Terms of Art: Assignment or Endorsement?

Lawyers, judges and homeowners are using different terms interchangeably thus muddying up the argument or ruling. An assignment refers to a mortgage whereas an   endorsement (“indorsement” in legalese) refers to a note. The rules regarding enforcement of a mortgage are different than the enforcement of a note.

Let us help you plan your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORMWITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.

Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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I want to point out the difference between assignment and endorsement. Because judges often defer to bank lawyers to explain the law, there is some confusion there. Often the point is that there was no valid purported assignment of the mortgage and there was no valid endorsement of the note. The argument has great significance particularly in view of the use of sham conduints at the initial “closing,” where the disclosed “ledner” is a misrepresentation, thus preventing the doctrine of merger in which the debt is merged with the note.
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By law, notes are not assigned. They are endorsed if a transfer occurs. Like a check the endorsement must be on the face of the instrument (like the back of the check), or if there is no room because of prior endorsements then an allonge must be permanently affixed to the note containing the endorsement. A separate paper is not an allonge, by definition.
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Keep in mind that the note is not the debt and the debt is not the note. The note can be (a) evidence of the debt or (b) merged with the debt (to prevent double liability only if the payee on the note is the same as the lender. The only exception to this is if the payee was acting as a disclosed agent for the lender. The debt exists regardless of whether there is paperwork. The note might exist but it might be invalid depending upon whether it memorializes a real transaction between the parties on the note.
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In practice in the typical “closing” the borrower signs the note and mortgage before he receives the alleged loan. Neither one should be released, much less recorded, by the closing agent unless and until the borrower receives the funds or money is actually paid on the borrower’s behalf by the Payee on the note. When it comes to purported transfer of these residential “loans,” low level employees are not given powers over tens of millions of dollars worth of loans in banking custom and practice.
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The biggest point I wish to make here is that the assignor and assignee of a mortgage must exist legally and actually. Similarly the endorser and endorsee of a note must exist. An apparently valid assignment or endorsement to a party who did not purchase the debt can result in two things: (a) the assignment of mortgage is not valid because it failed to transfer the debt and/or (b) the failure of the assignment to transfer the debt may be fairly construed as failing to place the subject loan in trust. Without the trust owning the debt (as evidenced by a real transaction in which the debt was purchased from a party who owned the debt), the trust does not exist as to the subject loan nor does it exist at all if that was the practice with respect to all alleged loans for which there was a transfer on paper that did not memorialize real life events.
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Three endorsements:
Dated special endorsement to a particular party. This will be treated a presumptively valid. But the presumption can be rebutted — if the endorser (“indorser” in legalese) did not own the note or otherwise have the right to act as agent for a party who did own the note. This is the point of our TERA — to expose the fact that the paper is self generated and self serving and fabricated by revealing the one simple fact that the party who executed the endorsement was an actual or fictitious individual who was probably a robo-signor on behalf of an entity that did not own the note nor have the power to assign.
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Undated special endorsement to a particular party. If it is undated, it is probably fabricated because custom and practice in the industry does not treat mortgage loans the same as they treat checks. When dealing with high ticket items a special endorsement that is dated would (a) ordinarily accompany an assignment of mortgage (often abandoned by the foreclosing party) and (b) MUST be accompanied by acquisition for value — i.e., purchase of the debt. Ordinarily there would also be correspondence and written agreements concerning the sale of the note and mortgage. Those are issues for discovery.
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Dated or undated blank endorsement — bearer paper. As stated above, big ticket items usually are not generally transferred by blank endorsements, assuming the paper is actually “negotiable.” Hence if it is bearer paper (no person identified as the endorsee) this is likely a fabricated, backdated document, if it is dated, or just a blanket self serving document that consists of a misrepresentation to the court. Note that most provisions in a PSA (Pooling and Servicing Agreement, also referred to as the “trust instrument”) state specifically that (a) the “trust” is organized to be a REMIC vehicle which means there is a 90 day window in which they can acquire loans (the cutoff period) and (b) the assignments must be in recordable form and (c) the endorsements must be valid. Otherwise, the apparent transfer cannot be accepted by the Trust under REMIC rules (see Internal Revenue Code 26 U.S. Code § 860D – REMIC defined), under the powers of the Trustee (virtually nonexistent in most REMIC Trusts), and under New York Law which almost always invoked as the  State in which the Trust is organized. New York Law states that any act that contravenes the powers expressed in the Trust instrument are void, not voidable. So a transfer after the cutoff date is void, as it would ruin the REMIC status under the IRC and violate the specific provisions of the Trust designed to invoke the REMIC rules.

