Seminars for Layman (Pro Se Litigants) and For Lawyers
TILA RIGHT OF RESCISSION and CONSEQUENCES
TRUTH IN LENDING
FEDERAL CIVIL COURT, FEDERAL BANKRUPTCY, STATE COURT INFORMATION
THIS POST RELATES ONLY TO RESCISSION UNDER TILA. IT SHOULD BE REMEMBERED THAT THERE ARE MULTIPLE GROUNDS FOR RESCISSION AND CANCELLATION OF THESE NOTES AND POSSIBLY TREBLE DAMAGES FOR USURY. SEE HOLDER IN DUE COURSE IN GLOSSARY.
I have been inundated with TILA questions. So I went out hunting to see if anyone had already written about it in terms that a lay person might be able to understand. What I found is shown below. I believe it to be generally correct and the citations are good citations of law. See this site for the entire write-up. It should give most lay people an idea on how to handle this and it will be valuable to your lawyer if he/she is not totally familiar with the TILA context. http://www.rcxloan.com/Civil_Action__BK__Motion_14.htm. As always, we are available to answer questions and direct you to the proper people to get expert help and advice.
MY ANSWER TO OUR READER’S QUESTIONS:
- TILA Rescission is self enforcing. It automatically extinguishes the lien and the liability. The time for rescission does not run until you actually knew the full scope of the violation. That is tantamount to it never running out.
- YOU CAN ASSERT AND SHOULD ASSERT TILA VIOLATIONS IF YOU CAN BEFORE YOU ARE IN FORECLOSURE OR EVEN IF YOU ARE CURRENT IN YOUR PAYMENTS.
- Judge is required to look for authority himself if you are representing yourself without a lawyer (pro se). This provision in effect makes the Judge your lawyer and your Judge. Pretty good combination for you.
- Judge has no discretion to deny damages, refunds etc to Borrower once a violation of TILA, no matter how small, is discovered.
- TILA Rescission is NOT barred before during or after other proceedings unless those other proceedings specifically mention rescission as an issue to be tried.
- Federal Action for injunction against the players to require them to file documents canceling the documents of record and providing judgment for damages and refunds is probably the best action since that is what is contemplated.
- If in bankruptcy, it should be pled in an adversary proceeding. But if the bankruptcy is primarily related to the foreclosure the better practice would be to file in the same Federal Court, Civil Division, a complaint for violation of TILA rescission.
- A Quiet TItle Action in State Court would probably also be a good idea before, during or after the Federal action. It clears up any doubt whatsoever about the status of title or the lender’s lien or encumbrances.
- THIS IS INFORMATION YOU NEED BECAUSE THE LATEST LENDER STRATEGY SEEMS TO BE FOR THE LENDER TO IGNORE THE RESCISSION NOTICE. THE LENDER IS BETTING YOU WON’T KNOW WHAT TO DO.
- Suggestion: If you are in Court and you have opted or are ordered to settlement, try to get a paragraph in the mediation order that requires all decision-makers to be present, whether they are parties or not. This would include the holders of securities who are the ultimate owners of the mortgage. (You may get a pleasant surprise. We have reports that the lenders sometimes can’t trace them down, in which case, the foreclosure action or sale is dismissed and you have no mortgage).
TILA & Res Judicata
(Analogous to Mr. Pierre R. Augustin, Pro Se’s situation since he had never litigated fully or raised any TILA claims affirmatively or defensively) –
A rescission action may not be barred by prior or subsequent TIL litigation which did not involve rescission (Smith v. Wells Fargo Credit Corp., 713 F. Supp. 354 (D. Ariz. 1989) (state court action involving, inter alia TIL disclosure violations did not bar a subsequent action based on rescission notice violations in conjunction with same transaction which were not alleged or litigated in prior action) (See also In re Laubach, 77 B.R. 483 (Bankr. E.D. Pa. 1987) (doctrine of merger bars raising state and federal law claims arising from a transaction on which a previous successful federal TILA action was based; merger does not bar, however, rescission-based on the same transaction)).
IX. Timely Notified Lenders/Attorneys of TILA Right of Rescission
Mr. Pierre R. Augustin, Pro Se filed a copy of the notice of rescission letter (See Exhibit 5) in the bankruptcy court notifying the attorneys representing DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance as well as having certified receipt return of proof of delivery to the Lawyers including are proof of notification according to the Official Staff Commentary, 226.2(a)(22)-2 as authorizing service on attorney.
The Truth-in-Lending law empower Mr. Pierre R. Augustin, Pro Se to exercise his right in writing by notifying creditors of his cancellation by mail to rescind the mortgage loan transactions per (Reg. Z §§ 226.15(a)(2), 226.23(a)(2), Official Staff Commentary § 226.23(a)(2)-1) and 15 U.S.C. § 1635(b).
Equitable Tolling
The filing of Bankruptcy tolls or extends the rescission time as Mr. Pierre R. Augustin, Pro Se had filed for bankruptcy on September 26, 2005 and obtained a discharge on September 26, 2006.
Also, the principle of equitable tolling does apply to TILA 3 years period of rescission since despite due diligence, Mr. Pierre R. Augustin, Pro Se could not have reasonably discovered the concealed fact of TILA violations in-depth and explicitly until September 17, 2006 at about 5 a.m. in reading the Truth-in-Lending book by the National Consumer Law Center.
The equitable tolling principles are to be read into every federal statute of limitations unless Congress expressly provides to the contrary in clear and ambiguous language, (See Rotella v. Wood, 528 U.S. 549, 560-61, 120 S. Ct. 1075, 145 L. Ed. 2d 1047 (2000)). Since TILA does not evidence a contrary Congressional intent, its statute of limitations must be read to be subject to equitable tolling, particularly since the act is to be construed liberally in favor of consumers.
Security Interest is Void
The statute and regulation specify that the security interest, promissory note or lien arising by operation of law on the property becomes automatically void. (15 U.S.C. § 1635(b); Reg. Z §§ 226.15(d)(1), 226.23(d)(1).
As noted by the Official Staff Commentary, the creditor’s interest in the property is “automatically negated regardless of its status and whether or not it was recorded or perfected.” (Official Staff Commentary §§ 226.15(d)(1)-1, 226.23(d)(1)-1.).
Also, the security interest is void and of no legal effect irrespective of whether the creditor makes any affirmative response to the notice. Also, strict construction of Regulation Z would dictate that the voiding be considered absolute and not subject to judicial modification.
This requires DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance to submit canceling documents creating the security interest and filing release or termination statements in the public record. (Official Staff Commentary §§ 226.15(d)(2)-3, 226.23(d)(2)-3.)
Extended Right of Rescission
The statute and Regulation Z make it clear that, if Mr. Pierre R. Augustin, Pro Se has the extended right and chooses to exercise it, the security interest and obligation to pay charges are automatically voided. (Cf. Semar v. Platte Valley Fed. Sav. & Loan Ass’n, 791 F.2d 699, 704-05 (9th Cir. 1986) (courts do not have equitable discretion to alter substantive provisions of TILA, so cases on equitable modification are irrelevant).
The statute, section 1635(b) states: “When an obligor exercises his right to cancel…, any security interest given by the obligor… becomes void upon such rescission”. Also, it is clear from the statutory language that the court’s modification authority extends only to the procedures specified by section 1625(b).
The voiding of the security interest is not a procedure, in the sense of a step to be followed or an action to be taken.
The statute makes no distinction between the right to rescind in three day or extended in three years for federal and four years under Mass. TILA, as neither cases nor statute give courts equitable discretion to alter TILA’s substantive provisions.
Since the rescission process was intended to be self-enforcing, failure to comply with the rescission obligations subjects DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance to potential liability.
XIII. Non-Compliance
Non-compliance is a violation of the act which gives rise to a claim for actual and statutory damages under 15 USC 1640. TIL rescission does not only cancel a security interest in the property but it also cancels any liability for the Mr. Pierre R. Augustin, Pro Se to pay finance and other charges, including accrued interest, points, broker fees, closing costs and that the lender must refund to Mr. Pierre R. Augustin, Pro Se all finance charges and fees paid.
In case DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance do not respond to this default letter, Mr. Pierre R. Augustin, Pro Se has the option of enforcing the rescission right in the federal, bankruptcy or state court (See S. Rep. No. 368, 96th Cong. 2 Sess. 28 at 32 reprinted in 1980 U.S.C.A.N. 236, 268 (“The bill also makes explicit that a consumer may institute suit under section 130 [15 U.S.C., 1640] to enforce the right of rescission and recover costs and attorney fees”).
TIL rescission does not only cancel a security interest in the property but it also cancels any liability for Mr. Pierre R. Augustin, Pro Se to pay finance and other charges, including accrued interest, points, broker fees, closing costs and the lender must refund to Mr. Pierre R. Augustin, Pro Se all finance charges and fees paid.
Thus, DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance are obligated to return those charges to Mr. Pierre R. Augustin, Pro Se (Pulphus v. Sullivan, 2003 WL 1964333, at *17 (N.D. Apr. 28, 2003) (citing lender’s duty to return consumer’s money as reason for allowing rescission of refinanced loan); McIntosh v. Irwing Union Bank & Trust Co., 215 F.R.D. 26 (D. Mass. 2003) (citing borrower’s right to be reimbursed for prepayment penalty as reason for allowing rescission of paid-off loan).
XIV. Sources of Law in Truth in Lending Cases
“These include TILA itself, the Federal Reserve Board’s Regulation Z which implements the Act, the Official Staff Commentary on Regulation Z, and case law. Except where Congress has explicitly relieved lenders of liability for noncompliance, it is a strict liability statute. (Truth-In-Lending, 5th Edition, National Consumer Law Center, 1.4.2.3.2, page 11)
XV. Synopsis of How Rescission Works
The process starts with the consumer’s notice to the creditor that he or she is rescinding the transaction. As the bare bones nature of the FRB model notice demonstrates, it is not necessary to explain why the consumer is canceling. The FRB Model Notice simply says: “I WISH TO CANCEL,” followed by a signature and date line (Arnold v. W.D.L. Invs., Inc., 703 F.2d 848, 850 (5th cir. 1983) (clear intention of TILA and Reg. Z is to make sure that the creditor gets notice of the consumer’s intention to rescind)).
The statute and Regulation Z states that if creditor disputes the consumer’s right to rescind, it should file a declaratory judgment action within the twenty days after receiving the rescission notice, before its deadline to return the consumer’s money or property and record the termination of its security interest (15 USC 1625(b)). Once the lender receives the notice, the statute and Regulation Z mandate 3 steps to be followed.
XVI. Step One of Rescission
First, by operation of law, the security interest and promissory note automatically becomes void and the consumer is relieved of any obligation to pay any finance or other charges (15 USC 1635(b); Reg. Z-226.15(d)(1),226.23(d)(1). . See Official Staff Commentary § 226.23(d)(2)-1. (See Willis v. Friedman, Clearinghouse No. 54,564 (Md. Ct. Spec. App. May 2, 2002) (Once the right to rescind is exercised, the security interest in the Mr. Pierre R. Augustin’s property becomes void ab initio).
Thus, the security interest is void and of no legal effect irrespective of whether the creditor makes any affirmative response to the notice. (See Family Financial Services v. Spencer, 677 A.2d 479 (Conn. App. 1996) (all that is required is notification of the intent to rescind, and the agreement is automatically rescinded).
It is clear from the statutory language that the court’s modification authority extends only to the procedures specified by section 1635(b). The voiding of the security interest is not a procedure, in the sense of a step to be followed or an action to be taken.
The statute makes no distinction between the right to rescind in 3-day or extended as neither cases nor statute give courts equitable discretion to alter TILA’s substantive provisions. Also, after the security interest is voided, secured creditor becomes unsecured. (See Exhibit #6)
XVII. Step Two of Rescission
Second, since Mr. Pierre R. Augustin has legally rescinded the loans transaction, the mortgage holders (DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance) must return any money, including that which may have been passed on to a third party, such as a broker or an appraiser and to take any action necessary to reflect the termination of the security interest within 20 calendar days of receiving the rescission notice which has expired.
The creditor’s other task is to take any necessary or appropriate action to reflect the fact that the security interest was automatically terminated by the rescission within 20 days of the creditor’s receipt of the rescission notice (15 USC 1635(b); Reg. Z-226.15(d)(2),226.23(d)(2).
XIII. Step Three of Rescission
Mr. Pierre R. Augustin is prepared to discuss a tender obligation, should it arise, and satisfactory ways in which to meet this obligation. The termination of the security interest is required before tendering and step 1 and 2 have to be respected by DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance
XIV. Conclusion
I am requesting an itemized statement of my payment record to DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance. When Mr. Pierre R. Augustin rescinds within the context of a bankruptcy, courts have held that the rescission effectively voids the security interest, rendering the debt, if any, unsecured (See Exhibit #6). (See in re Perkins, 106 B.R. 863, 874 (Bankr. E.D.Pa. 1989); In re Brown, 134 B.R. 134 (Bankr. E.D.Pa. 1991); In re Moore, 117 B.R. 135 (Bankr.E.D. Pa. 1990)).
Once the court finds a violation such as not responding to the TILA rescission letter, no matter how technical, it has no discretion with respect to liability (in re Wright, supra. At 708; In re Porter v. Mid-Penn Consumer Discount Co., 961 F,2d 1066, 1078 (3d. Cir. 1992); Smith v. Fidelity Consumer Discount Co., Supra. At 898. Any misgivings creditors may have about the technical nature of the requirements should be addressed to Congress or the Federal Reserve Board, not the courts.
Since DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance have not cancelled the security interest and return all monies paid by Mr. Pierre R. Augustin within the 20 days of receipt of the letter of rescission of September 21, 2006, the lenders named above are responsible for actual and statutory damages pursuant to 15 U.S.C. § 1640(a).
