about our program.

If you have a loan, it is subject to rescission.

The other issues you raise are exactly what you address in our analysis and report. We cannot offer you legal advice or opinions other than general information like this letter unless you are a lawyer or have a lawyer who is asking the same questions.

At the very least you should purchase my original workbook from 2008 which contains the same information that Judges and lawyers rejected but which was completely validated by a unanimous US Supreme Court 9-0. The only thing that has changed is that all the lawyers and judges that applied rules for common law rescission were, as I have always said, dead wrong.

TILA RESCISSION: Homeowners — Take Yes for An Answer!

For further information please call 520-405-1688 or 954-495-9867.

Please note that we are reconstructing our internet store. If you wish to buy a book, manual or service please call the above numbers.

RESCISSION PACKAGE: The volume is so high that we are able to provide discounts up until the April 14 cutoff date. Send your email to neilfgarfield@hotmail.com and fill out the form at TILA or COMBO registration form — No Obligation to Purchase

The ONLY loans that we reject as candidates are those in which the homeowner has never sent a notice of cancellation or rescission of the loan and where (a) judgment has been entered or (b) where the judicial sale occurred. If you DID send a notice of rescission BEFORE judgment or judicial sale, you are still eligible for our program even if judgment and sale has occurred.

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FOR GENERAL INFORMATION
Somehow, despite the unanimous and unequivocal decision penned by Justice Scalia for the the US Supreme Court, people are still not getting it. The burden of proving a bad rescission is on the banks and if they don’t do it within 20 days, the questions are over. But lawyers and homeowners refuse to take yes for an answer, even when it comes from a unanimous Supreme Court, the highest court in the land the final word on any subject.
Instead of the Banks bringing the required lawsuit to challenge the rescission within 20 days which in nearly all cases expired long ago, homeowners and lawyers are letting themselves get ensnared with interpretations of TILA that might prevent a homeowner from thinking he or she can send of enforce a notice of rescission that would have been enforced — if they had only asked.
Since 2007 I have repeatedly said in connection with foreclosure defense, don’t accept the burden of proof. Hundreds of judges and thousands of lawyers expressed their contempt for my analysis, which they called wishful thinking. Events have proven me right in every respect. The courts are increasingly finding for the homeowner in foreclosures.
AND the rescission remedy is exactly what I said it was — a nuclear bomb in finance that the banks cannot do anything about except try to scare people into not using it.Don’t over analyze this. Don’t accept the burden of proof. AND in this case — TILA rescission — you have specific authority NOT to accept the burden of proof. Yet lawyers and homeowners are making the mistakes of hundreds of judges before them. They are applying common law rules for rescission to a statutory remedy that is very clearly NOT common law rescission.
These are all self defeating questions, in my opinion. TILA doesn’t stop you from sending a notice of rescission nor does TILA require you to interpret the statute of limitations whether the property is primary residence, whether the loan was a purchase money mortgage etc. It only provides that as far as the actions of the homeowner are concerned, he or she need only send a letter cancelling the loan and that the letter is the same as a court order — by operation of law.All the legal arguments and questions arising out of who should have been able to send a notice of rescission are questions that the Banks must raise within 20 days of the notice of rescission. If they fail to raise those issues, the issues are waived.
The answer is technically that the act of sending a notice of rescission applies regardless of whether your particular mortgage in fact qualifies for rescission or not. If it does not qualify, the rescission is STILL EFFECTIVE until challenged by the banks within the 20 day window. We have not seen such a challenge ever filed in any court.Hence the rescission would be upheld under the US Supreme Court decision because it is effective when dropped in the mailbox and consumers of loans are not required to be lawyers or have a lawyer when they want to cancel the loan. If the rescission is improper the creditor has 20 days to make its claim. After that it is waived and the homeowner is entitled to enforce a rescission — even one that MIGHT have been determined ineffective, had it been properly challenged.
It is the technical legal procedure that puts virtually all borrowers in the driver’s seat. You only need any arguable basis for sending the rescission. Being wrong does NOTHING to effectiveness of the rescission unless a judge says so during the 20 window in which the creditor MUST file their challenge. After that it is all about enforcement of a rescission, which, by operation of law, is valid and effective despite any defects the creditor might want to point out to the court.

This is one of many examples of why the rescission package is essential and why the advice from people who know nothing about the law, nothing about the Jesinowski decision and nothing about rescission other than “what they have heard” is so important. And it is why we have received nearly a thousand inquiries about our program.

If you have a loan, it is subject to rescission.

The other issues you raise are exactly what we address in our Rescission Package analysis and report. We cannot offer you legal advice or opinions other than general information like this letter unless you are a lawyer or have a lawyer who is asking the same questions.

At the very least you should purchase my original workbook from 2008 which contains the same information that Judges and lawyers rejected but which was completely validated by a unanimous US Supreme Court 9-0 in 2015. The only thing that has changed is now we all know that all the lawyers and judges that applied rules for common law rescission were, as I have always said, dead wrong.