Wells Fargo Bank: Fraud or “Error”

This was no mistake. It is one of many ploys to make modification unlikely or impossible. WFB wants foreclosures not modifications. That way they get to steal from investors, steal from homeowners and get away with it!

Once again, WFB is caught cheating homeowners, producing needless foreclosures (using the so-called “modification” process), leaving the homeowners in the dirt with an offer of $20,000 to settle the claims of fraudulent foreclosures.

Even though they claim the “error” existed — adding the attorney fees to the amount supposedly due — they knew three years ago and did nothing to  make the homeowners whole.

And this is a company that gets the benefit of the doubt when their lawyers proffer “documents” (i.e., fabrications) to the court seeking legal presumptions of validity.

The court is empowered to tell them they have no such presumptions and to prove the truth of the matters asserted. It’s time they did so.

see Wells Fargo Admits 400 Wrongful Foreclosures

Beware of the new lending bubble

What is clear to me is that nothing has changed except the government complicity in predatory lending practices is increasing despite the passage of Dodd Frank. A fact that keeps getting buried here is that Federal Law (Truth in Lending Act) puts the burden of determining affordability of an alleged loan product on the lender, not the borrower. That is the whole point of the Act — to avoid mistakes that borrowers might make with sales pitches that will result in financial ruin for borrowers and extreme wealth for underwriters on Wall Street.

When you see “CashCall” offering loans to people who have a FICO score of 585, we all should ask “how can they make money on alleged loans that are going to fail.” Legally the question becomes one that scares the hell out of the banks: having given a loan to someone who needed their help in making the down payment and who have a bad credit history, is the defense to the foreclosure action properly stated if “assumption of risk” or some other related defense is asserted?

The additional question is who is putting up the money for national advertisements on TV, radio and written media to get as many people as possible to take a loan they cannot pay. This is especially true when an alleged adjustable rate mortgage is involved with negative amortization and a teaser payment.

If the burden of affordability is on the lender and not the borrower and the loan resets to a payment higher than the entire household income the outcome is guaranteed to produce a “loss” that will be covered by multiple levels of derivative and hedge products that will turn the loss into a windfall for the intermediaries.

The effect of the foreclosure is that it rubber stamps plainly illegal behavior. The good faith estimate is completely  fictitious. The term of the loan is not 30 years; it is 3 years or whenever the loan resets. That means whatever fees are amortized over the life of the loan should be amortized over 3 years, not 30. So the cost of credit is falsely stated.

And of course the primary directive of TILA that the lender be disclosed is being completely overlooked. CashCall is not lending the money in the sense that they have no risk of loss. The value of the loan to CashCall must be in the fees it receives for acting as a sham conduit.

I also doubt if the promissory notes executed by borrowers in such a situation are negotiable instruments, especially when you consider the possibility of TILA rescission, which is a condition not stated on the face of the note.Shows how securitization worked. Partially correct. BEST IN CLASS

I give the following video a 90%+ rating. It doesn’t cover the sham conduit originator but otherwise it appears totally correct.