Once again, please send me a copy of my payment history and other document showing the loan disbursements, loan charges and payment made. Also, DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance are to take any necessary or appropriate action to reflect the fact that the security interest was automatically terminated by the rescission (15 USC 1635(b); Reg. Z-226.15(d)(2),226.23(d)(2). This requires canceling documents creating the security interest and filing release or termination statements in the public record of FREE and CLEAR TITLE to Mr. Pierre R. Augustin. Thank you (TTTLMG).
May GOD Bless America,
Pierre Richard Augustin, Pro Se, MPA, MBA
28 Cedar Street, Lowell, MA 01852
Tel: 617-202-8069
TILA Pleading
Under the Federal Rules of Civil Procedures, it may be sufficient to plead that the TILA has been violated. (Fed.R. Civ. P. 8(a)).
Specific violations do not necessarily have to be alleged with particularity (Brown v. Mortgagestar, 194 F. Supp. 2d 473 (S.D. W. Va. 2002) (notice pleading is all that is required in TILA case);
Herrara v. North & Kimball Group, Inc., 2002 WL 253019 (N.D. Ill. Feb.. 20, 2002) (notice pleading sufficient; response to motion to dismiss can supplement complaint by alleging facts re specific documents assigned);
Staley v. Americorp. Credit Corp., 164 F. Supp. 2d 578 (D. Md. 2001) (Mr. Pierre R. Augustin,
Pro Se need not specify specific statute or regulations that entitle him to relief; court will examine complaint for relief on any possible legal theory);
Hill v. GFC Loan Co., 2000 U.S. Dist. Lexis 4345 (N.D. Ill. Feb. 15, 2000).
The consumer’s complaint need not plead an error exceeded the applicable tolerance, since this is an affirmative defense (Inge v. Rock Fin. Corp., 281 F.3d 613 (6th cir. 2002)).
In page 2 (See Exhibit 1) of Mr. Pierre R. Augustin, Pro Se’s civil complaint, he stated that TILA was in of the Jurisdiction of all the claims against the creditors or defendants in that civil action.
At #6 of page 14 (See Exhibit 2) of civil complaint, Mr. Pierre R. Augustin, Pro Se explicitly stated that the New Century Mortgage Note which is now assigned to Chase is in violation of TILA and Regulation Z claims.
In page 17 of the civil complaint, Mr. Pierre R. Augustin, Pro Se did mention rescission and statutory damages (See Exhibit 3).
Filed under: bubble, CDO | Tagged: damages, finance charges, foreclosure, interest, lender, notice, points, quiet title, refunds, rescission, TILA, TILA audits, truth in lending |
So, what is the final position the borrower finds himself in after recision? I mean, the agreements are voided and you get all the money back from the lender(s) since they had no legal right to collect money from you, but don’t the lenders (pretenders of course) have a legitimate claim in equity (e.g. unjust enrichment, etc) that centers around the fact that they still paid out money to a third party on the borrower’s behalf? Don’t get me wrong, I’d rather defend this scenario on behalf of the borrow than be under the guise of a legitimate deed of trust, but it just seems that there is another part of the rescission tactic that is not being discussed.
I need you to contact me I need to know how to write and form to use to file for violations of tila. I sent notice recession and 20 days has passed I now want to file in district court but I dont know how to style my form or what to state. please respond to me at email. thanks
How do I get the release on the title report after violation of the 20 day letter
please send me updates. thank you. h. zameck
Do you have any F.T,C case law , or other case law where a purchase money mortgage can be rescinded, where fraud is present.
[…] Foreclosure Defenses This is a good article published by Neil Garfield of Livinglies on TILA violations and […]
Dan-thank you. You are awesome!! Really, you should start law school asap!!
Abby,
You asked Neil:
1. in TILA law, if original lender sold the loan, does is make them not responsible if one sends them a TILA rescission letter?
2. does the TILA rescission letter then extend to the bank that purchased the loan?
3. if home was forelcosed upon but one sends TILA rescission letter to all entities involved (well within the 3 year limit), is the rescission letter valid? will it work after a foreclosure?
My answers:
1) – I believe they are still responsible but holder in due course / assignment makes the new party responsible also. If my originator was still around I would want to go after them to prove (among other things): they were NOT the actual lender (they did not supply the money) and the assignment done in foreclosure was not valid (they did NOT sell the loan to the Trustee directly and they did NOT receive consideration from the Trustee directly)
2) YES each subsequent purchase is responsible for the origination and other frauds, errors and violations.
3) Once you have been foreclosed on (inside or outside of 3 years) you can still send TILA / RESPA QWRs. You can use rescission as a defense against foreclosure.
The law regarding rescission (TILA rescission) is not that long. Locate it and read it (I don’t have it with me off-hand). Also, search for this document on the Internet and read it:
Truth-In-Lending
Disclosure Requirements, Violations, and remedies
By Leslie B. Ng
Dated June 13, 2007
Thanks,
Dan Edstrom
dmedstrom@hotmail.com
Neil
1. in TILA law, if original lender sold the loan, does is make them not responsible if one sends them a TILA rescission letter?
2. does the TILA rescission letter then extend to the bank that purchased the loan?
3. if home was forelcosed upon but one sends TILA rescission letter to all entities involved (well within the 3 year limit), is the rescission letter valid? will it work after a foreclosure?
If the security interest in the property becomes void “ab initio”, ALL credit reporting information must be removed regarding this loan. Notify the creditor of this information as soon as possible – preferably when you actually perform rescission. Failure to comply with the Fair Credit Reporting Act will subject the creditor to further liability as they will probably not perform rescission within 20 days and will probably not remove reporting history from the credit reporting agencies. Also, be sure to dispute the validity of the debt after rescission. The newly unsecured creditor now may be considered a debt collector and may be subject to the FDCPA (Federal) and your state fair debt collections law if any (RFDCPA in California). Usually a debt collector is involved anyway (at least in non-judicial states) so a debt dispute letter should be sent anyway.
Disclaimer: I am not a lawyer and this is not legal advice, this is what I am doing for my own case.
Thanks,
Dan Edstrom
dmedstrom@hotmail.com
Thanks for the reply to my previous question. The reply was good but did not address some of my concerns.
This ismy situation: I have a refiance which involves the consolidation of 2 security interests. One of the security interest is my dwelling. The other is not. This loan also involves advancement of new money. Footnote 47 of TILA reads… For purposes of this section, the addition to an existing obligation of a security interest in a consumer’s principal dwelling is a transaction. The right of rescission applies only to the addition of the security interest and not the existing obligation. The creditor shall deliver the notice required by paragraph (b) of this section but need not deliver new material disclosures. Delivery of the required notice shall begin the rescission period.
Additionally, the Official Staff Interpretations of TILA interpretate Footnote 47 as follows….. Under footnote 47, the addition of a security interest in a consumer’s principal dwelling to an existing obligation is rescindable even if the existing obligation is not satisfied and replaced by a new obligation, and even if the existing obligation was previously exempt (because it was credit over $25,000 not secured by real property or a consumer’s principal dwelling). The right of rescission applies only to the added security interest, however, and not to the original obligation. In those situations, only the §226.23(b) notice need be delivered, not new material disclosures; the rescission period will begin to run from the delivery of the notice.
This information seems to imply that my transaction is rescindiable, even if the security interest in the home that I do not live in is not sastified or replaced with a new obligation.
My question is if I don’t have to replace the mortgage in the home that I don’t live in and I cannot return the home, what is the tender? I understand that the mortgage for the home that I live in will be reinstated, but what about the home that I do not live in? I also realize that I will have to return new advances. Help!!!
Margie
Good afternoon Pierre;
Trust this finds you well and, hopefully, successful in your recision action and enjoying some of the fruits of your labors.
You were kind enough to chat on the phone with me some months back, late in the evening at your end. I am still in the somewhat “early” stages of my own action v AHMSI having issued a letter of recision, which they deny receipt even though I possess legal USPS documentation of delivery to the very same place I have sent previous certified return receipt mail in previous months. Its long past 20 days since they signed receipt for same and I have issued a notice of default letter which was sent to the same address the recision letter was sent and have USPS proof of service. I am patiently awaiting some acknowledgement which is becoming long overdue.
I have now read most of the material regarding your situation that I could find but have gone about 2 months since last review of your materials. You most certainly have done a excellent job of In Propria Persona with an abundance of legal cites, points and authorities. Your work will save me a great deal of time and I want to ask your permission to use materials you have posted on the internet to construct my own litigation. Essentially, I am asking permission to “plagiarize” your work. Please advise me if that is ok with you.
I am curious to know what exactly is the status of your action(s)
at this date. I am reviewing material you posted mid last year and up through May/June this year.
I appreciate and respect your time so please answer only when it is convenient for you.
God Bless, Respectfully,
Bruce R. Nelson
Hi.. it’s been called to my attention that both times the Loan Servicing company re-wrote my mortgage they never gave me the 3 day to cancel notice. This is not right is it ? TILA Truth and Lending Act has totally been violated.. Now I am wanting to notify them of this which should cancel out my mortgage completely. How the best way to do this? Do I really need an attorney?? I feel like i do but no funds to hire one. Is there one you could refer me to tho if one is needed? . Does the attorney have to be local to me ? I would like to do it myself due to no funds, there again , not sure I am legal knowledgable enough if it’s a complicated deal. Also how long will it take to cancel the mortgage? As I am facing Foreclosure in October. and need all of this stop’d and don’t they owe me money back ?
and Neil if you sue your lender aren’t you supposed to be provided some kind of authorization that the lender is now being represented by whichever lawfirm?
livinglies…. A question?
RE: “livinglies , on September 22nd, 2009 at 8:18 am: Margie Hamilton:
Lots of confusion surrounding the right of rescission…….”
Can whoever shows up in court as “THE LENDER” in the TILA complaint be ATTACKED for “Lack of Standing”?
Margie Hamilton: Lots of confusion surrounding the right of rescission. First, remember that TILA rescission is only ONE of MANY rights of rescission at common law, statutory law (SEC, usury etc.). Second in a TILA rescission the statute and regulations say that first you declare rescission and then the “lender” has 20 days to either send you back a satisfaction of mortgage and canceled note or to file a petition for declaratory relief with a court of competent jurisdiction. If they don’t file the petition and they don’t send back the satisfaction of the mortgage (or release and reconveyance in non-judicial states) then by operation of the law, the mortgage encumbrance is nullified. There has been very little litigation or appellate decisions on this subject so we can’t be sure how the courts will ultimately apply these very clear, explicit provisions in the law and regulations. It is only after the tender of the satisfaction of mortgage and cancellation of the note along with all money paid starting with origination of the loan, that the borrower has any obligation to “tender” money back to “lender” less any claims, counterclaims or set offs for predatory lending or other violations, damages etc.
What does a debtor have to tender in a truth in lending case if there is a security interest added to an exsisting secirity for my home. (See footnote 47 For purposes of this section, the addition to an existing obligation of a security interest in a consumer’s principal dwelling is a transaction. The right of rescission applies only to the addition of the security interest and not the existing obligation. The creditor shall deliver the notice required by paragraph (b) of this section but need not deliver new material disclosures. Delivery of the required notice shall begin the rescission period. )
Daniel Webb: Most of the material on this site is applicable to most mortgages. The TILA exceptions relate to certain remedies — not the standards of conduct for lenders.
[…] doesn’t ask for the return of the money or property. According to this post on Neil Garfield’s website, it looks like the borrower’s remedy is to file a […]
Can someone please explain how TILA affects real estate? The only thing I see has a strange statement saying that it does not apply to real estate mortgage transactions. That would mean that none of the information on this site even applies to the majority of the people reading it.
I am one of the many who find themselves in the predicament of a NOTS and attempting to thwart the pending action. The below quote is from the beginning of this page.
“The time for rescission does not run until you actually knew the full scope of the violation. That is tantamount to it never running out. ”
I have searched 15 USC section 1635 and elsewhere and have not been able to find where it says that right to rescind starts when you discover the full scope of the violation. Could someone please point me in the right direction to verify this statement either in statute or case law please?
Thanks for any help offered.
Patrick
If anyone has answers to my questions regarding my recent post regarding my modification and HOEPA OR have any further information about what I’ve read regarding a 2nd modified when a first is modified, I would greatly appreciate any response sent to: chaotic356d@aol.com
Thank you
BJ
Thank you so much for the blog!
1st & 2nd Mortgage 1/4/06 (Adjustable Rate Mtg)
1st Modified 4/15/09
2nd Mtg refuses to help stating our first mtg payment is under 31% (of course, we modified it! We don’t qualify by $500)
Q: Does the Lender have an obligation to provide a TIL for a Loan Modification Agreement (providing for temporary fixed interest rate, then adjustable interest rate) on a first mortgage?
The problem is that after reading it I realize it’s that the Maturity Date is the same yet I was behind on my payments when I signed the modification. I have no clue as to when I am suppose to make up for the missed payments.
It simply states that after 1 year of the fixed rate “Borrower will pay may change in accordance with the terms of the original Note.” Don’t ask me what “will pay may…” means because I have no clue.
The next sentence just says that I will continue to say “…. Borrower’s monthly payments may change in accordance with the terms of the original Note.”
Very confusing!
###
Additionally, I’m not sure if it was a requirement, but I signed a “Letter of Acknowledgment” which states I was to make a qualifying payment of a specified amount. The amount is incorrect and I was told not to pay it but a lesser amount with is stated in the modification.
Q: Does that void the Letter of Acknowledgment?
###
Q: What is the statue of limitation for providing the disclosures for HOEPA when the borrower had no clue they fell under HOEPA?
1- “HOEPA disclosures must be given to the borrower three business days before the consummation of the loan.”
