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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Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
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 ARE 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 or 954-451-1230. 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 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.

How to Apply Federal TILA Rescission Rights

Bottom Line: TILA Rescission is looming as a major risk factor to banks and investors who were not informed about the risk of TILA Rescission. The oddity is that the investors were not purchasing the loans and in fact agreed to replace the income stream from borrowers with an income stream from a fake trust.

Court decisions are inching closer to allowing the explicit language of the TILA Rescission Statute 15 U.S.C. §1635 to control situations like any other law passed by Congress and signed into law, with unanimous approval from the Supreme Court of the United States (SCOTUS).

It is highly probable that TILA Rescission will be the undoing of the mass fraud perpetrated on the word in which the banks unlawfully created an illusion of being principals when there was a profit to be made but as intermediaries when there was a loss.

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Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
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 ARE 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 or 954-451-1230. 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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  1. If we can show that the TILA Rescission Notice was sent/delivered within 3 years of the date of the presumed consummation, then it would be foolish not to raise the issue in blazing lights. But any pleading based upon the rescission should avoid any semblance of being a claim for rescission or relief based upon rescission (i.e., enforcement of the TILA Rescission statutory duties) because the statute of limitations has clearly run on that in most cases. Any such pleading should emphasize that rescission has occurred — i.e., that the written loan contract has been replaced with the statutory scheme — and that the claimants should be barred from avoiding that simple fact. Further, given the same statute of limitations in TILA, the claimants are now barred from pursuing the debt which has expired. Ignoring the rescission was a fatal decision by the claimants who lost not only their right to enforce the paper instruments, but the debt as well.
  2. Notwithstanding some erroneous decisions rendered by state court and even federal courts (other than SCOTUS) there is no statute of limitations that applies to a notice of rescission sent within 3 years of the supposed consummation. Rescission is an event (like a  deed) not a claim. It is effective “by operation of law.”
  3. If the proof shows that the notice of TILA rescission was sent more than 3 years after the presumed date of consummation it is my opinion that SCOTUS will eventually treat it the same as the above paragraph. BUT, a big caveat here, is that SCOTUS might throw a bone to the banks. They could do that by saying that rescission notices that appear from their face to be sent after the three year “expiration” date could be reviewed by the court and declared void ab initio with affirmative pleading, thus removing the judicial standing impediment that the banks face (they have no creditor who would fulfill the requirements of judicial standing). Thus while my analysis shows that SCOTUS and  Congress clearly see the TILA rescission statute as a procedural statute and not a substantive one, there remains a possible interpretation by the high  court that would eviscerate rescissions outside the three year limitation. This is also the opinion of many lawyers who have carefully analyzed the situation, like Beth Findsen in Arizona. I don’t think that is right, but I can see how that could occur.
  4. The 3 year limitation is a viable defense for the creditor, just as the other restrictions on TILA rescission (lack of disclosures, purchase money mortgage etc.). All defenses must be raised as affirmative pleading to vacate the rescission or they are nothing at all. An affirmative pleading would be a lawsuit to vacate the rescission or affirmative defenses raised in a lawsuit brought by the borrower. But since rescission automatically voids the note and mortgage, those instruments cannot be used to plead or even imply standing. 
  5. Multiple deliveries of the rescission notice are a two edged sword particularly if they each bear different dates. Oddly this draws in a separate analysis. If rescission is truly an event as Congress and SCOTUS (and I) have stated, then NOBODY can rescind the rescission without a court order — not even the borrower. Any act undertaken in spite of the existence of a deed or rescission is void, in the sense of a wild deed, particularly if it is recorded in the county records. A new agreement could be reached but the rescission stands until a court order is entered changing the situation. The new agreement would likely be subject to disclosure requirements.
  6. What all of this means is that title could not have been changed even with court orders after the sending/delivery of the TILA Rescission. Here the high court will have a more difficult time allowing any foreclosure sale to stand in the absence of an affirmative pleading seeking to vacate the rescission and an order granting the demand. Title issues are a matter within the bounds of state law, not Federal law except where preempted, as in the TILA Rescission statute.
  7. But in the absence of an affirmative pleading, a trial on the merits, and a final  judgment or order, the state courts would have no jurisdiction over the subject matter and avoidance of the TILA Rescission would be without authority to do so under the US Constitution Article III. The logic is simple, the paper instruments  upon which the foreclosure was brought do not exist and did not exist at the time of the foreclosure sale. Hence title could not change without due process — i.e., a trial on the issue of whether the rescission should be vacated. The caveat here is that SCOTUS could again carve out something for the banks, because this would leave millions of homeowners retaining title to their homes long after the foreclosure sale. They might invent some doctrine based upon laches or some such doctrine that would bar homeowners from asserting their title after some period of time after the foreclosure sale.