Shows how securitization worked. Partially correct. BEST IN CLASS

Check this out:

No Savings? No Problem. These Companies Are Helping Home Buyers With Down Payments
The Wall Street Journal

Lenders are coming up with novel ways for buyers to cobble together down payments. Read the full story

The Chronology of TILA Rescission

SIMPLE LOGIC, NO DEBATE

I said it before and the Supreme Court said I was right. I said it again and the Supreme Court will again issue a ruling that conforms with my statements about TILA Rescission. The longer the rebellion (by the courts) goes on, the more title, rights, obligations and certainty will be undermined.

It’s not up for debate, which many people have tried to promote. The statute is clear and the Jesinoski decision drills home the point — the chronology of TILA rescission starts with delivery or mailing the notice of cancelation. It is THEN that rescission is effective by operation of law. It is a “done deal.”

This is NOT an “interpretation” or “theory”. I am only quoting the final decision from the Supreme Court that makes final decisions that may not be appealed.  And the reason why SCOTUS was unanimous 9-0, Justice SCalia said, is that the statute could not be more clear and unambiguous. 

All other arguments are policy arguments that should be taken up with the legislative branch of government. The debate is over. Any contrary ruling, motion, decision or judgment is void. A new Supreme Court ruling is expected in which it considers what to do with lower courts that refuse to follow orders from their boss (SCOTUS).

The legal effect is that the loan agreement is over and the note and mortgage are void. The debt survives but (1) is now conditioned on compliance with the lender’s obligations under the statutory scheme that replaced the loan agreement and (2) enforcement in all events is barred by the one year statute of limitations even if  the lender did comply with the statute.

In some states the statute of limitations extinguishes the debt. In others it must be raised as an affirmative defense and is subject to possible renewal as with payments made after the SOL expires.

Let us help you plan your TILA rescission strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK ORDERED BY YOU. THE INFORMATION ON THE FORMS IS NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.

Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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In any TILA rescission brief, I think the emphasis should be on chronology, subject matter jurisdiction and due process. I.e., that rescission removed the note, mortgage and loan agreement from legal consideration and therefore subject matter jurisdiction was lacking thereafter — a point that can be brought up anytime, even on appeal or even later.

  • AND that imposing a remedy based upon void documents violates due process rights of the borrower.
  • AND that any ruling denying the application of TILA rescission is void in the absence of a party with legal standing seeking a remedy (vacating the rescission) asserting (1) legal standing (injury) and (2) grounds upon which the rescission could be vacated.
  • Any contrary ruling (ignoring the TILA rescission) is itself void on both jurisdiction and due process grounds.
The fundamental facts must be clearly stated and must be based upon chronology. The rescission caused the loan agreement, the note and the mortgage to be void by operation of law at the moment of mailing or delivery. That is exactly what the statute says and exactly what Jesinoski says with emphasis on the word “when.”
If that remains true, then it is fundamental error for a trial court or appellate court to treat the loan agreement, note and mortgage to be in existence after receiving notice of the existence of the rescission, whether recorded or not. It therefore follows that it is fundamental error, without jurisdiction and a deprivation of fundamental and natural rights of the borrower to due process if a court grants relief or a remedy based upon the void documents.
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There is no basis for a motion or ruling (from any court other than SCOTUS) that starts with the premise that rescission is effective upon delivery or mailing “IF”. There is no “IF.” There is no “provided.” There is no “However.” There are no conditions other than delivery or mailing.
Everything that attempts to impose conditional statements on the TILA rescission statute is wrong and void. Each such attempt assumes grounds for vacating the rescission have been proven by a party with standing. Due process requires the party who is directly injured by the “wrongful” rescission to initiate a lawsuit that begins with legal standing, asserts the rescission is effective, and the grounds for why the rescission notice should be vacated.

Creating Foreclosure Defense Narrative: Three Brain Dumps from LendingLies

See TERA Explained and Using our TERA Report

If you don’t get our TERA report, you are most likely overlooking important parts of the defense narrative.

Get our TERA report. Then the CONSULT.    