2 – “The rescission process was intended to be self-inforcing and able to be completed without the
necessity of going to court. If the homeowner does not sell the home, the extended right of rescission
can last up to three years after the loan consummation—AND LONGER IF THE LENDER INITIATES FORECLOSURE PROCEEDINGS.”
Not sure what exactly consitutes “initiates” I did receive a letter from them demanding past due mortgage payments – which by the way we have never been late once since the modification was signed – someone has dropped the ball and I was told to keep my signed copies and a supervisor would make sure all was put to right – apparently that has not been done.
Thank you so very much for taking the time to read this and any help is greatly appreciated.
BJ
My loan is 5 years old. I just now discovered I have TILA issues with the First that was originated by Wells Fargo. The loan was then transferred to US Bank.
The second was originated by Wells Fargo but transferred to Citi Bank, Then refi’d though US Bank, then refi’d again through Bank of America. I can not find problems with the second. Regarding the first, Do still have time to file a case ?
BSEaston@cox.net
.
We have one case where after we have filed a case, the buyer in the foreclosure sale transferred the property back to the homeowner-borrower
Anyone ever have a lender comply with the notice of rescission? Or better yet is there any case law showing that a lender rescinded or lawsuits where the lender rescinded the loan?
Seems like this strategy will back-fire HUGE if you’re offered a tender by the lender when they comply with rescission. I want the house, so what happens next?
can anyone reccommend a florida attorney that can do 2 tila recissions for me
PSULLPSULL@YAHOO.COM
so what ever happened to with Nye Laville? his client? Today is March 31, 2009. How did the story end?
I rescinded my loan in June 07, Lender was non compliant, but then replied and agreed to the rescission. I have a suit filed and ongoing. They did not remove security note, they haven ‘t found the note?hmmmmmm
Now they have filed foreclosure for a second time. Last year they filed and withdrew the complaint having agreed to NJDOBI they would not foreclose, they claimed they did not know they were foreclosing.
If the borrower cannot tender, this is not a good angle if the borrower will be homeless?
This loan paid off the Mortgage Brokers loans to us, for construction, our previous mortgage, and of course a lot of fees, etc. what exactly does the lender have to return besides payments made, interest , fees, commissions? Don’t they just expect borrower to turn around and give it back? There is NO equtiy in the home, and Im sure way negative by now. What does the borrower end up with, no mortgage, but no home if we can;t tender?
There are so many components to this case. I do not believe they have Original docs. Pretty sure they sold as securities, immed. Transferred last Oct. Nov. received a threat of foreclosure then, noitfication. it had been transferred back. On the 24th March, subsidiary of the lender filed foreclosure in State Superior Court. then on the 27th the subsidiary went to the county and filed a transfer of assignment to them, from the lender. Yesterday, the 30th the subsidiary went back to the County and filed Les Pendens. I am ahead of things, they have not served me yet. I found an attorney to handle the Predatory lending cousumer fraud, misrep, etc etc. plus, forgery adding my husband’s name and signature to Mortgage. And 4 variations of their poor accounting skills Five total, HUD 1 Settlement Statements, prepared, and forged in my name, on vairous dates, and back dated to closing date, 6 weeks earlier. They never asked me to come in and sign a new one.they paid off my mortgage to previous they made all payments before receiving or even executing all documents. Knowing they needed them. My income was multiplied by 100 Plus.by the broker. He handled our financial affairs, he knew what we had, yet instisted we could afford this, and pushed us into this and paying off other debt with our mortgage, many lies, many.
??Bankruptcy, or Defend foreclosure with the missing mortgage note? I am broke now, spent all my money on the case, all my time defending myself, now here I found a lawyer on contingency and they throw this at me. I need to work and have a life, but with out a home, things are much more difficult. Everything has spiraled as a result, business suffered because my husband was distraught. He is trying in this difficult economy, to pull it back together. and i am trying to make money, but I need the time, Catch 22. The lawyer wants, $2500 to defend foreclosure, and $500. per month for his effort. I will handle myself. Don’t have a choice.
Thanks for your divine efforts, and for listening to me too.
Many abundant blessings to you.
DIck: It is a gray area as to TILA because the transaction was actually a consumer loan, usually combined with a HELOC or secondary financing and the character of the transaction was that of a securities transaction rather than a traditional first mortgage on a residential swelling. So the rescission remedy probably applies even if they say it doesn’t. And by invoking it you force them to either send the release or file a lawsuit for declaratory judgment saying you are wrong. This they don’t do because first of all they are probably wrong and you are right, second they can’t take the chance of getting a judgment against them or even for them because that could lead to an appeal. An appeal would lead to an opinion and that appellate opinion would be the LAW for all cases in that jurisdiction not just your case. Besides that there are numerous rescission and nullification remedies under common law fraud, securities fraud, and usury, just to name a few. Check with an attorney who REALLY knows this stuff before you do it in your jurisdiction, but I am leaning toward sending the rescission letter and either filing the release and reconveyance yourself under the terms of the deed of trust or mortgage or filing your own suit to quiet title. You already have a leg up because the pretender lender is (a) not the lender and (b) even if they were they are already in violation of the statute regarding what THEIR remedies are if you rescind.
Question: What are the possibilities for rescission if your loan was a purchase money mortgage (can’t rescind under TILA for this)?
Nye Lavalle
I am in the process of trying a similar agrumment in Illinois. What state are you in. I am in the process of sending the demand letter but if could get the 20 days clock ticking sooner by calling first and demanding the answers by phone I would be good with that. I am current to date and would like to not have to make a March payment and just be done with the property. Do you do work in Illinois. Shot me an email pendolinos1@sbcglobal.net thanks tony
Thanks for the case Paul. Good on several points. However, I think the equation of the balance of equities is what doomed this money grab. Lawyers on our side need to get with the program in that no judge is going to allow a “windfall” and allow someone to get their entire mortgage and home free and clear.
Seems they offered to “sell the house” which isn’t really “tender.” Also, there seems to be agreement that the borrower got the required notices.
In our case, the borrower got NO notices or a Reg Z in their file. Predatory loan. They cooked her “liar loan” application and overstated her income on the primary first mortgage application by 60% and then stated the her real income on the “silent” second that they closed on a day later, even though she was only at one closing.
Condo was sold for $230,000 and now going for $160,000 in building. So, our offer is simply this, in the next 20 days come to her condo pick up the keys, a release of all liability, and proper conveyance documents. Please bring a check for the total amount of all payments she has made with you. With kind regards….
Will keep you abreast of how it goes!
“As for tender, you can tender the home.”
I’ve seen a couple of people mention that but I’m not familiar with a single case where the ‘home’ has been deemed acceptable tender. Here is a case that would say the opposite:
http://tinyurl.com/65vv5v
Don’t get me wrong, I think it would be great if the home could be tendered back to the bank if it were possible.
As for tender, you can tender the home. In today’s market, if you are upside down, get all your money and then go out and buy a new home at today’s value prices!
I have a new system we use in doing TILA rescissions. First, I tell the client that I must tape record all of my conversations with them. You’ll see why in a minute. Next, over the phone I ask them (while taping) to go their files or where they store their mortgage documents. (borrowers almost always have one file where everything they signed in the closing is kept or in a safe deposit box).
I then ask them WHILE I AM ON THE PHONE TAPING to look for the Reg Z and Right to Rescind Notices. I do this since if they are there, they can tell me what’s on them to do a “quick check.” I also do this in case (as in many occurrences) either document is not there. This way, the lender can’t make the argument they did anything with the notices that they will claim were provided.
Next I tell them NOT TO LET ANYONE EXCEPT THEM. COPY THE FILE. Go to Kinkos and copy each document in the file and then make 2 copies of the “copies.” Take the original set given to you and get a FedEx Box or Envelop from Kinkos. Place all documents as is in the envelop/box and SEAL with packing tape each side and end that can be opened. Sign your signature and date the tape/seal.
Place the sealed box/envelop under your bed or someplace no one has access to or rent a safe deposit box and place there. What you are doing is creating a complete chain of custody so that no one can argue your auditor or counsel removed pertinent documents. The taped phone call reveals all voice inflections, frustration, surprise etc…
Next, I get on the phone with the client and call the mortgage company and we tape this call too. I ask if they are taping the call which they all say yes to. The client provides my name and authorization as their auditor (they place in system). I then ask several questions.
First, I ask if they are the servicer, investor, or hold the note in their portfolio. I then ask followup questions that seek to know where the note is physically held and who is the document custodian. I ask for the name of the trust owning the note or investor. If they are servicing or sub-servicing? Who is the holder in due course? Has the note and mortgage/deed been bifurcated at any time? Will we get the original signed in ink note back upon payoff or refinance stamped “cancelled and paid in full?” That we need to know the name of trustee and person who we can offer changes in the terms of the note to or offer to purchase the note since we want to insure clear and clean title and we have investors willing to buy the notes. If the note has been pledged to the Fed, GSE, or other party as collateral? Are there any unrecorded assignments to the note and what are they. You get my drift.
Many servicers will tell you there’s an investor and then claim their “rules and policy” dictate that they cannot give you that name, even though its in the system and right in front of them.
We often, get the person to give us this information which the borrower has the complete right to have or we call several times until we get someone to give it up.
We then trace via EDGAR the deal and find out who the claimed trustee is and who are notices for the deal to go to.
WE NOW SEND SEVERAL RESPA & TILA RESCISSION LETTERS VIA CERTIFIED MAIL TO THE CURRENT CLAIMED SERVICER AND HOLDER WE LEARNED OF AT THE ADDRESS GIVEN IN THE STATEMENT AND TO THE PERSONS LISTED IN THE SEC REGISTRATION ON EDGAR!
You now have a valid TILA Rescission and no argument that you did not do all you could do. Since the borrower is upside down, we offer to sign all of the documents necessary to convey title to WHOEVER HOLDS THE NOTE at the property address IMMEDIATELY or within the “prescribed legal time period of the statute” and please call to arrange.
If this is not done, then we will follow up with a Rule 27 (30b6 corp rep) deposition in advance of filing a lawsuit. In the lawsuit, claims for quiet title, slander of title, tortious interference with contractual relations (note owner) and business relationships (sale of note/property) are added to the other RESPA and TILA claims.
At their deposition or your client’s depo, you bring in the “sealed” envelope and introduce the evidence! You must also get their “originals” signed in ink copies and NEVER ACCEPT A COPY. They slice and splice not only the notes in securitizations, but many of the notices, mortgage applications, and information filed!
Nye Lavalle
Pew Mortgage Institute
Osorio what are your main sources?
Osorio
Thank you for the info. I am trying to educate atty and a few other folks
SOCALG
15 USC & 1635(g)
Additional relief
In any action in which it is determined that a creditor has violated this section, in addition to rescission the court may award relief under section 1640 of this title for violations of this subchapter not relating to the right to rescind.
the law provides for “Additional Relief” under section 1640 in the form of “Twice the amount of any finance charges in connection with the transaction”
1640 (a)(2)(a)(i)
Except as otherwise provided in this section, any creditor who fails to comply with any requirement imposed under this part, including any requirement under section1635 of this title, or part D or E of this subchapter with respect to any person is liable to such person in an amount equal to the sum of—
(1) any actual damage sustained by such person as a result of the failure;
(2)
(A)
(i) in the case of an individual action twice the amount of any finance charge in connection with the transaction,
So in light of this the creditor might very well end up owing money instead of receiving it.
I had to dig this one out as it seems people are not willing to help the other in trouble. One just been getting half ast recommendations and aswers.
Hope this help.
p.s. Always try to have a trust worthy legal counsel to coach you if you cannot afford a full time counsel.
Here is a question. Should the recission letter be sent to the company’s Statuary Agent or to the Company’s customer service?
Is it best to have a lawyer draft a recission letter citting the violations.?
Hello, can you tell me how we get around the tender issuse in sec 1635 (b) of TILA
I meant
Today February 17th is the 20th day after mailing the reciscion and the lender did not comply with it .
What happens how? I certified mailed letters of resiscion to all parties January 20th, 2009. Today February 17th is the 20th day after mailing the reciscion and the letter did not comply with it. This in on my primary, refinance before the 3rd year anniversary of the closing.
$300.00 for a document preparation fee by the title company to prepare settlement documents at closing were not included understated finance charges calculation.
USC 15 & 1635 (b) reads:
Within 20 days after receipt of a notice of rescission, the creditor shall return to the boligor any money or property given as earnest money, downpayment, or otherwise, and shall take any action necessary or appropriate to reflect the termination of any security interest created under the transaction. If the creditor has delivered any property to the obligor, the obligor may retain possession of it. Upon the performance of the creditor’s obligations under this section, the obligor shall tender the property to the creditor, except that if return of the property in kind would be impracticable or inequitable, the obligor shall tender its reasonable value. Tender shall be made at the location of the property or at the residence of the obligor, at the option of the obligor. If the creditor does not take possession of the property within 20 days after tender by the obligor, ownership of the property vests in the obligor without obligation on his part to pay for it. The procedures prescribed by this subsection shall apply except when otherwise ordered by a court.
Do I get to keep the property without any obligations now?
Thanks,
Bill,
No lawyer yet. Just what I have learned from Neil’s site.
Thanks,
Dan Edstrom
dmedstrom@hotmail.com
Dan, thank you for the feedback. I do have a number of tools at my disposal, but i am trying to get it organized and laid out so i dont miss anything.
How did you find a lawyer in your town that “got it” and was willing to work through the process with you? I may be one of the only people in SC to have even “Answered” a foreclosure complaint. I have finally reached the point where i realize i need help and this will be very difficult to do on my own. Yet i have a very clear case with multiple options available. The amount of confusion caused by these banks alone ought to be grounds for dismissal and quiet title!
Thanks again.