9th Circuit Creeps Up the Ladder in Hoang TILA Rescission Breakthrough

This case comes the closest yet to the truth about TILA Rescission. And it requires that TILA Rescission be applied — if there is an action to enforce within the statute of limitations covering contract actions in the state in which the property is located.

The court’s conclusion that there must be a statute of limitations is derived from its erroneous assumption AGAIN that TILA rescission is a claim rather an event. Jill Smith has done an outstanding job of moving us toward the final step in TILA REscission, to wit: TILA Rescission is procedural and it is an event. Once delivered it has ended the loan, the note and the mortgage by operation of law, just as the statute says. There is no statute of limitations on an event because it is not a claim.

Only a claim for breach of TILA duties could be subject to a statute of limitations. Failure to file suit, as specifically and expressly pointed out by a unanimous SCOTUS decision in Jesinoski does not affect the effect of TILA rescission. Courts don’t like it but that is the law and now this court has moved up to the precipice of saying exactly that.

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Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.
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 ARE 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 or 954-451-1230. 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.
===========================

Hoang v Bank of America 12-6-18

See also ! Financial Freedom Acquisition LLC v. Standard Bank & Trust Co., 2015 IL 117950

! Financial Freedom Acquisition v Standard Bank -Analysis

! If You Own Your Home in a Land Trust

TILA Rescission is no more a claim than a warranty deed. It just exists. You don’t need to sue periodically because by operation of law (the exact wording of the TILA REscission statute) the deed exists and confirms title. In the same way TILA Rescission eliminated the lien encumbrance, the note and even the loan agreement and replaces it with a statutory “agreement” to unwind the debt.

The note and mortgage remain void throughout any time period after the notice of rescission is sent. This court gets close but veers off what they obviously believe is a radical end result — i.e., that the right to claim the debt expires if the creditor fails to comply with the duties imposed by TILA REscission and refuses to even acknowledge the existence of the rescission. That “radical result” is precisely what is mandated by the statute and the courts have no right to legislate it away. The legislature has that power but not the courts. Simple as that.

Contrary to what this court is saying a demand for injunction (as one would do under authority of a valid warranty deed) is NOT a lawsuit to enforce the rescission. The rescission is already in force. And the note and mortgage no longer exist. A Lawsuit to enforce the rescission would ONLY be a lawsuit that seeks to enforce the statutory duties during the time allowed by the statute of limitations in TILA which everyone agrees does not apply.

Ultimately the statute says that regardless of ANY defense a claimed creditor might have (including limitations which is an affirmative defense) the rescission is effective when delivered (mailed under USPS). Even the three years can only be raised by a party with standing and who can prove it WIThout reference to the note or mortgage. Real facts showing they paid for the debt . Those facts don’t exist and most people know it. But because of the “free house” myth they continue to flout the law and legislature from the bench.

But this case almost gets me over the hump where I can say “I told you so.”

Here are some notable quotes from this very important decision.

If a creditor fails to make required disclosures under the Truth in Lending Act (TILA), borrowers are allowed three years from the loan’s consummation date to rescind certain loans.1 15 U.S.C. § 1635(f). Borrowers may effect that rescission simply by notifying the creditor of their intent to rescind within the three-year period. Jesinoski v. Countrywide Home Loans, 135 S. Ct. 790, 792 (2015). TILA does not include a statute of limitations outlining when an action to enforce such a rescission must be brought

On April 15, 2013 (within the three-year period), Hoang sent the Bank notice of intent to rescind the loan under TILA. The record reflects that the Bank took no action in response to receiving the notice.

Once a borrower rescinds a loan under TILA, the borrower “is not liable for any finance or other charge, and any security interest given by the [borrower] . . . becomes void upon such a rescission.” 15 U.S.C. § 1635(b); see 12 C.F.R. § 226.23(a)(3). Within 20 days after the creditor receives a notice of rescission, the creditor must take steps to wind up the loan. 15 U.S.C. § 1635(b). “Upon the performance of the creditor’s obligations under this section, the [borrower] shall tender the property to the creditor . . . [or] tender its reasonable value.” Id. Once both creditor and borrower have so acted, the loan has been wound up.

However, the Supreme Court altered that usual procedure in Jesinoski. It eliminated the need for a borrower to bring suit within the three-year window to exercise TILA rescission. Instead, “rescission is effected when the borrower notifies the creditor of his intention to rescind.” Jesinoski, 135 S. Ct. at 792. “[S]o long as the borrower notifies within three years after the transaction is consummated, his rescission is timely. The statute does not also require him to sue within three years.”

A party may amend its pleading with the court’s leave, which “[t]he court should freely give . . . when justice so requires.” Fed. R. Civ. P. 15(a)(2). “This policy is to be applied with extreme liberality.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (internal quotation marks omitted). “Dismissal with prejudice and without leave to amend is not appropriate unless it is clear on de novo review that the complaint could not be saved by amendment.” Id. at 1052. Leave to amend can and should generally be given, even in the absence of such a request by the party. See Ebner v. Fresh, Inc., 838 F.3d 958, 963 (9th Cir. 2016) (“[A] district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.”).