Here is a typical piece of narrative in the TERA report:

“In the Trust Instrument (PSA) the Trustee and the parties identified as beneficiaries lack any power to conduct or ratify any transaction or, for that matter, to conduct any administration of any ongoing activity of the trust. This is a fair reading of the  trust provisions in the context of a REMIC pass-through facility. “

This nugget allows you to take on those decisions, especially in California that say that an Assignment that is void is really voidable because someone could ratify the acceptance of the assignment (thereby ruining the tax status of the “REMIC” Trust). Our report will show, where appropriate, that there is no person or group identified in the trust instrument who could have that power.

Then my Case Analysis or CONSULT closes the door and locks it. New York law (cited by most PSAs as the state of organization) says that if any act of the trustee (and that includes people who were “appointed” by the named trustee) is contrary to express provisions of the trust the act is void.

My Analysis  will show you the path toward traction in the courtroom. Many courts have invented new doctrine to contradict and thereby violate full faith and credit clause of the US Constitution. Under this nutty novel doctrine, void means voidable, which is because the act could be ratified.

That is true in actual trusts. But according to the PSA “pass-through” trust instrument there is no party or entity empowered to ratify anything. And there is a reason for that. The entire reason for writing down the PSA provisions was to qualify for REMIC treatment under the Internal Revenue Code. Allowing anyone to change that or to conduct a transaction outside the cutoff period would destroy the tax favored treatment afforded by the REMIC statute.

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK ORDERED BY YOU. THE INFORMATION ON THE FORMS IS NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.

Then you also get to the facts about nearly all REMIC trusts. They were never in business, they own nothing and there is not even a bank account in the name of the identified trust.

So there is no trust, there are no trust beneficiaries and a close look at those “certificates” reveals a promise to pay by the identified trust that is NOT backed by notes and mortgages (i.e., the certificates, the PSA or both disclaim any such interest). So there are no beneficiaries. And THAT accounts for the missing Mortgage Loan Schedule (MLS) when the so-called trust was named by an aggregator as the owner of loans.

The MLS was not necessary except a fake one (disclosed as fake in the prospectus) to create the illusion of actual property rights being held by an actual managing trustee. With nothing held in trust there is no trust.

This and more available from us on www.lendinglies.com.

VIDEOS —

See TERA Explained and Using our TERA Report

 

TILA Rescission Time Limits

If you slow down and logically go through the statute and the Jesinoski decision it is easy to analyze the situation and come to a correct conclusion. This is not argument of law, it is the application of logic. SCOTUS and the statute state unequivocally that the rescission is effective WHEN it is mailed, by operation of law. Everything else happens afterwards.

Let us help you plan your TILA rescission strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK ORDERED BY YOU. THE INFORMATION ON THE FORMS IS NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.

Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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The “three year” limitation is an affirmative defense that only arises AFTER rescission is effective by operation of law. It is only an affirmative act resulting in a court order that can revoke or vacate a TIILA rescission. To state it more bluntly, merely raising a dispute does not mean (a) you have the standing to do so nor (b) that the matter is at issue. The error here is that the parties are usually already in court.
As soon as the court is apprised of the rescission having been sent (whether 10 minutes ago or 10 years ago) the case changes, to wit: any action based upon the note and mortgage must be struck or dismissed.
  • Any party who was pursuing a claim based upon the note and mortgage is out — they no longer have legal standing and the Court no longer has subject matter jurisdiction over their claims or defenses.
  • Any party who is the actual creditor could, within 20 days from notice of rescission, either comply with the statute or file a lawsuit invoking and standing or any other basis upon which they dispute that the rescission was properly sent.
  • Any party failing to invoke the remedy of repayment or the duty of compliance within one year from date of mailing is barred from pursuing any statutory claim.
  • Title stays unchanged as of the date of mailing, to wit: fee simple absolute with no encumbrance of mortgage or deed of trust.
Once the statutory scheme is invoked, everything changes. The statutory scheme replaces the loan agreement just as the statutory scheme for nonjudicial foreclosure replaces the constitutional requirement of due process PROVIDED that the homeowner may still invoke the right to due process. If not, the statutory nonjudicial scheme is all that remains. The same analysis applies when looking at the nonjudicial cancelation of the loan agreement. If the “lender” fails to object with a lawsuit to vacate or revoke the rescission, then the statutory nonjudicial scheme is all that remains.
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Once TILA rescission is sent, the note and mortgage no longer exist, by operation of law. The courts may not simply apply a note (new or old), much less an encumbrance (new or old) on land by fiat as this deprives the homeowner of his right to due process before his clear title can be taken away from him. Such an act must be preceded by formal application to a court by a party who has legal standing, and a trial occurs producing the court order. That application must be filed within 20 days of notice of rescission.
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People are pointing to the reference in Jesinoski to the three year limitation. That is dicta — i.e., there is no ruling or opinion on when or whether that defense can be invoked. That defense does not arise by operation of law like the effectiveness of the rescission notice. But we do know by definition that such defenses can only arise after notice of rescission is sent. The argument that SCOTUS said that a notice sent outside the three year period is void is wrong. There is no place in the opinion where the court says that. And it isn’t likely they they will issue such an opinion.
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The reason is that if SCOTUS were to say that rescission is NOT effective upon mailing if it was mailed beyond the three year limitation, then an added condition is being inserted into the statute. The option stands for exactly the opposite conclusion. No conditions may be added. Period. Any interpretation or ruling that adds a condition means that the rescission is not effective upon mailing by operation of law. Such a ruling inserts “unless….” into the wording of the statute and the ruling of SCOTUS.
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Lastly, within the context of 15  USC §1635 and Jesinoski, the rescission and simultaneous destruction of the note and mortgage does NOT start a clock on any statute of limitations any more than a Deed starts a clock on a statute of limitations as to the title. But for the same reason it is true that SCOTUS is unlikely to say both a 2008 and 2017 rescission were effective. Once the first rescission was sent (and assuming there is no doubt about that) the loan agreement was canceled; hence, there was nothing to rescind in 2017.

What is the effect of TILA Rescission on My title? Can I sue for damages?

I have been getting the same questions from multiple attorneys and homeowners. One of them is preparing a brief to the U.S. Supreme Court on rescission, but is wondering, as things stand whether she has any right to sue for damages. When our team prepares a complaint or other pleading for a lawyer or homeowner we concentrate on the elements of what needs to be present and the logic of what we are presenting. It must be very compelling or the judge will regard it as just another attempt to get out of justly due debt.

Let us help you plan your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS IS NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.

Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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Combining fact patterns from multiple inquiries we start with a homeowner who actually sent two notices of rescission (2010 and 2017). Questions vary from who do I sue for damages to how do I get my title back?

Note that the biggest and most common error in rescission litigation is that the homeowner attempts to (a) have the court declare the rescission effective contrary to their own argument that it is already effective by operation of law, 15 USC §1635, and (b) seek to enforce the TILA rescission statutory duties beyond one year after rescission.

Whether you can sue for damages is one question. Whether the rescission had the effect of removing the jurisdiction, right or authority to dispossess you of title is another. And whether title ever changed is yet another. Yes you can sue for damages if not barred by a statute of limitations. Yes authority is vitiated by operation of law regardless of the status of litigation. And NO, title never changed and you probably own your house unless state law restricts your right to claim such ownership.