I sen
BillW,
Sure. We rescinded my loan on 12/29/2008. My loan closed on 9/7/2005. The reason? The real “lender” never gave us notices of the right to rescind. The originator gave us these notices, but the originator never lent us their own capital at risk of loss. The money came from the warehouse lender. Will the rescission work? Who knows? The servicer said it was too late for us. But they deny they have done anything wrong – even when presented with the facts. It will take a judge to rule on the issue.
You can rescind anytime you like – even within the 3 yrs. But they will almost always say you cannot rescind. Remember – rescission is only 1 of the many many items in your tool belt that fights foreclosure. If this is your only tool, you will most likely lose.
Be sure to get an audit and talk to a local attorney about the specifics of your case. I am not a lawyer and this information is just what I have heard and what is applicable to my own situation.
By the way, I notify everyone that fraud has occured, I have rescinded and that no good title passes with notice of fraud. That way, when they assign the mortgage to the company that is foreclosing, I can argue with the judge that they had notice (or should have had notice) that fraud has occurred.
Thanks,
Dan Edstrom
dmedstrom@hotmail.com
Is there ever an option to request rescission even though you are past the 3 year statute? my loan closed 3/15/2005 can I still rescind that loan with the bank? Or is my only option a TILA violation lawsuit?
Here is the link if you want to download the above referenced case.
http://docs.justia.com/cases/federal/district-courts/minnesota/mndce/0:2007cv02582/91833/20/0.pdf
I found this document on the internet I think is a very good guide for people seeking resciscion without makin the same mistakes the plaintiff’s made in this particular federal injunction request. Study it in detail and avoid getting slammed in federal court.
Randolph and Jennifer Rimstad, Civil No. 07-2582 (DWF/AJB)
Plaintiffs,
v. MEMORANDUM
OPINION AND ORDER
Wells Fargo Bank, N.A., as Trustee
for Option One Mortgage Loan Trust
2004-2, Asset-Backed Certificates Series
2004-2, Assignee; and Option One Mortgage
Corporation as Attorney-in-Fact,
Defendants.
________________________________________________________________________
Lee A. Hacklander, Esq., Hacklander Law Offices, P.C., counsel for Plaintiffs.
Ernest F. Peake, Esq., and James M. Jorissen, Esq., Leonard O’Brien Spencer Gale &
Sayre, Ltd, counsel for Defendants.
___________________________________________________________________________
On June 5, 2007, the Court issued a Temporary Restraining Order (“TRO”) in this
matter, enjoining Defendants Wells Fargo Bank and Option One Mortgage Corporation
(collectively, “the Defendants”) from commencing any eviction action against Plaintiffs
Randolph and Jennifer Rimstad (collectively “the Rimstads”) or otherwise seeking to
exclude the Rimstads from possession and/or legal or equitable title to the property
located at 3642 Robinwood Terrace, Minnetonka, Minnesota, 55305 (the “Property”). On
June 12, 2007, this case came before the Court pursuant to the Rimstads’ Motion to
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Rimstad et al v. Wells Fargo Bank N.A. et al Doc. 20
Dockets.Justia.com
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Extend the TRO and Defendants’ Motion to Vacate the TRO. For the reasons set forth
below, the Court denies Plaintiffs’ motion and grants Defendants’ motion.
BACKGROUND
On March 19, 2004, the Rimstads entered into a consumer credit transaction with
Option One Mortgage Corporation (“Option One”) to obtain an extension of credit. The
Rimstads executed a mortgage in favor of Option One against the Property, which the
Rimstads have owned and lived at for twenty-four years.
Option One retained Ideal Title Solutions, LLC (“Ideal”) to close the transaction
on its behalf. Option One delivered a document entitled, “Instructions to Closing Agent,”
which provided that each borrower must receive two Notices of Right to Cancel (the
“Cancellation Notice(s)”). Theresa Dubiel, the President of Ideal, testified that the title
company always delivers the Cancellation Notices in accordance with the instructions
provided by Option One. Julia Wathen, the closer on the Rimstad’s loan transaction,
asserts that at the closing she delivered all four Cancellation Notices to the Rimstads—
two for each of the Rimstads.
The Rimstads signed two of the Cancellation Notices, attesting that they had
received the requisite four Cancellation Notices:
ON THE DATE LISTED ABOVE I/WE THE UNDERSIGNED EACH
RECEIVED TWO (2) COMPLETED COPIES OF THE NOTICE OF
RIGHT TO CANCEL IN THE FORM PRESCRIBED BY LAW
ADVISING ME/US OF MY/OUR RIGHT TO CANCEL THIS
TRANSACTION.
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(Aff. of Julia K. Wathen (“Wathen Aff.”), Ex. B.) But at their depositions, both
Randolph and Jennifer Rimstad testified that they had no recollection of whether they
received any of the Cancellation Notices. (Aff. of Ernest F. Peake (“Peake Aff.”), Ex. A
at 1–2, B at 1–2.) Yet Jennifer Rimstad also testified that if a document was not true, she
would not have signed it. (Id., Ex. B at 1–2.)
The Cancellation Notices provided instructions for canceling the loan. In
particular, the Cancellation Notices stated that any Notice of Rescission must be sent to
Option One Mortgage Corporation at 1033 N. Mayfair Road, Suite 201, Wauwatosa, WI.
The Cancellation Notices also stated that, “[y]ou may use any written statement that is
signed and dated by you and states your intention to cancel, or you may use this notice by
dating and signing below.” (Wathen Aff., Ex. A.)
Option One subsequently assigned the mortgage to Option One Mortgage Loan
Trust, for which Defendant Wells Fargo Bank (“Wells Fargo”) acts as trustee. Thereafter,
the Rimstads stopped making their monthly mortgage payments. Because the Rimstads
were in default for failing to pay for almost a year, Defendants hired the Minnesota law
firm, Reiter & Schiller, to conduct a foreclosure of the Property. Defendants thereafter
foreclosed on the Property and it was sold at a sheriff’s sale on December 5, 2006.
The Rimstads allege that they rescinded the loan and that Defendants therefore had
no right to foreclose on the Property. Specifically, the Rimstads allege that
approximately one hour before the sheriff’s sale, Marie McDonnell, a non-lawyer who
operates as “The Mortgage Counselor,” sent a Notice of Rescission (“Rescission Notice”)
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by fax to Reiter & Schiller in St. Paul, MN. The Rimstads admit that they did not sign the
Rescission Notice, but claim that McDonnell was their duly authorized agent and acted
under a Special Power of Attorney. Along with the Rescission Notice, McDonnell sent a
copy of a document entitled, “Special Power of Attorney,” which both Randolph and
Jennifer Rimstad had signed. According to the Rimstads, their Rescission Notice gave
the Defendants notice under the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601, of
their intent to rescind the loan and mortgage transaction pursuant to TILA and
12 C.F.R. § 226 (“Regulation Z”).
Defendants did not rescind either the transaction or the mortgage. Because of this,
pursuant to statute, the Rimstads had a six-month redemption period, during which they
could redeem the mortgage. The six-month statutory redemption period of the Property
expired at midnight on June 4, 2007.
On May 31, 2007, the Rimstads filed this lawsuit in Hennepin County District
Court, alleging violations of TILA, and seeking to enforce the Rimstad’s right to rescind
the consumer credit transaction, void the Defendant’s security interest in the subject
property, and to recover statutory damages. On June 4, 2007—the last day of the sixmonth
statutory redemption period—the Rimstads brought a motion for a TRO requesting
that the court extend the statutory redemption period of the Property and enjoin
Defendants from instituting eviction proceedings against them. At approximately
3:30 p.m. on June, 4, 2007, Defendants removed the action to this Court. The Court
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conducted a telephone hearing on the Rimstads’ motion at approximately 5:00 p.m. on
June 4, 2007.
During the telephone hearing and in an Order filed June 5, 2007 (the “June 5
Order”), the Court denied the Rimstads’ request for a TRO to extend the statutory
redemption period of the Property but granted the Rimstads’ request for a TRO to enjoin
Defendants from instituting eviction proceedings against them. The Rimstads now bring
this motion to extend the TRO, and Defendants move the Court to vacate the TRO.
Specifically, the Rimstads request that the Court extend the TRO enjoining Defendants
from instituting eviction proceedings against the Rimstads. Defendants, on the other
hand, request that the Court vacate the TRO enjoining them from instituting eviction
proceedings against the Rimstads.
DISCUSSION
I. Standard for Temporary Restraining Order
A temporary restraining order may be granted only if the moving party can
demonstrate: (1) a likelihood of success on the merits; (2) that the movant will suffer
irreparable harm absent the restraining order; (3) that the balance of harms favors the
movant; and (4) that the public interest favors the movant. Dataphase Sys., Inc. v. C L
Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981). None of the factors by itself is
determinative; rather, in each case the factors must be balanced to determine whether they
tilt toward or away from granting injunctive relief. Taylor Corp. v. Four Seasons
Greetings, LLC, 315 F.3d 1039, 1041 (8th Cir. 2003); West Publ’g Co. v. Mead Data
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Cent., Inc., 799 F.2d 1219, 1222 (8th Cir. 1986). The party requesting the injunctive
relief bears the “complete burden” of proving all the factors listed above. Gelco Corp. v.
Coniston Partners, 811 F.2d 414, 418 (8th Cir. 1987); see also Watkins, Inc. v. Lewis,
346 F.3d 841, 844 (8th Cir. 2003).
A. Likelihood of Success on the Merits
The first Dataphase factor requires that the movant establish a substantial
probability of success on the merits of his or her claim. Dataphase, 640 F.2d at 114. The
Rimstads claim that Defendants violated TILA. Specifically, the Rimstads assert that
they did not receive four copies of the Cancellation Notices explaining their right to
rescind their consumer credit transaction as required under 15 U.S.C. § 1635(a) and 12
C.F.R. § 226.23(b). Additionally, the Rimstads assert that Option One failed to deliver all
“material” disclosures required by TILA and Regulation Z. Specifically, the Rimstads
contend that Defendants failed to clearly and accurately disclose the finance charges and
the amount financed.
In response, Defendants assert that the Rimstads failed to serve Option One with
their Rescission Notice in a timely manner and that the Rimstads’ claims therefore
expired under the Statute of Repose. Alternatively, Defendants contend that the Rimstads
in fact received all four required Cancellation Notices. Additionally, Defendants contend
that they disclosed all required finance charges. The Court finds that the Rimstads are not
likely to succeed on the merits of their claims that they did not receive four Cancellation
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Notices and that Defendants failed to disclose all material finance charges.1
i. Cancellation Notices
TILA grants “obligors,” such as Plaintiffs, the right to rescind the transaction and
requires “creditors,” such as Defendants, to provide obligors with notice of this right. 15
U.S.C. § 1635(a). The applicable regulation specifies that in order to provide proper
notice, “a creditor shall deliver two copies of the notice of the right to rescind to each
consumer entitled to rescind.” 12 C.F.R. § 226.23(b)(1). Further, TILA provides that
“[n]otwithstanding any rule of evidence, written acknowledgment of receipt of any
disclosures required under this title by a person to whom a statement is required to be
given pursuant to this section does no more than create a rebuttable presumption of
delivery thereof.” 15 U.S.C. § 1635(c).
1 Although the Court need not address whether the Rimstads served Option One
with a Rescission Notice in a timely manner, the Court finds that the Rimstads have not
demonstrated a substantial probability of success on their claim that their Rescission
Notice was timely. The Rimstads assert that they had an extended right to rescind the
loan under 15 U.S.C. § 1635(a) because Defendants failed to give them the requisite
number of Cancellation Notices and failed to properly disclose various finance charges.
Even if the Rimstads correctly assert that under TILA they were permitted to send their
Rescission Notice to Reiter & Schiller in St. Paul, Minnesota, rather than to Option One
at their designated Wauwatosa, WI address, neither of the Rimstads signed the Rescission
Notice as required by the Cancellation Notices. Further, the Rimstads provide no
authority for their assertion that McDonnell, a non-lawyer, was authorized to act on their
behalf under TILA. In fact, Defendants point out that the “Special Power of Attorney”
document that the Rimstads signed and sent to Reiter & Schiller was a copy, not an
original, was not notarized, and was therefore not an enforceable Power of Attorney
under Minnesota law.
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Here, when the Rimstads signed the Cancellation Notices acknowledging that they
each received two copies of the Cancellation Notices, they created a rebuttable
presumption of delivery of four Cancellation Notices. Id.; Jackson v. New Century
Mortgage Corp., 320 F. Supp. 2d 608, 610 (E.D. Mich. 2004). The Rimstads fail to rebut
this presumption. Both Randolph and Jennifer Rimstad testified that they had no
recollection of whether they received any of the Cancellation Notices. Specifically, when
asked whether she received the Cancellation Notices at the closing, Jennifer Rimstad
testified, “I don’t remember what we got at all. I don’t remember. I don’t know half of
these.” (Peake Aff., Ex. B at 1.) Additionally, Randolph Rimstad testified that he could
not recall if he received two copies of the Cancellation Notices at the closing. Thus, in
their depositions, the Rimstads do not even allege that they did not receive four
Cancellation Notices, in contradiction to the Complaint’s assertion that they only received
one Cancellation Notice.