TILA Rescission: Three Years from When? Three Days from When?

James Macklin, a senior forensic analyst has worked together with attorneys and produced the following article on the “statute of limitations” as it applies to notices of rescission. I think I agree with their premise but would add that in all probability, if the lender is not known — the three day right of rescission starts to run when the real lender is disclosed. Otherwise there either is no contract for loan or the three day right can be exercised. If the three day right is exercised, then there is no defense to it of any kind even if the bank files the challenge action within 20 days of the notice. The challenge action would be subject to dismissal for failure to state a cause of action.

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The general rule you will normally see in regard to TILA 3 year right of rescission is the following:
“Section 1635 of TILA allows consumers to rescind “any consumer credit transaction . . . in which a security interest . . .is or will be retained or acquired in any property which is used as the principal dwelling of the person to whom credit is extended,” so long as such rescission takes place within three days of the consummation of the transaction or the delivery of required disclosures under TILA, whichever occurs later. 15 U.S.C. § 1635. If the lender never submits the required disclosures, the borrower’s right to rescission expires three years after the consummation of the transaction. 15 U.S.C. § 1635(f).”  In the seminal case of Beach v., Ocwen, 523 U.S. 410, the United State Supreme Court held: “the right of rescission is completely extinguished after three years from the date of the loan’s consummation.”  See also 15 U.S.C. § 1635(f).  Equitable tolling does not apply to an action for rescission under TILA. See Mays v. U.S. Bank National Association, 2010 WL 318537 (E.D. Cal.2010).
This then begs the question, when is a loan “consummated” under TILA.  According to the FDIC on this website, consummation means when a consumer becomes obligated on a loan.”  See also 12 C.F.R. § 226.2(a)(13).
Under Regulation Z, which specifies a lender’s disclosure obligations, “consummation” of the loan occurs when the borrower is “contractually obligated.” 12 C.F.R, §226.2(a)(13). The point at which a “contractual obligation … is created” is a matter of state law. 12 C.F.R. pt. 226, Supp. 1 (Official Staff Interpretation), cmt. 2(a)(13). Under California law, a contract is formed when there are (1) parties capable of contracting, (2) mutual consent, (3) a lawful object, and (4) sufficient cause or consideration.  See California Civil Code Section 1550 and Grimes v. New Century Mortgage Corp., 340 F.3d 1007, 1009 (9th Cir. 2003).
Under TILA, the Courts must look to state law in determining when a borrower becomes contractually obligated on a loan.  At the very least, before you can have a contract, there must be specifically identified parties to the contract (meaning an identified lender and a identified borrower) – “parties capable of contracting” as set forth above and sufficient consideration.
Now, in the god old days a borrower and a bank would contract to lend money.  The borrower would borrow the money and offer a security interest in its property, and the bank would lend money off its balance sheet and hold both the note and mortgage (deed of trust) in the event you failed to pay.  Those days are gone for a large number of “securitized loans” (loans that are bundled into pools and sold off on Wall Street).  Nowadays, you have a loan “originator” posing as a “lender” and the loan originator is not loaning you a dime (rather, someone else or some other entity is funding, lending, or table funding the loan).  In this scenario, the originating lender, purporting to contract to “lend” you money, is not actually lending you any money.  In reality, they are doing nothing more than earning a commission on the money SOMEONE ELSE IS LENDING YOU (i.e. some Wall Street investor in your loan pool who is funding the loan, who is NOT IDENTIFIED AT ANY STAGE OF THE LOAN PROCESS, and who expects a return on their investment).  These hidden investors are the true “lender” who is the source of funds for you loan.  Strange, but true.
So, when you contract with the “originator” of the loan (as opposed to the lender), has the true lender ever been identified?  No, they have not.  So shouldn’t the promissory note be between you and the real lender?  After all, the “lender” on the note and deed of trust never lent you any money, and this can be verified by looking at their balance sheet.  Do you have an enforceable contract to lend money under state law in this scenario?  That is an issue to litigate under TILA – in my opinion.  The originator is representing that they are lending you money,, when in fact they are not.  They are serving as an intermediary for someone else to lend you money.  Is there a meeting of the minds under this scenario?