All three questions are related.
Taking the last question (did title actually change?) first, my opinion is that the rescission was effective when mailed. Therefore the note and mortgage were void. The failure of the alleged “lender” to comply with the rescission duties and then pursue repayment within one year from the date of rescission bars them from pursuing the debt. So at this point in time (equally applicable to the 2017 rescission notice) there is no note, mortgage or enforceable debt.
  • Hence any further activities to enforce the note and mortgage were legally void. And that means that any change of title wherein a party received title via any instrument executed by anyone other than you is equally legally void. In fact, that would be the very definition of a wild deed.
  • The grantor did not have any right, title or interest to convey even if it was a Sheriff, Clerk or Trustee in a deed of trust.
  • Any other interpretation offered by the banks would in substance boil down to arguments about why the rescission notice should not be effective upon mailing, like the statute says and like SCOTUS said 9-0 in Jesinoski.
  • CAUSES OF ACTION would definitely include
    • the equitable remedy of mandatory and prohibitive injunctions to prevent anyone from clouding your title or harassing you for an unenforceable debt would apply. But as we have seen, the trial courts and even the appellate courts refuse to concede that the rescission notice is effective upon mailing by operation of law, voiding the note and mortgage.
    • such a petition could also seek supplemental relief (i.e., monetary damages) and could be pursued as long as the statute of limitations does not bar your claim for damages. This is where it gets academically interesting. You are more likely to be barred if you use the 20010 rescission than you are if you use the 2016 rescission.
    • a lawsuit for misrepresentation (intentional and/or negligent) might also produce a verdict for damages — compensatory and punitive. It can be shown that bank lawyers were publishing all over the internet warning the banks to stop ignoring rescission. They knew. And they did it anyway. Add that to the fact that the foreclosing party was most often a nonexistent trust with no substance to its claim as administrator of the loan, and the case becomes stronger and potentially more lucrative.
    • CLASS ACTION: Mass joinder would probably be the better vehicle but the FTC and AG’s (and other agencies) have bowed to bank pressure and made mass joinder a dirty word. It is the one vehicle that cannot be stopped for failure to certify a class because there is not class — just a group of people who have the same cause fo action with varying damages. The rules for class actions have become increasingly restrictive but it certainly appears that technically the legal elements for certification fo the class are present. It is very expensive for the lawyers, often exceeding $1 million in costs and expenses other than fees.
    • Bottom line is that you legally still own your property but it may take a court to legally unwind all of the wrongful actions undertaken by previous courts at the behest of banks misrepresenting the facts. Legally title never changed, in my opinion.

Taking the second question (the right to dispossess your title) my answer would obviously be in the negative (i.e., NO). Since there was no right to even attempt changing title without the homeowner’s consent and signature, petitions to vacate such actions and for damages would most likely apply.

  • This question is added because the courts are almost certainly going to confuse (intentionally or not) the difference between unauthorized actions and void actions.
  • The proper analysis is obviously that the rescission is effective upon mailing by operation of law.
  • Being effective by operation of law means that the action constitutes an event that has already happened at the moment that the law says it is effective. If a court views this simply as “unauthorized” actions then it will most likely slip back into its original “sin”, to wit: treating rescission as a claim rather than an event that has already transpired.

And lastly the issue of claims for damages. There are different elements to each potential cause of action for damages or supplemental relief. I would group them as negligence, fraud, and breach of statutory duty.

  • As to the last you are barred from enforcing statutory duties in the TILA rescission statute if you are seeking such relief more than one year after rescission. But there are other statutes — RESPA, FDCPA and state statutes that are intended to provide for consumer protection or redress when the statutes are violated. There are statutory limits on the amount of damages that can be awarded to a consumer borrower.
  • Fraud requires specific allegations of misrepresentations — not just an argument that the position taken by the banks and servicers was wrong or even wrongful. It also requires knowledge and intent to deceive. It is harder to prove first because fraud must be proven by clear and convincing evidence which is close to beyond a reasonable doubt. Second it is harder to prove because you must go into “state of mind” of a business entity. The reward for proving fraud is that it might open the door to punitive damages and such awards have been in the millions of dollars.
  • Negligence is the easier to prove that it is more likely than not that the Defendant violated a statutory or common law duty — a duty of care. So the elements are simple — duty, breach of that duty, proximate cause of injury, and the actual injury. Negligent misrepresentation and negligent super vision and gross negligence are popular.
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