 

TILA RESCISSION: W.V. Federal District Court:”LENDER” MUST FILE SUIT, DAMAGES AWARDED TO BORROWER

major hat-tip to Charles Cox in Nevada.

Federal Judge’s response to chicken little argument: [2] RMS argues that enforcing the statute as written would upend the mortgage industry. As noted, lending institutions faced with a notice of rescission have many options to protect their interests and ensure that the borrower is able to tender the loan proceeds. Most obviously, creditors may provide the required disclosures to limit the rescission period to three days, when parties are more likely to be able to easily return to the status quo. The Court is unconvinced that creditors will be unable to protect their financial interests if they are required to comply with § 1635 according to its terms.”(e.s.)

And that, my friends is the end of the free house myth and the sky is falling argument for making homeowners pay for bank malfeasance and negligence.

As I have said and predicted, the language of the TILA Rescission statute 15 USC §1635 is clear and unambiguous. This decision will eventually pull the plug on all claims of securitization whether true or false.

The problem for the financial industry is (a) they have no way of actually identifying the debt from the perspective a creditor and (b) therefore they have no creditor to identify. In order to file a claim to change or vacate the notice of rescission they must allege and prove standing without the void note and void mortgage. That requires a creditor.

However this case does not test the three year express limit on TILA rescission. I say that all rescissions are effective by operation of law when delivered (or mailed using USPS) regardless of whether or not the rescission is contested. I say that TILA Rescission creates a procedural hurdle that the banks have been dancing around for over a decade. The three year limitation could be an adequate defense and grounds to vacate the TILA rescission — but only if “someone” asks for it and that “someone” must be a party with standing that does not rely on the void note and void mortgage. This is an issue for another day.

Thre question in this case is whether there will be an appeal and if so, in whose name?

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

I provide advice and consent to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.

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 ARE 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 or 954-451-1230. 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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see LAVIS v. REVERSE MORTGAGE SOLUTIONS LLC Dist

For more discussion on TILA Rescission just use the search bar here on this blog “TILA RESCISSION.”

Without further comment ad nauseum but with at least one well-deserved “I told you so” here are some significant quotes from a West Virginia District Court Judge:

RMS conceded that it could not demonstrate that Ms. Lavis was provided notice of her right to rescind, which extended the time in which Ms. Lavis could exercise that right. Ms. Lavis cites the testimony from RMS’ corporate representative, confirming that it had a copy of her notice of rescission, with a receipt stamp dated May 17, 2016, and that RMS did not release the deeds of trust or file a civil action to maintain the lien within twenty days after that notice.

The Court further finds that RMS failed to preserve any right to tender from Ms. Lavis. Ms. Lavis took all appropriate steps required under the statute to rescind and to protect her rights. Despite its status as a sophisticated entity with access to the expertise of counsel, RMS did nothing in response to Ms. Lavis’ notice of rescission. It did not take steps to terminate her security interest. It did not request that she proffer regarding her ability to tender or submit a request for a specific amount in tender. It did not file suit to preserve its right to tender or to delay its obligation to terminate the security interest pending Ms. Lavis’ demonstration of an ability to tender the loan proceeds. After Ms. Lavis filed this action to enforce her rights, RMS did not file a counterclaim for return of the loan proceeds. It did not file a motion or other response requesting that the Court alter the procedures set forth in 15 U.S.C. § 1635(b). Instead, it continued to insist, even through the end of trial and in its briefings considered here, that it could simply ignore Ms. Lavis’ rescission of the loan.[2](e.s.)

 

The evidence related to rescission was not significantly in dispute, although the parties vigorously dispute the legal implications of the facts. RMS did not provide Ms. Lavis with required disclosures regarding the right to rescind at the loan closing, giving her three years to exercise her right to rescind. Ms. Lavis sent a letter, dated May 12, 2016, informing RMS that she was exercising her right to rescind. Although RMS does not dispute that Ms. Lavis retained the right to rescind, it did nothing in response to the letter. To date, RMS has taken no steps to effectuate rescission or to honor its statutory obligations triggered by Ms. Lavis’ letter.

15 U.S.C. § 1365(b) sets forth the procedures involved in rescission, using mandatory “shall” language. Within twenty days after an obligor exercises the right to rescind, “the creditor shall return to the obligor any money or property given as earnest money, down payment, or otherwise, and shall take any action necessary or appropriate to reflect the termination of any security interest created under the transaction.” 15 U.S.C. § 1635(b) (emphasis added.) This language is not permissive.