Further, Jennifer Rimstad testified that if a document was not true, she would not
have signed it. Moreover, the evidence shows that both Dubiel and Wathen assert that the
Rimstads were delivered four Cancellation Notices at the closing on March 19, 2004. On
this evidence, the Rimstads will not be able to rebut the presumption that they received
four Cancellation Notices at the closing. Therefore, the Rimstads likely cannot establish
a substantial probability of success on the merits of their claims.
ii. Material Disclosures
Additionally, the Rimstads have not demonstrated a substantial probability of
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success on their claim that Option One failed to deliver all material disclosures. The
Rimstads assert that Option One understated the Rimstads’ finance charges by $125
because Ideal allegedly marked-up its title services. Additionally, the Rimstads assert
that the amount financed in this transaction was understated by $4,764.40, the difference
between Option One’s March 12, 2004 Truth In Lending Disclosure Statement
(“TILDS”) and its final March 19, 2004 TILDS, which was given to the Rimstads’ at
closing. In response, Defendants assert that the markups related to the abstract or title
search, title examination, plat drawing, and assessment search are reasonable and
bona fide and do not constitute finance charges. Additionally, Defendants assert that the
amount financed was actually overstated, not understated as the Rimstads’ suggest.
The applicable regulation provides that closing-agent charges are finance charges
only if the creditor: (i) requires the services; (ii) requires the charge; or (iii) retains a
portion of the third-party charge. 12 C.F.R. § 226.4(a)(2). Further, the regulation
excludes real-estate related fees such as fees for title examination and abstract of title if
they are bona fide and reasonable. Id. at § 226.4(c)(7). Here, Defendants assert that the
fees at issue were charged by Ideal and that they were not required by Option One or
retained by Option One. Darcie Cancino, the Director of Compliance for Option One,
asserted in an affidavit that fees are bona fide and reasonable. The Rimstads do not point
to any evidence in support of the Complaint’s assertion that the fees were unreasonable.
Thus, based on the evidence before the Court, Defendants will likely prevail on this
claim. Additionally, Defendants correctly point out that the amount financed was actually
Case 0:07-cv-02582-DWF-AJB Document 20 Filed 06/15/2007 Page 9 of 13
10
overstated, not understated, on the chart provided in the Rimstads’ memorandum
supporting their motion.
Accordingly, the Rimstads have not demonstrated a substantial probability of
success on the merits of their claims. Therefore the Court finds that the first Dataphase
factor favors Defendants.
B. Irreparable Harm
The second factor that the movant must establish is that irreparable harm will
result if injunctive relief is not granted and that such harm will not be compensable by
money damages. See Packard Elevator v. I.C.C., 782 F.2d 112, 115 (8th Cir. 1986). A
showing of speculative harm is insufficient to meet this burden. Id. Failure to show
irreparable harm alone is a sufficient basis for a court to deny injunctive relief.
Gelco Corp., 811 F.2d at 420. If denying an injunction results in eviction, then the
irreparable harm element is likely met. See Higbee v. Starr, 698 F.2d 945, 947 (8th Cir.
1983).
The Rimstads assert that they will suffer irreparable harm if the Court does not
extend the TRO because Defendants will have the right to evict them from their home of
twenty-four years. In response, Defendants assert that the Rimstads will not suffer
irreparable harm because the foreclosure was authorized. Further, Defendants contend
that the Rimstads’ request for relief is undermined by their delay in bringing an action.
Specifically, Defendants point out that the Rimstads stopped making mortgage payments
almost two years ago and then waited until the last hour of the six-week period between
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11
notice of foreclosure and the foreclosure sale to take any action. Although the Court
acknowledges the Rimstads’ significant delays in taking action, the Court recognizes the
adverse effects that flow from eviction and finds that this Dataphase factor weighs in
favor of the Rimstads.
C. Balance of Harms
The third Dataphase factor to be considered is whether the harm to the movant in
the absence of injunctive relief outweighs the potential harm that granting injunctive
relief may cause to the non-movant. See Dataphase, 640 F.2d at 114. The Rimstads
assert that their lives would be substantially disrupted if the Defendants evict them from
their home. Defendants, on the other hand, assert that if the TRO remains in force they
will be unable to earn interest income from the Property and will be required to continue
paying property taxes on the Property while the Rimstads occupy it.
Additionally, Defendants contend that the title of the Property will become clouded,
rendering the Property unmarketable.
The Court finds that the harm to the Rimstads in the absence of the TRO
outweighs the potential harm that excluding the TRO may cause to Defendants. While
the Court considers both parties’ concerns valid, the Court finds that losing a basic
necessity such as shelter is a greater harm to a couple than the Defendants’ temporary loss
of income. Therefore, the balance of harms tips in favor of the Rimstads.
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D. Public Interest
The final Dataphase factor to be considered by the Court is whether injunctive
relief is in the public’s interest. See Dataphase, 640 F.2d at 114. The Rimstads assert
that public policy favors protecting the victims of aggressive lending tactics and lending
procedures that do not comply with federal statutes. In response, Defendants assert that
public policy favors personal responsibility and the payment of validly-created debts.
Defendants deny any predatory lending practices and assert that the Rimstads attempt to
use TILA as a sword to avoid their legal responsibilities.
Although public policy favors the victims of aggressive lending tactics, the
Rimstads have not shown that they are likely to succeed on the merits of their claims.
Thus, the evidence before the Court indicates that the mortgage loan was a validly-created
debt. Further, the Court notes that the Rimstads waited almost three years to take any
action even though they knew their loan would eventually be foreclosed. Accordingly,
the Court finds that this factor weighs in favor of the Defendants.
CONCLUSION
Although the second and third Dataphase factors weigh slightly in favor of the
Rimstads, the first and fourth Dataphase factors weigh heavily in favor of Defendants.
Balancing these factors, the Court finds that the Rimstads have not satisfied their burden
of demonstrating that an extension of the TRO is warranted. Assuming that the Rimstads
will be required to leave the Property, the Court assumes that Defendants will give the
Rimstads a reasonable amount of time to move-out of the home.
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13
It is difficult for the Court to understand why this case has not been settled.
Defendants have asserted, and the Rimstads have not denied, that the Rimstads declined
Option One’s offer to reinstate the mortgage on terms better than those available to any
other borrower. The Court is aware that Randolph Rimstad testified that McDonnell
negotiated an agreement with the Rimstads under which McDonnell would receive a 20%
fee contingent upon the amount of any recovery the Rimstads might obtain if the
Rimstads were successful in their efforts to rescind the loan. The Court hopes that the
Rimstads were not acting on McDonnell’s advice in declining the offer, given
McDonnell’s financial interest in pursuing rescission of the loan.
IT IS HEREBY ORDERED that:
1. Plaintiffs’ Motion for a Temporary Restraining Order (Doc. No. 10) is
DENIED.
2. Defendants’ Motion to Vacate the Temporary Restraining Order (Doc. No.
13) is GRANTED.
Dated: June 15, 2007 s/Donovan W. Frank
DONOVAN W. FRANK
Judge of United States District Court
Bob,
Excellent case, thank you for sharing!
Dan Edstrom
dmedstrom@hotmail.com
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION
CASE NO.: 05-CV-389 Judge Robert M. Dow Jr.
THOMAS HUBBARD,
Plaintiff,
v.
AMERIQUEST MORTGAGE COMPANY, .DEUTSCHE BANK NATIONAL TRUST and AMC MORTGAGE SERVICES, INC.
Defendants.
AMERIQUEST MORTGAGE COMPANY, DEUTSCHE BANK NATIONAL TRUST and AMC MORTGAGE SERVICES, INC.
Defendants.
MEMORANDUM OPINION AND ORDER
Plaintiff Thomas Hubbard (“Hubbard”) filed an amended complaint against Defendants
Ameriquest Mortgage Company (“Ameriquest”), Deutsche Bank National Trust (“Deutsche
Bank”), and AMC Mortgage Services, Inc. (“AMC”) alleging violations of the Truth in Lending
Act, 15 U.S.C. § 1601 et seq. (“TILA”), seeking rescission of his mortgage and statutory
damages. This matter is now before the Court on Plaintiff’s renewed motion for summary
judgment [103]. For the reasons set forth below, that motion is granted as to Ameriquest and
Deutsche Bank and denied as to AMC. Also before the Court is Defendants’ motion to strike
portions of Plaintiff’s renewed motion for summary judgment [113]. That motion is denied as
moot, although the Court will disregard the portions of Plaintiff’s submissions that Defendants
find objectionable.
I. Background
This case was originally assigned to Judge Mark Filip. While still before Judge Filip,
Plaintiff moved for summary judgment on liability and Defendants filed a cross-motion for
summary judgment. Judge Filip struck those motions to allow for final determination of a case
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2
then before the Seventh Circuit that potentially was dispositive of one of the principal issues in
this case.1 As expected, the Seventh Circuit provided instruction on the issue in Hamm v.
Ameriquest Mortgage Co., 506 F.3d 525 (7th Cir. 2007), and Plaintiff subsequently filed a
renewed motion for summary judgment.
A. Local Rules on Summary Judgment
The Court takes the relevant facts from the Plaintiff’s Local Rule 56.1 (“L.R. 56.1”)
statements (“Pl. SOF”) and Defendants’ Response (“Def. Resp. SOF”). The Court construes the
facts and draws all reasonable inferences in Defendants’, as the non-movant, favor. See Foley v.
City of Lafayette, Ind., 359 F.3d 925, 928 (7th Cir. 2004).
L.R. 56.1 requires that statements of fact contain material allegations and the factual
allegations must be supported by admissible record evidence. See L.R. 56.1; Malec v. Sanford,
191 F.R.D. 581, 583-85 (N.D. Ill. 2000). Where a party has offered a legal conclusion or a
statement of fact without offering proper evidentiary support, the Court will not consider that
statement. See, e.g., Malec, 191 F.R.D. at 583. Additionally, where a party improperly denies a
statement of fact by failing to provide adequate or proper record support for the denial, the Court
deems admitted that statement of fact. See L.R. 56.1(a), (b)(3)(B); see also Malec, 191 F.R.D. at
584. The Court disregards any additional statements of fact contained in a party’s response
rather than its statement of additional facts. See, e.g., Malec, 191 F.R.D. at 584 (citing Midwest
Imports, Ltd. v. Coval, 71 F.3d 1311, 1317 (7th Cir. 1995)).
1 MINUTE entry before Judge Mark Filip: The Court strikes without prejudice Plaintiff Thomas
Hubbard’s motion for summary judgment on liability (D.E. 62) and Defendants’ cross-motion for
summary judgment. (D.E.72.) The parties are directed to notify the Court when the Seventh Circuit
resolves the appeal in Hamm v. Ameriquest Mortgage Co., Seventh Circuit Appeal No. 05 C 3984
(District Court case No. 05 C 227, 2005 WL 2405804 (N.D. Ill. Sept. 27, 2005)), in which a decision is
expected shortly. At that time, the parties may move to have their motions reinstated, although the briefs
likely will need to be supplemented to address the applicable Seventh Circuit teaching.
Case 1:05-cv-00389 Document 143 Filed 09/30/2008 Page 2 of 16
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B. Pertinent Facts
The facts of this case are straightforward. Prior to April 10, 2002, Plaintiff applied for a
loan from Ameriquest that was secured by a mortgage on his home at 7249 South Princeton in
Chicago, Illinois. Pl. SOF ¶¶ 2, 10. Ameriquest closed that loan on April 12, 2002. Pl. SOF ¶
12. At the closing, Plaintiff received several documents including a Truth in Lending Act
(“TILA”) Disclosure Statement. Pl. SOF ¶ 13. The TILA Disclosure Statement stated that
“payments shall be due beginning” “6/1/2002,” it listed the number of payments (360), and the
due date of the final payment (5/1/2032). Pl. SOF ¶ 16. The TILA Disclosure Statement did not
“expressly state,” “in words,” that the loan payments were due “monthly.”2 Pl. SOF ¶ 17. The
TILA Disclosure Statement did not list the due date of each and every payment under the loan.3
Pl. SOF ¶ 18. After Ameriquest closed the loan, it sold or assigned the loan to Deutsche Bank.
Pl. SOF ¶ 19. The servicing rights to Plaintiff’s loan were transferred or assigned to AMC. Pl.
SOF ¶ 20.
On January 18, 2005 Plaintiff’s Counsel sent a letter to Ameriquest indicating Plaintiff’s
intent to rescind the loan for Defendant’s alleged violations of the TILA.4 Pl. SOF ¶ 21.
2 Defendant denies this fact but an examination of the document referenced in Pl. SOF ¶17 (Exhibit D to
the Amended Complaint) provides no basis for Defendant’s denial. While it may be a reasonable
assumption, based on the TILA Disclosure Statement, that payments were due monthly, the Disclosure
Statement did not “expressly” “in words” include the word “monthly.” See Hamm, 506 F.3d 525; Malec,
191 F.R.D at 584.
3 Defendants deny this fact for the same reason as the previous fact, and the Court rejects the denial for
the same reason. See Hamm, 506 F.3d 525; Malec, 191 F.R.D. at 584.
4 Defendant admits that “Plaintiff’s counsel sent a letter to Argent Mortgage Company.” However, the
document referenced in Plaintiff’s SOF ¶21 (Pl. SOF, Appendix K) indicates that it was addressed to
Ameriquest Mortgage Company. See Malec, 191 F.R.D. at 584
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4
Although Plaintiff refinanced the mortgage at issue, the original loan was never rescinded.5 Pl.
SOF ¶¶ 23, 24.
II. Analysis
A. Standard of Review
Summary judgment is proper where “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.” Fed. R. Civ. P. 56(c). In determining whether there is a genuine issue of fact,
the Court “must construe the facts and draw all reasonable inferences in the light most favorable
to the nonmoving party.” Foley, 359 F.3d at 928. To avoid summary judgment, the opposing
party must go beyond the pleadings and “set forth specific facts showing that there is a genuine
issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (internal quotation
marks and citation omitted). Summary judgment is proper against “a party who fails to make a
showing sufficient to establish the existence of an element essential to that party’s case, and on
which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986). The non-moving party “must do more than simply show that there is some
metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986). “The mere existence of a scintilla of evidence in support of the
[non-movant’s] position will be insufficient; there must be evidence on which the jury could
reasonably find for the [non-movant].” Anderson, 477 U.S. at 252.
