see https://livinglies.me/2019/10/11/update-and-review-of-tila-rescission-15-u-s-c-%c2%a71635-beach-v-great-western-fla-and-beach-v-ocwen-federal/
I think you need to emphasize more that rescission is an event that takes place upon the mailing of the notice of rescission. The error of the lower courts all stems from the fact that they treat TILA rescission as a claim. They either do it directly in direct conflict with the Jesinoski decision or they are doing it indirectly by characterizing the position of the homeowner as pressing a claim under the Truth in Lending Act. Neither one is true.
If you are pressing a claim for a remedy under TILA and more than one year has passed you are most likely barred by a one year statute of limitations on TILA claims. But you don’t need TILA after you sent the notice of TILA rescission within 3 years from the date of the loan closing.
This is where the courts, who hate TILA and are revolted by TILA rescission, twist the facts and the law if you let them. The key is to be clear on what you are doing and what you are not doing.
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The homeowners claim is based on title which was affected on the day that rescission became effective.
TITLE CHANGED THAT DAY AS A MATTER OF LAW.
The remedy is under State statutes and common law for ejectment, eviction, and a declaration of rights, together with mandatory and prohibitive injunctive relief, and possibly damages for trespass. None of those arise from ANY remedy set forth in the truth in Lending Act. The matter is in controversy solely because the creditor or the alleged representative of the Creditor failed to comply with the Statute by filing a satisfaction of mortgage.
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The error of the lower courts is in misconstruing the claim of the homeowner. Judges do so intentionally and happily since they do not approve of a homeowner canceling a loan agreement with the stroke of a pen — but that is exactly how the law reads and for good reason. It was either that or create a huge Federal Bureaucracy to review every closing — because consumers were clearly helpless compared with the sophistication of financial institutions and non-bank lenders.
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The findings of fact adopted by Congress and the President when TILA was discussed and passed in the 1960’s was that mortgage closing documents are impossible for the average borrower to read, much less understand without degrees in law and finance.
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So Congress passed specific laws concerning specific disclosures in plain language that the borrower could understand without being deceived or mislead. Specifically the true facts about viability of the loan — which is the burden of the lender, not the borrower —must be disclosed in detail.
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In addition ALL compensation of every kind arising from the borrower’s signature on the loan documents must be disclosed. But in fact compensation was NEVER fully disclosed where securitization was in play. Thus TILA rescission was almost always justified.
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If those requirements were not met to the letter, the parties acting as lenders were subject to draconian penalties —
- first, loss of interest and fees
- second loss of the note,
- third loss of the mortgage encumbrance, and
- fourth, loss of the entire debt.
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Where notice of TILA rescission was sent years earlier than the date that foreclosure was allegedly started, the simple defense is that foreclosure impossible because the mortgage does not exist because, as a matter of law, it was canceled and rendered a legal nullity (void) the day that the notice of TILA Rescission was sent. Since the foreclosure was a legal nullity it can always be attacked for lack of jurisdiction which cannot be waived.
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In a Quiet Title Action or Petition for Declaratory, Injunctive and Supplemental Relief, the homeowner is not seeking enforcement of the statutory duty under TILA, although it may be possible to do so. Homeowner is seeking to prevent and prohibit anyone from asserting any rights in connection with the property arising from a mortgage that exists in the title record solely because one or more parties violated the statutory duties set forth in the rescission statute 15 U.S.C. §1635. As the owner of the property in fee simple absolute the homeowner obviously has standing to protect their title interest and the quiet enjoyment of the property.
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But the courts insist on treating the mere mention of a prior notice of rescission as a claim, then applying the three year limitation they conclude that the homeowner has no standing to raise it. Somehow lawyers are not following simple logic. It’s just another example of how the lower courts are twisting the law. The decisions in the Beach and Jesinoski cases make it clear what happens in TILA Rescission. The ONLY way that a court could arrive at the erroneous conclusion that the homeowner lacked standing is by characterizing their deed as a claim.
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Such a characterization is not just error. It is tomfoolery. If such decisions are not reversed it paves the way for a day when nobody’s title is clear and marketable because a warranty deed in fee simple absolute could then be regarded as a claim that somehow had to be renewed periodically. No such law exists. No such law can exist in an orderly society.
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PRACTICE NOTE:
Although there are various statutes of limitation arising from claims for remedies under TILA, RESPA, FUDCPA, and other statutes, practitioners are directed to strategize based upon affirmative defenses using the same facts and the same violations. In most, if not all states, such defenses are not barred by any statute of limitations, since they are not technically claims for which the homeowner has filed suit.
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Thus you might not be able to claim damages but you can claim an amount that should offset the monetary claim against the homeowner. Between statutory damages,, attorney fees, and common law claims for consequential and even punitive damages there may be enough to entirely offset the total claim against the homeowner, thus negating the foreclosure action.
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In filing an action for quiet title or my preference, a Petition for Declaratory, Injunctive and Supplemental Relief, you should name all known parties who are sued because they have or could claim some interest in the property.
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These would include all servicers, past and present, as well as the original named lender, the aggregator (like Countrywide), the Depositor, the underwriter, the seller, the named trustee and the trust.
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The allegation should be simple and direct: none of these parties have any interest in the borrower’s payment or nonpayment of the debt because none of them have paid value for the debt and therefore none of them has ever received title to the mortgage. (A transfer of mortgage without the debt is a legal nullity).
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If the void foreclosure has been completed on paper, you need to undo it on paper with a court order arising from your client’s ownership of the property unencumbered by the mortgage or deed of trust.
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If eviction or writ of possession has resulted from the homeowner being dispossessed of the property, then various claims for damages from trespass, slander of title, etc. might apply arising from the completion of the foreclosure and not from the initial loan closing. Under the right circumstances you might even allege and prove punitive damages.
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A good case for punitive damages can be made if you can show or infer that in prior foreclosures, as well as the one at Bar, the claimant was not the recipient of title or the proceeds of sale, both of which were held for the investment bank who sold certificates to investors. Hence, the proceeds of foreclosure were never meant to pay down the debt but instead result in revenue by defrauding the court and the borrower.
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