The Court has repeatedly held that the clear language of the statute, as well as the Supreme Court’s discussion of the issue in Jesinoski v. Countrywide Home Loans, Inc., demonstrate that, absent a suit or motion to alter the procedures set forth in the statute and regulations, a creditor’s obligation to return funds and terminate the security interest precedes any obligation of the borrower to tender loan proceeds. 135 S.Ct. 790, 793 (2015).

The Court further finds that RMS failed to preserve any right to tender from Ms. Lavis. Ms. Lavis took all appropriate steps required under the statute to rescind and to protect her rights. Despite its status as a sophisticated entity with to the expertise of counsel, RMS did nothing in response to Ms. Lavis’ notice of rescission. It did not take steps to terminate her security interest. It did not request that she proffer regarding her ability to tender or submit a request for a specific amount in tender. It did not file suit to preserve its right to tender or to delay its obligation to terminate the security interest pending Ms. Lavis’ demonstration of an ability to tender the loan proceeds. After Ms. Lavis filed this action to enforce her rights, RMS did not file a counterclaim for return of the loan proceeds. It did not file a motion or other response requesting that the Court alter the procedures set forth in 15 U.S.C. § 1635(b). Instead, it continued to insist, even through the end of trial and in its briefings considered here, that it could simply ignore Ms. Lavis’ rescission of the loan.[2](e.s.)

A finding that RMS is entitled to tender, despite its disregard of its obligations over a period of years and its failure to take any measures to preserve its rights under the statute, would incentivize lending institutions to follow RMS’ poor example.

Rescission Article for the Banks

Hat tip to anonymous tipster

I have previously posted articles written by lawyers who researched and analyzed the TILA rescission statute 15 U.S.C. §1635 et seq. The bottom line is that they all have come to the same conclusions that I have after 12 years of study. The latest one brought to my attention was written probably before January, 2015, when the Jesinoski decision was published by the United States Supreme Court (SCOTUS).

The interesting thing about this article, written for in-house counsel for lenders, is that it obviously predates the Jesinoski decision (January, 2015) by SCOTUS. The thrust of the article is that borrowers must bring a lawsuit to effectuate TILA rescission within 3 years. The law of the land is that borrowers do NOT need to file suit to effectuate rescission and that to do so would be redundant because TILA Rescission is effective on delivery “by operation of law.”

Despite thousands of court decisions based upon that exact premise, the U.S. Supreme Court reached the obvious conclusion that such a view conflicts with the wording of the statute that says the rescission is effective, by operation of law, on the date of delivery or mailing. In effect SCOTUS reversed thousands of decisions by trial courts, appellate courts and even State Supreme Courts.

So the interesting point is that once you read the whole article you must read it again and exclude or remove the notion that there is some burden, rule or law that requires the homeowner to bring it to court and that the burden of going to court and applying for relief from the TILA rescission is squarely on the creditor, and must be exercised within 20 days; any ability of the “lender” to stonewall or extend the 20 day period would enable the foreclosing party to block the ability of the borrower to obtain alternative financing to pay back the principal. The session notes for the legislation make it very clear that Congress was removing all possible tools for the banks to “stonewall” the TILA rescission.

You must remember that the banks were instrumental in drafting TILA back in the 1960’s. There is no surprise here. Faced with two potential methods of policing the banks Congress chose the one advocated by the banks — a provision handing the control over the loan contract completely and entirely to the borrower. The results were draconian to be sure, but they were intended to be draconian because Congress did not want to establish a new federal agency to review all loan contracts.

So once you read the article for a second time you will come to the same conclusion that I did in 2008 — that the attorneys for the banks agree with my statements and analysis 100%. But what these attorneys don’t know is that their clients have no way of introducing a party with standing to challenge the TILA rescission. Hence the advice of filing a motion in court to establish rescission procedure is falling on deaf ears.

And the second thing these attorneys for the banks don’t understand is that TILA rescission is a risk factor to the issuance of “certificates” by an alleged trust. It’s a risk factor that was never publicized. And when the borrower is successful, by operation of law, in sending a notice of rescission it is game over — nobody except the owner of the debt can possibly bring the challenge to the TILA rescission. There MIGHT be some wiggle room as to whether the 3 year limitation is a statute of repose (barring equitable tolling) or a statute of limitations.

But either way, applying the express wording of the TILA Rescission statute, any challenge to a notice of rescission must be made by a party with legal standing within 20 days of the date on which the rescission became effective. Standing after any notice of TILA rescission cannot rely on ownership or possession of the note or mortgage. They were rendered void by sending the notice.

A claim may not be based upon void documents. There simply is no subject matter jurisdiction where, after notice of rescission has been delivered, the claims against the borrower for repayment of the debt are based upon the void (by operation of law) note and mortgage.

See Locke Lord TILARescission-Perdew

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

I provide advice and consent to many people and lawyers so they can spot the key elements of a scam. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.

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 TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. 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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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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