5 In Response to Pl. SOF ¶24, Defendant responds “Admitted that Plaintiff paid off his loan subsequent to
the filing of his lawsuit.” (Def. Resp. SOF ¶24). As explained below, it is irrelevant to the disposition of
this case whether the loan was “paid off” or “refinanced.”
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5
B. Motion to Strike Portions of Plaintiff’s Renewed Motion for Summary
Judgment
Defendants have moved to strike certain portions of Plaintiff’s renewed motion for
summary judgment. Those portions include terms used by Plaintiff to describe Defendants,
reports issued by third parties that Plaintiff referenced in the memorandum in support of this
motion and included in the appendices, and “facts” included in Plaintiff’s motion that were not
included in his statement of undisputed material facts. As noted above, LR 56.1 requires the
parties to include statements of material fact. In accordance with that rule, the Court has ignored
any facts included in Plaintiff’s statement of facts that are not material to the disposition of this
motion. In addition, this opinion will not refer to Defendants using any terms employed by
Plaintiff in his summary judgment motion that Defendants found objectionable.
To the extent Defendants seek a formal striking of portions of Plaintiff’s motion for
summary judgment, Defendant’s motion is denied as moot. However, the Court’s decision not to
consider the portions of Plaintiff’s motion, memoranda, and appendices that Defendants found
objectionable essentially provides Defendants with all the relief that they seek.
C. Hamm v. Ameriquest
TILA imposes upon lenders, among other obligations, an explicit obligation to include
“[t]he number, amount, and due dates or period of payments scheduled to repay the total of
payments,” in their Disclosure Statements to borrowers. 15 U.S.C. § 1638(a)(6); see also 12
C.F.R. § 226.18(g)(1). Defendants concede in their response to Plaintiff’s renewed motion for
summary judgment that under Hamm, “a Truth in Lending Act Disclosure Statement which
disclosed the date of the first loan payment, the date of the last loan payment, and the number of
total payments due failed to satisfy the TILA requirement to disclose the period of payments
scheduled.” Defendants further concede that Plaintiff in the present action received a TILA
Case 1:05-cv-00389 Document 143 Filed 09/30/2008 Page 5 of 16
6
disclosure that provided just such information. Therefore, Defendants concede that Plaintiff
received a TILA disclosure that violated the statute and that “the violation was apparent on the
face of the disclosure statement.” Def. Supp. Br. [132] at 4.
D. AMC Mortgage Services, Inc.
Defendant AMC argues that as a “servicer” of Plaintiff’s loan, TILA does not allow a
judgment for rescission or statutory damages against it. A “servicer” is not generally liable for
rescission or other damages. See Payton v. New Century Mortgage Corp., 2003 WL 22349118
(N.D. Ill. Oct. 14, 2003). While assignees of loans may be liable for TILA violations, the statute
draws a distinction between mere servicers of loans and assignees. See 15 U.S.C. § 1641(f)(1).
A servicer may be treated as an assignee only if the servicer is or was the owner of the
obligation. See id. However, a servicer is not treated as an owner on the “basis of an assignment
of the obligation from the creditor or another assignee to the servicer solely for the
administrative convenience of the servicer in servicing the obligation.” 15 U.S.C. § 1641(f)(2).
“Servicing” is defined as “receiving any scheduled periodic payments from a borrower pursuant
to the terms of any loan” and “making the payments of principal and interest * * * as may be
required.” 12 U.S.C. § 2605(2), (3) (cross-referenced in 15 U.S.C. § 1641(f)(3)).
Plaintiff’s statement of facts alleges, and Defendant admits, that “the servicing rights to
Plaintiff’s loan were transferred or assigned to AMC.” Despite use of the term “assigned,” it is
clear when contrasted with the description of Deutsche Bank’s role in the Plaintiff’s Statements
of Fact, that even Plaintiff was aware of AMC’s limited function. Plaintiffs uncontested facts
state that Ameriquest “sold or assigned the loan” to Deutsche Bank. When viewed together,
Plaintiff himself has set out the delineation between the “servicing” done by AMC and the
Case 1:05-cv-00389 Document 143 Filed 09/30/2008 Page 6 of 16
7
assignment of the loan itself to Deutsche Bank. There is nothing that would support treating
AMC as anything other than a “servicer”.
Neither of the exceptions to the general rule that servicers of loans are not liable for TILA
violations applies here. The “owner of the obligation” exception does not apply because AMC
acted solely in an administrative role. See 15 U.S.C. § 1641(f)(1), (2); Payton, 2003 WL
22349118, at *5. The other potential exception may come into play when the servicer possesses
or possessed an interest in the loan. Conner v. Moss, Codilis, Stawiarski Morris, Schneider &
Prior, LLP, 2003 WL 21267093 (N.D. Ill. June 2, 2003). That interest must be separate from the
interest that all servicers possess simply by providing their role in the administration of the loan,
so that the exception does not swallow the rule. No such interest is alleged here. While some
courts have allowed servicer defendants to remain in the case under the theory they are necessary
parties under Fed. R. Civ. P. 19, the reasoning behind those decisions extends only to current
servicers for rescission purposes. See Bills v. BNC Mortgage, Inc., 502 F. Supp. 2d 773, 775
(N.D. Ill. 2007). But here the loan no longer is being serviced by AMC.
In sum, because AMC’s role in the transaction was as a servicer only and none of the
exceptions permitting liability to a servicer applies Plaintiff’s motion for summary judgment
against AMC must be denied.6
E. Remedies Against Ameriquest and/or Deutsche Bank
Having established that the disclosures provided by Ameriquest to Plaintiff violated the
TILA, the question of available remedies remains. TILA’s civil liability provisions, relevant to
the present facts, state that a creditor who fails to comply with 15 U.S.C. § 1635 is liable for (i)
6 Defendants state in Supplemental Response Pursuant to the Court’s July 14, 2008 Order that “the parties
agree that this Court cannot enter any judgment against AMC Mortgage Services.”
Case 1:05-cv-00389 Document 143 Filed 09/30/2008 Page 7 of 16
8
“not less than $400 or greater than $4,000” in statutory damages7 (15 U.S.C. §
1640(a)(2)(A)(iii)) and (ii) “in the case of any successful action to enforce the foregoing liability
or in any action in which a person is determined to have a right of rescission under § 1635 of this
title, the costs of the action, together with a reasonable attorney’s fee as determined by the court”
(15 U.S.C. § 1640(a)(3)). The TILA also provides, under certain circumstances, the opportunity
to rescind the transaction. If rescission is proper, a debtor is entitled to the return of money or
property. See 15 U.S.C. § 1635(b). While Ameriquest has conceded its liability for statutory
damages and costs and attorney’s fees for the failure to rescind the transaction, Defendants
dispute whether rescission is a proper remedy at all because the loan at issue has been paid off
and whether Plaintiff has any remedies against Deutsche Bank.
1. Rescission
The TILA was created “to assure a meaningful disclosure of credit terms so that the
consumer will be able to compare more readily the various credit terms available to him and
avoid the uninformed use of credit.” 15 U.S.C. § 1601(a). When lenders violate the TILA,
Congress provided consumers the right to rescind a consumer credit transaction in which a
security interest is retained in the consumer’s home. 15 U.S.C. § 1635(a). The right to rescind
generally extends until the third business day after the later of the: (i) closing of the transaction
or (ii) the delivery of the information and rescission forms together with the statements of
7 At the time of the parties’ initial briefing, the pertinent statute provided that “any creditor who fails to
comply with any requirement imposed under this part, including any requirement under section 1635
(right of rescission) of this title * * * is liable * * * in the case of an individual action relating to a credit
transaction not under an open end credit plan that is secured by real property or a dwelling, not less than
$200 or greater than $2,000.” 15 U.S.C. § 1640(a)(2)(A)(iii). However, Section 1640(a)(2)(iii) was
amended effective July 30, 2008, to double the minimum and maximum amounts of statutory damages.
The relevant language now states that “in the case of an individual action relating to a credit transaction
not under an open end credit plan that is secured by real property or a dwelling,” the creditor is liable in
an amount “not less than $400 or greater than $4,000.”
Case 1:05-cv-00389 Document 143 Filed 09/30/2008 Page 8 of 16
9
material disclosures. Id. However, if the creditor fails to provide the required material
disclosures, the right to rescind extends until three years after consummation, upon transfer of all
of the consumer’s interest in the property, or upon the sale of the property, whichever appears
first. 15 U.S.C. § 1635(f)(3); 12 C.F.R. § 226.23(a)(3)8.
Defendants concede that the TILA disclosure provided to Hubbard failed to properly
include the payment periods and that such information is “material” under the implementing
regulations of TILA. See 12 C.F.R. § 226.23(a)(3) n.48. Therefore, Plaintiff had three years in
which to rescind the credit transaction at issue. The loan was closed on April 12, 2002, and
notice of rescission was provided to Ameriquest within the three year window, on January 18,
2005. Despite timely notice to Ameriquest, Defendants make two principal arguments to limit
their liabilities: (i) by refinancing the loan, rescission is no longer possible as to either defendant;
and (ii) even if rescission is still possible generally, Deutsche Bank cannot be held liable because
it did not receive notice of the rescission request within the three year window. Those issues will
be discussed in turn.
a. Rescission as to Ameriquest
While the parties quibble as to whether the loan at issue has been “refinanced” or “paid
off,” it is undisputed that the Defendants have released the mortgage securing the loan.
Regardless of the terminology chosen by the parties, the Seventh Circuit has held a right of
rescission exists in this situation. See Handy v. Anchor, 464 F.3d 760 (7th Cir. 2006). Handy
followed an opinion from the Sixth Circuit in which the court construed the TILA and its
implementing regulations to encompass a right to rescind the transaction itself and not just the
security interest. See Handy, 464 F.3d at 765 (quoting Barrett v. JP Morgan Chase Bank, N.A.,
8 TILA’s implementing regulations, 12 C.F.R. § 226 et seq., known as “Regulation Z” are promulgated by
the Federal Reserve Board.
Case 1:05-cv-00389 Document 143 Filed 09/30/2008 Page 9 of 16
10
445 F.3d 874, 878 (6th Cir. 2006)). Regulation Z enumerates two specific ways to extinguish a
borrower’s right to rescind: (1) complete transfer of interest in the property or (2) sale of the
property. See 12 C.F.R. § 226.23(a)(3). “Nowhere do[es] the legislation or regulations add that
the act of refinancing an existing loan transaction by itself cuts off the right of rescission.”
Handy, 464 F.3d at 765 (quoting Barrett, 445 F.3d at 878). Based on this plain reading of the
statute, the right of rescission outlives the refinancing of the loan. Therefore, “the remedies
associated with rescission remain available even after the subject loan has been paid off.”
Handy, 464 F.3d at 765. That outcome, Barrett and Handy agreed, prevents lenders from
insulating themselves from responsibility for their noncompliance. See Handy, 464 F.3d at 766
(quoting Barrett, 445 F.3d at 879).
The fact that the loan has been refinanced is the only defense that Ameriquest raised to its
liability for rescission. Since Seventh Circuit precedent requires the Court to reject that
argument, Plaintiff was entitled to rescission and Ameriquest must honor all of Plaintiff’s
rescission remedies and pay the statutory damages, costs, and attorney’s fees that it concedes are
its responsibility.
b. Rescission as to Deutsche Bank
Although the right to rescind outlives repayment, Deutsche Bank still maintains that it
cannot be liable for rescission because Plaintiff did not give notice of its request for rescission to
Deutsche Bank as well within the three years allowed under Section 1635. Although Plaintiff
plainly gave timely notice to Ameriquest, it appears from the record that Deutsche Bank first
received notice of Plaintiff’s intent to rescind the loan when it was added as a party to this
lawsuit in Plaintiff’s Amended Complaint.9 The question raised by Deutsche Bank’s argument is
whether Plaintiff’s timely notice to the original lender is sufficient to effectuate rescission as to
9 The Summons from the Amended Complaint was returned executed on October 26, 2005.
Case 1:05-cv-00389 Document 143 Filed 09/30/2008 Page 10 of 16
11
assignees who did not receive timely notice. Upon examination of the statutory language, its
implementing regulations, the pertinent case law, and the role that rescission plays within the
TILA scheme, the Court concludes that Hubbard’s timely rescission request as to Ameriquest is
equally effective against Deutsche Bank as assignee, despite lack of notice to Deutsche Bank
within the three year window.
The TILA and Regulation Z lay out the steps that an obligor must take to invoke its right
of rescission. Significantly, both the statute and the regulation only require notification to the
“creditor.” 15 U.S.C. § 1635(a) (“[T]he obligor shall have the right to rescind the transaction
* * * by notifying the creditor * * * of his intention to do so”); 12 C.F.R. § 226.23(a)(2) (“[T]he
consumer shall notify the creditor of the rescission by mail, telegram or other means of written
communication”). The use of “creditor” is significant, because that word has a defined meaning
under TILA. A “creditor” “refers only to a person who * * * is the person to whom the debt
arising from the consumer credit transaction is initially payable on the face of the indebtedness
* * *.” 15 U.S.C. § 1602(f). Under the plain language of the statute, Hubbard fulfilled his
obligation to rescind when he notified Ameriquest, “the “creditor,” that he wanted to rescind.
The use of the word “transaction” in the statute provides further supports for the Court’s
conclusion that rescission is effective to all subsequent assignees upon timely notice to the
“creditor.” See 15 U.S.C. § 1635(a) (“The obligor shall have the right to rescind the transaction
* * *.”) (emphasis added). As the Seventh Circuit recognized in Handy, rescission terminates
the entire transaction and thus “encompasses a right to return to the status quo that existed before
the loan.” Handy, 464 F.3d at 765 (quoting Barrett 445 F.3d at 878). Accordingly, upon timely
invocation of the right of rescission, a borrower must be put back in the position that it occupied
prior to the loan agreement. Handy, 464 F.3d at 765 (quoting Barrett, 445 F.3d at 877).