There are a few other cases I have come across in my research that indicate, that under this scenario (usually involving MERS securitized loans, and other hard money loans where undisclosed entities are table funding the loan), the LENDER MUST BE IDENTIFIED BEFORE THE THREE YEARS BEGINS TO RUN, WHICH MEANS, IF YOU DO NOT KNOW WHO THE REAL “LENDER” IS, OR THE TRUE “SOURCE OF FUNDS” FOR YOUR LOAN, THE THREE YEAR CLOCK TO EXERCISE YOUR RESCISSION RIGHTS MAY NOT BEGIN TO RUN.
(1) Ramsey v. Vista Mortgage Corp, 176 BR 183 (TILA RESCISSION IN BANKRUPTCY CHAPTER 13 CASE).  In this case, the court laid down the test of when the three year right to rescind begins to run and specifically tackles the concept of when a loan is “consummated.”  Several internal citiations also help clarify this point.  Here is what the Ramsey Court said:
“When Ramsey signed the loan documents on September 13, 1989, he knew who was going to provide the financing. Courts recognize the date of signing a binding loan contract as the date of consummation when the lender is identifiable.”   The Court also cited to the Jackson v. Grant, 890 F.2d case (9th Circuit 1989), a NON-BANKRUPTCY CASE, and said: “the Ninth Circuit held that under California law a loan contract was not consummated when the borrower signed the promissory note and deed of trust because the actual lender was not known at that time.Under these circumstances, the loan is not “consummated” until the actual lender is identified, because until that point there is no legally enforceable contract.”
ANALYSIS: It seems fair to say that the Courts are not willing to find a contractual obligation exists under State Law until a true and actual lender is identified. “Pretender lenders” – as Neil Garfield calls them – and intermediary “originators” who make false representations to the effect that they are “lending money”and are your “lender” should not be sufficient to set the three year TILA rescission clock in motion.  Until the real Wall Street entity, or Wall Street Investor, or true source of the table funded loan is identified, the loan should not be deemed “consummated” under TILA and the three year right to rescind should remain open until such disclosure is made.  That is TRUTH IN LENDING WHICH IS THE WHOLE POINT OF TILA IN THE FIRST PLACE.
THIS MEANS, IF YOU STILL DO NOT KNOW WHO YOUR LENDER IS AFTER DUE DILIGENCE (AND BELIEVE ME WE TRY WITH DEBT VALIDATION LETTERS, CHAIN OF TITLE REVIEWS, FANNIE AND FREDDIE LOAN LOOKUPS, QUALIFIED WRITTEN REQUESTS, 15 US.C. 1641 LETTERS, UCC PRESENTMENT LETTERS, ETC.) AND IF THE ORIGINATING “LENDER” TRULY NEVER LENT YOU A SINGLE PENNY, PERHAPS THERE IS AN ARGUMENT TO BE MADE, USING THE LAW CITED ABOVE, THAT THE THREE YEARS HAS NOT YET BEGUN TO RUN.  NOW, THIS IS A NOVEL THEORY OF LAW THAT I HAVE NOT SEEN ANYONE PUT FORTH AS OF YET.  BUT REVIEWING THE CASE LAW, IT SEEMS TO OFFER SOME HOPE TO 4,5 OR EVEN 10 YEAR OLD LOANS.  OF COURSE, YOU SHOULD CONSULT WITH FORECLOSURE AND TILA LAWYER BEFORE PROCEEDING ON SUCH A THEORY, BUT WHERE THE BANKS ARE ACTIVELY ENGAGED IN THE “HIDE THE EIGHTBALL” GAME WHERE THEY DO NOT WANT YOU TO KNOW WHO OWNS YOUR LOAN, AND THEY NORMALLY CANNOT EVEN LEGALLY PROVE WHO OWNS YOUR LOAN, IF YOU HAVE NO OTHER OPTIONS THIS MAY BE A THEORY TO BRING TO THE ATTENTION OF YOUR FORECLOSURE, BANKRUPTCY OR LITIGATION COUNSEL.  THE FINANCIAL INSTITUTIONS USE EVERY LAW IN THE BOOKS TO TAKE YOUR HOME, THIS MAY BE A POTENTIAL ARGUMENT TO FIGHT BACK.
ALSO NOTE – THERE ARE A STRING OF CASES  THAT SAY YOU MUST FILE YOUR TILA LAWSUIT WITHIN 3 YEARS OF CONSUMMATION.  SO CONSULT A TRUTH IN LENDING LAWYER IMMEDIATELY TO DISCUSS YOUR CASE.
We have talked about the consequences of TILA rescission in many other posts.  Google “Vondran TILA lawyer” (or got http://www.RescindMyLoan.net or http://www.ForeclosureDefenseResourceCenter.com) and you will see more articles.  AS WITH EVERYTHING ELSE IN FORECLOSURE DEFENSE, DO NOT WAIT UNTIL THE LAST MINUTE BEFORE SEEKING A FORECLOSURE LAWYER.  IF YOU GET A NOTICE OF DEFAULT OR NOTICE OF SALE, DO NOT WAIT, CONTACT A FORECLOSURE AND BANKRUPTCY, TILA LAWYER TO PUT TOGETHER A SOUND LITIGATION PLAN.
James L. Macklin, Managing Director
Secure Document Research(Paralegal Services/Legal Project Management)
Agent for Charles T. Marshall, Esq. (SBN 176091)
917 Tahoe Blvd #201 A
Incline Village NV 89451
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