Case 1:05-cv-00389 Document 143 Filed 09/30/2008 Page 11 of 16
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Applying these principles, when Plaintiff notified Ameriquest that he wished to exercise
his right to rescission, Plaintiff terminated the transaction itself, and was entitled to return to the
status quo prior to the loan. The only way to effectuate the statutory right to be returned to the
status quo is to involve the original lender and all subsequent assignees – parties that would not
have been involved in the transaction or received any of the obligor’s interest payments were it
not for the original loan. Therefore, Plaintiff must return everything that he received on the
closing date (to the extent that it has not already been returned) and Ameriquest and Deutsche
Bank must release any security interest they might have asserted. See Handy, 464 F.3d at 766.
Because the original loan has been refinanced, Plaintiff has no principal to return and Defendants
have no security interest to release. Finally, Defendants forfeit their right to collect interest upon
rescission and therefore must reimburse Plaintiff for any interest or other finance charges that he
paid wile the loan was outstanding. See Handy, 464 F.3d at 766; 15 U.S.C. § 1635(b). To the
extent that interest payments were made to Deutsche Bank as assignee, Deutsche Bank must
participate in the rescission process in order to achieve the statutory goal of returning all parties
to the position that existed prior to the transaction.
The statutory language specifically addressing assignees and rescission is fully consistent
with this outcome. It states “[a]ny consumer who has a right to rescind a transaction under
section 1635 of this title may rescind the transaction against any assignee of the obligation.” 15
U.S.C. § 1641(c). Reading that provision in light of the text, structure, and purpose of the TILA
as a whole and the Seventh Circuit’s relevant precedents, the Court concludes that Section
1641(c) simply clarifies that assignees may not hide behind an assignment and that as long as the
borrower has properly rescinded the transaction by giving notice to the “creditor” within the
three year statutory period, the rescission of the transaction is effective against any assignee.
Case 1:05-cv-00389 Document 143 Filed 09/30/2008 Page 12 of 16
13
This reading also supports the notion that assignees can be necessary parties in TILA litigation,
for they may be essential to fully unwinding the “transaction” as required under Handy.
Defendants contend, relying principally on a bankruptcy court decision, In re Meyer, 379
B.R. 529 (Bankr. E.D. Pa. 2007), that the three year statute or repose in the TILA bars any action
against Deutsche Bank because Plaintiff did not give notice of the rescission request to Deutsche
Bank within that time frame. However, given the Seventh Circuit’s determination that rescission
takes place on a transactional basis, this Court cannot accept the view that the notice given to
Ameriquest was not sufficient to effectuate rescission as to Deutsche Bank. By giving notice to
Ameriquest within the three year period, Plaintiff timely exercised his unitary rights to “rescind
the transaction” (15 U.S.C. § 1635(a)) and to “return to the status quo that existed before the
loan.” Hardy, 464 F.3d at 765.10
In sum, to properly effectuate Plaintiff’s timely invoked right to rescission, Ameriquest
and Deutsche Bank each must determine the amounts of interest and fees that they received from
Plaintiff while the loan was outstanding and reimburse Plaintiff in those amounts. See Handy,
464 F.3d at 766 (“Given the statute, [Defendant] forfeits its right to collect interest, and so it
must reimburse [Plaintiff] for any interest paid while the loan was outstanding”); see also
10 Plaintiff also complains that he was hampered in his ability even to learn that Deutsche Bank was the
current holder of the loan by Ameriquest’s refusal to respond to Plaintiff’s Interrogatory Requests in a
timely fashion. Specifically, Plaintiff asked Ameriquest to “[s]tate whether defendant owns all legal and
beneficial interests in plaintiff’s loan. If not, identify each other person or entity who owns or claims to
own any interest in plaintiff’s loan and describe their claimed interest.” Plaintiff argues that Ameriquest’s
refusal to identify Deutsche Bank in response to that interrogatory deprived Plaintiff of any opportunity to
request rescission of Deutsche Bank within the three year period, as Defendants contend Plaintiff was
required to do. The Court need not explore that dispute any further in view of the conclusion that, under
the statute, Plaintiff only was required to give notice to the “creditor” – Ameriquest – within the three
year period in order to invoke the right to rescind the transaction as a whole, including as to assignees
such as Deutsche Bank. By requiring notice only to the “creditor,” Congress prevented lenders from
hiding behind assignments to avoid rescission and protected borrowers from the need to obtain
information on, and to provide notice to, any number of assignees to accomplish Congress’ objective of
making borrowers whole after terminating the transaction.
Case 1:05-cv-00389 Document 143 Filed 09/30/2008 Page 13 of 16
14
Miranda v. Universal Financial Group, Inc., 459 F. Supp. 2d 760, 765 (N.D. Ill. 2006) (“Under
§ 1635(b), a borrower who exercises the right to rescind is entitled to the return of any payments
made on the loan”). Only then can the parties be returned to the status quo that existed before
the loan was made.
2. Statutory Damages, Costs, and Attorney’s Fees for Failure to Rescind
Plaintiff acknowledges that he is not entitled to statutory damages for the underlying
TILA disclosure violation. Ameriquest admits that it is liable for statutory damages, as well as
costs and attorney’s fees,11 as a result of its failure to rescind the transaction when requested to
do so by Plaintiff. Def. Supp. Br. at 3, 6. The remaining question is whether such liability also
may be imposed on Deutsche Bank.
The question of assignee liability for statutory damages, costs, and attorney’s fees has
arisen in several recent cases in this district. See, e.g., Lippner v. Deutsche Bank National Trust
Co., 544 F. Supp. 2d 695 (N.D. Ill. 2008); Ware v. IndyMac Bank, FSB, 534 F. Supp. 2d 835
(N.D. Ill. 2008); Bills v. BNC Mortgage, Inc., 502 F. Supp. 2d 773 (N.D. Ill. 2007); Walker v.
Gateway Financial Corp., 286 F. Supp. 2d 965 (N.D. Ill. 2003); Payton v. New Century
Mortgage Corp., 2003 WL 22349118 (N.D. Ill. Oct. 14, 2003); Fairbanks Capital Corp. v.
Jenkins, 225 F. Supp. 2d 910 (N.D. Ill. 2002). Having reviewed those cases thoroughly, the
Court discerns a reasonably clear demarcation in which assignees generally have not been on the
hook for statutory damages, costs, or attorney’s fees where the underlying TILA violation was
not apparent on the face of the document in question (see Bills, 502 F. Supp. 2d at 776-77;
Walker, 286 F. Supp. 2d at 968-69), but have been found liable as to those remedies where the
11 “Any creditor who fails to comply with any requirement [under TILA] * * * is liable * * * in the case
of any successful action to enforce the foregoing liability * * * [for] the costs of the action, together with
reasonable attorney’s fees as determined by the court.” 15 U.S.C. § 1640(a)(3).
Case 1:05-cv-00389 Document 143 Filed 09/30/2008 Page 14 of 16
15
underlying violation was facially apparent (see Lippner, 544 F. Supp. 2d at 704).12 The parties
have not cited, nor has the Court’s research located, a case in this district in which a court has
held that an assignee is not liable for statutory damages, costs, and attorney’s fees for failure to
rescind when the underlying TILA violation was apparent on the face of the offending
document, as the parties have agreed is the case here.
The Court concludes that the distinction drawn by other courts in this district between
TILA violations that are clear on the face of the underlying document and those that are not
facially apparent is sensible and comports with the statutory scheme. As in Lippner, this Court
concludes “[a]fter taking the entire statutory scheme of TILA into consideration,” that “an
assignee of a mortgage should be held liable for statutory damages and attorney’s fees for failing
to honor a demand for rescission when the underlying TILA violation is apparent on its face,”
because in those circumstances “the assignee has fair notice of the underlying TILA violation.”
544 F. Supp. 2d at 704-05.
III. Conclusion
Based on the foregoing analysis, the Court denies Plaintiff’s motion for summary
judgment [103] as to AMC and grants Plaintiff’s motion for summary judgment [103] as to
Ameriquest and Deutsche Bank, finding both Ameriquest and Deutsche Bank liable for
rescission, statutory damages, and costs and attorneys’ fees. Plaintiff is given until October 14,
2008, in which to submit supplemental briefing, consistent with this decision, on the appropriate
damage calculations and how to properly unwind the transaction for rescission purposes.
Ameriquest and Deutsche Bank will have until October 25, 2008, in which to respond to
12 In Payton, the court concluded that statutory damages could not be imposed on the assignee because the
violation was not apparent on its face, but that an award of attorney’s fees against the assignee was
appropriate because the plaintiff had brought a successful action for rescission. 2003 WL 22349118, at
*7-*8.
Case 1:05-cv-00389 Document 143 Filed 09/30/2008 Page 15 of 16
16
Plaintiff’s calculation of damages and briefing on rescission. Finally, the Court denies
Defendants’ motion to strike portions of Plaintiff’s renewed motion for summary judgment [113] as moot in light of the discussion above.
Dated: September 30, 2008 ___________________________________
Robert M. Dow, Jr.
United States District Court t
http://noonanandlieberman.com/media/pdfs/Hubbard__v_Ameriquest.pdf
THANK YOU, THANK YOU, THANK YOU, THANK YOU.
I CANNOT THANK YOU ENOUGH NEIL.
GOD BLESS YOU!!!
I Need a Lawyer that gets it in southern California this is what I have and my finding as much as the Lender failing to acknowledge my rescission request….
Unfortunately I have not been able to find an Attorney that will sit-down with me and further look at my case. Most will just ask to meet with you collect a consultation and give you a price.
But when I give them a brake down of the info I have collected they look at me as if they have never heard of it or with a confused look on their faces.
Personally that alone tells me they may have a tough time bringing forth a lawsuit that will benefit me.
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I found this on one of the postings I believe posted by Neil:
http://livinglies.wordpress.com/2008/05/07/foreclosures-tila-right-of-rescission-and-consequences/
1. TILA Rescission is self enforcing. It automatically extinguishes the lien and the liability. The time for rescission does not run until you actually knew the full scope of the violation. That is tantamount to it never running out.
2. YOU CAN ASSERT AND SHOULD ASSERT TILA VIOLATIONS IF YOU CAN BEFORE YOU ARE IN FORECLOSURE OR EVEN IF YOU ARE CURRENT IN YOUR PAYMENTS.
3. Judge is required to look for authority himself if you are representing yourself without a lawyer (pro se). This provision in effect makes the Judge your lawyer and your Judge. Pretty good combination for you.
4. Judge has no discretion to deny damages, refunds etc to Borrower once a violation of TILA, no matter how small, is discovered.
5. TILA Rescission is NOT barred before during or after other proceedings unless those other proceedings specifically mention rescission as an issue to be tried.
______________________________
So I have decided to file for Quiet Title Lawsuit, and bring forth the Letters I have sent as proof of what the lender should have done. Along with the violation found on the contract such as not getting proper disclosure indicating the 3 day right to cancel and that it was not properly served.
Due to their negligence in my many requests, prior to rescission asking them to do a loan modification and to their response over the phone:
“You don’t qualify for a loan modification because you are current on your payment”
As for my first Loan Modification request I forwarded the docs and I never received a response from them.
The other times I requested they send me Loan Mod forms they did not send them. I never got a reply letter to my requests or even to say I don’t qualify. In every petition I made, I explained to them I was not working and that my current household income only covered the mortgage payment.
Finally, after three months of struggle ling I fell behind on my line of credit a $200.00 dollar payment. (But not on my mortgage) I called them back indicating that I was running out cash and needed desperately their help, until I could get back on my feet. This was my 5th attempt in asking them to send me documents for a Loan Modification. Then and only then did they take into account that I needed the help, but this is what they did. They evaluated my claim for a modification over the phone; they said they no longer sent out forms that it was done with a live rep. I went along with it because this was the best I had received in three months. They asked what line of work I was in, how much I would bring home if I were working, how much were my other bills.
When that all was said and done; the rep said well with you not being currently employed and the amount of bills you have in excess of $1800.00 dollar you don’t qualify.
I was ticked off at their way of helping; I kept calm telling her had I been working I would not bother calling them. Had I been working, I would have at least another $6k to play with. But that was not the case I needed their help. In no way or form was I requesting they drop the price on the dept to current market value; I just needed them to give me a break for a few months.
After the seventh time and them calling me repeatedly, I fed up in giving them an explanation of my circumstances. I opened for the first time my loan docs and did some home work in trying to understand them. I read the truth in lending statement and many of the disclosure. In doing so I found what the banks need to provide borrowers at the loan consummation and read into the 3 day of rescission notice. Researched should that I needed to be given 2 copies per borrower and that was not the case. I figured I must have signed an acknowledgement of the document. I remembered doing so and that if a case were to go to court that would be good enough proof that they served the document.
But I was also told by a friend that you should get copies of the originals when you sign docs and that if the underwriter preparing the docs failed to insert all documents or got misplaced there was no way for the Loan Officer to know if all the blank copies he handed me were there.
Aside from that the copies I received had dates and listed in writing the loan officers name. But I found 3 copies were in-fact there were two borrowers and needed to receive 4 on the copies I took home. I did remember that while signing there were some documents that got thrown out because I made or found a mistake I don’t recall how it happened. But I know that he was able to reprint on the spot. I know this but very beg and would not be able to remember or make a claim since I am not to sure of what it was.
But even then I found this illustration:
TILA states that a written acknowledgment “does no more than create a rebuttable presumption of delivery.” 15 U.S.C. § 1635(c)
Notwithstanding any rule of evidence, written acknowledgment of receipt of any disclosures required under this subchapter by a person to whom information, forms and a statement is required to be given pursuant to this section does no more than create a rebuttable presumption of delivery thereof.
SIMPLE ENGLISH
In spite of any rule of evidence, written acknowledgment of receipt of any disclosures required under this subchapter by a person to whom information, forms and a statement is required to be given in accordance with something to this section does no more than create a denial of the truth a belief based on the fact that something is considered to be extremely reasonable or likely of delivery thereof.
At the time of consummation I was given cash and checks to pay of my credit cards all with in the same day I signed the loan docs. I should have signed a waiver indication in my own print that I had a financial emergency and needed the money there and then. If that is not the case then I have to wait until after the 3 days of rescission to end so that the lender can release all funds.
Since I know the agent that did my loan, I told him I needed him to notarize a document for me, because I was planning to send a notice of rescission to the bank. He told me that he could not do it because he was not a Notary public, (then that told me to look further) I talked to him and explained my situation.
I since have talked to the loan officer and told him of my findings and explained to him that do to the facts and that he was the one that notaries my documents the documents are Null and Void. I brought up the Notary Service and why he no longer was doing notary service he told me he never was a notary public. That the way it was done in the branch was if the Notary public was out to lunch or even on his day off, the Branch Manager instructed them to notarize the documents and that she would latter sign the book or the actual Notary Public would do it. They would start the process and it would later be completed.
I told him if he knew that the fact that he was doing the notary service was against the law. He told me that he knew and had told his boss about it. He was told to shut-up and do his job! He then offered if it came down to it he would testify in court to the entirety of facts that occurred at the branch, and that the Notary Public as well did not agree with being forced to leave the book.
Below are the many things I found and to that I am including a review Neil made once I had posted what I found as to the Notary Service.
______________________________
California Code: Notary Must NOT Have an Interest in the Document Being
Signed
January 30, 2009 • 14 Comments
I caught this from the comments section: He’s right and I think if you
look in the statutes of every state and industry standards that are
published by Notary Associations you will find the same language. The fact
that the Title agent is the closing agent is the Trustee on the Deed of
Trust DOES create an interest in the document being signed (Deed of
Trust). In judicial states it might be a different story. The logical
conclusion is that either a quiet title or mandatory injunction removing
the Deed of Trust from the official records of the county in which they
are recorded might be successful. This would remove the security but not
necessarily the obligation or the note (which is evidence of the
obligation). It DOES accomplish two things (a) the loan is no longer
secured and (b) there is nobody authorized to enforce it. Take a look at
this:
California Civil Code § 1185.
GOVERNMENT CODE SECTION 8200-8230
8224. A notary public who has a direct financial or beneficial interest in a transaction shall not perform any notarial act in connection with such transaction. For purposes of this section, a notary public has a direct financial or beneficial interest in a transaction if the notary public:
(a) With respect to a financial transaction, is named, individually, as a principal to the transaction.
(b) With respect to real property, is named, individually, as a grantor, grantee, mortgagor, mortgagee, trustor, trustee, beneficiary, vendor, vendee, lessor, or lessee, to the transaction.
For purposes of this section, a notary public has no direct financial or beneficial interest in a transaction where the notary public acts in the capacity of an agent, employee, insurer, attorney, escrow, or lender for a person having a direct financial or
beneficial interest in the transaction.
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8227.1. It shall be a misdemeanor for any person who is not a duly
commissioned, qualified, and acting notary public for the State of
California to do any of the following:
(a) Represent or hold himself or herself out to the public or to
any person as being entitled to act as a notary public.
(b) Assume, use or advertise the title of notary public in such a
manner as to convey the impression that the person is a notary
public.
(c) Purport to act as a notary public.
8227.3. Any person who is not a duly commissioned, qualified, and
acting notary public who does any of the acts prohibited by Section
8227.1 in relation to any document or instrument affecting title to,
placing an encumbrance on, or placing an interest secured by a
mortgage or deed of trust on, real property consisting of a
single-family residence containing not more than four dwelling units,
is guilty of a felony.
8228.
8228.1. (a) Any notary public who willfully fails to perform any duty required of a notary public under Section 8206, or who willfully fails to keep the seal of the notary public under the direct and exclusive control of the notary public, or who surrenders the seal of the notary public to any person not otherwise authorized by law to possess the seal of the notary, shall be guilty of a misdemeanor.
(b) Notwithstanding any other limitation of time described in Section 802 of the Penal Code or any other provision of law, prosecution for a violation of this offense shall be commenced within four years after discovery of the commission of the offense, or within four years after the completion of the offense, whichever is later.
(c) The penalty provided by this section is not an exclusive remedy, and does not affect any other relief or remedy provided by law.
______________________________
In order to get a lower interest rate I was told I needed to open a bank account and have direct deposit and auto pay set up and in doing so I was forced to close my bank account with Banck of the West at the time all a requirement the bank had to open a line of credit,,,
This is what I have found regarding tie-in loans if it helps I am not sure.
CALIFORNIA Unfair Competition Law would prohibit coercive tie-ins
BUSINESS AND PROFESSIONS CODE SECTION 17200-17210 The FTC enforces a number of laws specifically governing lending practices, including the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601 et seq., and the Home Ownership and Equity Protection Act of 1994 (“HOEPA”), 15 U.S.C. § 1639, which is part of TILA. The Commission also enforces the Federal Trade Commission Act, 15 U.S.C. § 41, et seq., along with Sherman Act Clayton Act , BHC Act, Home Owners’ Loan Act, would prohibit coercive tie-ins which broadly prohibits unfair or deceptive acts or practices in or affecting commerce.
Bank Holding Company Act Amendments
Section 106 of the Bank Holding Company Act Amendments of 1970 (section 106) generally prohibits a bank from conditioning the availability or price of one product on a requirement that the customer also obtain another product from the bank or an affiliate of the bank.1 Thus, for example, the statute prohibits a bank from conditioning the availability of a loan from the bank (or a discount on the loan) on the requirement that the customer also purchase an insurance product from the bank or an affiliate.2 Congress adopted section 106 in 1970 at the same time that it expanded the ability of bank holding companies to engage in nonbanking activities under section 4(c)(8) of the Bank Holding Company Act (BHC Act).3 Congress expressed concern that banks might use their ability to offer bank products— credit in particular—in a coercive manner to gain a competitive advantage in markets for nonbanking products and services (such as insurance sales).4 Congress therefore decided to impose the special anti-tying restrictions in section 106 on banks.
http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&group=17001-18000&file=17200-17210
BUSINESS AND PROFESSIONS CODE SECTION 17200-17210
17200. As used in this chapter, unfair competition shall mean and include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code.
17201. As used in this chapter, the term person shall mean and include natural persons, corporations, firms, partnerships, joint stock companies, associations and other organizations of persons.
17206. Civil Penalty for Violation of Chapter
(a) Any person who engages, has engaged, or proposes to engage in unfair competition shall be liable for a civil penalty not to exceed two thousand five hundred dollars ($2,500) for each violation, which shall be assessed and recovered in a civil action brought in the name of the people of the State of California by the Attorney General, by any district attorney, by any county counsel authorized by agreement with the district attorney in actions involving violation of a county ordinance, by any city attorney of a city having a population in excess of 750,000, by any city attorney of any city and county, or, with the consent of the district attorney, by a city prosecutor in any city having a full-time city prosecutor, in any court of competent jurisdiction.
17206.1. (a) (1) In addition to any liability for a civil penalty pursuant to Section 17206, any person who violates this chapter, and the act or acts of unfair competition are perpetrated against one or more senior citizens or disabled persons, may be liable for a civil penalty not to exceed two thousand five hundred dollars ($2,500) for each violation, which may be assessed and recovered in a civil action as prescribed in Section 17206.
17207. (a) Any person who intentionally violates any injunction prohibiting unfair competition issued pursuant to Section 17203 shall be liable for a civil penalty not to exceed six thousand dollars($6,000) for each violation. Where the conduct constituting a violation is of a continuing nature, each day of that conduct is a separate and distinct violation. In determining the amount of the civil penalty, the court shall consider all relevant circumstances, including, but not limited to, the extent of the harm caused by the conduct constituting a violation, the nature and persistence of that conduct, the length of time over which the conduct occurred, the assets, liabilities, and net worth of the person, whether corporate or individual, and any corrective action taken by the defendant.
This Book has come in handy for research and finding violations on my contract
Truth in Lending
Comptroller’s Handbook
October 2008
http://www.occ.treas.gov/handbook/til.pdf
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Below is my original posting if anyone can elaborate more to it and the posting listed above I would Kindly appreciate any Feedback..
February 6, 2009
Neil,
I have to ask on one of your previous posting I read that rescission letter should be sent to as many lender correspondences that you may have including the one to the originator of the loan. My loan was originated by Washington Mutual today being the 25th day since my first letter went out. The first 3 copies of the letter were received by the lender on the 13th of January at the branch where I initiated the loan, I also sent 3 copies to the Mortgage Servicing Center or otherwise the payment processing center and 3 more copies to the lenders Loss Mitigation Department.
Since the original notice was received the lender representatives have not stopped calling, every time they call if their number shows on my caller ID I answer since the 16th of January I started getting the calls I told them then to stop calling and kindly explained my self every time that I had rescinded the loan and I was awaiting for their correspondence to the letter. They insist they have not received anything from me and they are looking to help my by bringing me current. All I need to do is pay the month I am behind and the calls will stop.
Yesterday I faxed the collections department a letter indicating the many laws they violated with regards to my loan as much as how costly it would be if the district attorney took my case. I expressed myself accordingly and kindly asked that they stop calling me and to avoid further confusion that they only contact me by mail. That it was well over 20 days since I rescinded my loan and the consequences they risked in not responding and my rights since they failed to acknowledge 9 certified letters. As well as the many times they called me and I repeatedly requested they answer to my letter.
Now My payment was due on the 10th of January today I received a notice stating that if I do not respond with a payment with in 30 days they will start foreclosure proceedings and if I try to dispute the charges in court that would only speed up the time it takes to sell the home from under me. Now I know I have 9 certified postal certificates singed as received by one of their reps.
Today I have receive over 20 calls with number unknown and they hang up once voice mail picks up. I believe that now they have received the faxed copy and I also made the time to personally hand deliver a copy to the branch, of course I did not tell them it was my loan I simply stated that I was sent to do the delivery and if they could sing a sheet indicating I did deliver the document. Know when the branch manager read the cover sheet and what it stated, she said I had no business delivering to their branch and that the sender should address it to the bank. I stated that I was sent there because apparently the loan was originated there. Now I am not sure but under TILA I believe I read that the rescission letter should go to the address listed on the document and It only needs to state “I wish to Cancel” dated and signed now is there something that I can grasp to by getting rejected by the branch manager or turned away with the delivery of the letter should I even bother sending it to her certified like the other nine letter I sent. Or is the faxed copy to the collections department enough.
She blew me of and said it’s not my business this is a legal document and should be sent to the lender not the branch. That after having read the front cover it was not something she needed to deal with so I asked where should the letter be sent so I can transfer the info to the sender. She maid me wait for about 5 minutes came back out and told me to take the document back and have the sender look at the billing statement that it was not up to her to do it.
Since they have ignored my every request till this day, I am now thinking I should just start the lawsuit if I need to but am not sure since I faxed the second letter demanding they take action in correcting their wrong as well as sending me all the requested documents and the rescission request in clearing the deed and title. That I would allow for 20 days, although I am not required to do so. But was seeking they took action or I would forward the violations to the District Attorney for review.
If you or anyone out there has feedback I would appreciate it and Neil I emailed you early January I am not sure if my letter made sense but I would like to send you a copy of the letter I sent the bank I do not want to post it because I have found letters even here that are not expectable as was the letter posted regarding the Notice of Non- Compliance and I feel that with anything else it is best that people here seeking help don’t get miss informed as to postings. I have to let you know that some of the things I listed on the letter came from this blog and after researching in detail I felt it was valid.
You can email me or anyone with info directly at Help@EquityLoanManagement.com Neil I will email the letter to you for review if that is alright with you.
Thank you,
Bob
Neil if you could also elaborate to this posting, I would Kindly appreciate any Feedback. If you have an attorney that gets is please send me the info.
In Re:
Rescission means the Lender gives back the note and mortgage and you then negotiate the terms of the payback — but remember that if you owe them anything, after the treble damages in TILA etc., it is an unsecured debt not a secured debt (i.e., no mortgage)
Example:
YOU went to the lender to refi your property, you owed 100, the new lender loaned you 150, you rescinded loan; the lender puts you back to the 100. Mortgage contract on 150 is void. (becomes unsecured debt). They first have to give you the original note and original mortgage back then, you negotiate the terms of the 100 payback (unsecured debt) (No exchange of property). TILA says, “if the creditor does not act within 20 days, ownership of property vests in the borrower (obligor)”. After they don’t comply, bring action for non compliance to receive treble damages (triple) and then set off from original 100. They might owe YOU money now. Remember, the foreclosing entities are not the “real parties in interest”. They are vultures attempting to steal YOUR property. Direct violation of FDCPA and leads directly into RICO. Please find a lawyer that gets it. Good luck.
Lets say my prior lender had me in a predatory loan that I refi’d out of but sent sent extended rescission letters within the 3 year SOL(& let the current lender know about it) and the lender did not comply, prior and current. I had intended to use the money from recovered damages from the prior loan to cure the default I was currently in, but somehow before I could the servicer wrongfully foreclosed”in error” due to negligence but rescinded the auction. How would that affect my claim against the prior lender and can & should I go after the current for improperly handling my case?
Troubled: rescission don’t become void, as far as I know but you need to check with local counsel on what you mean by that. Except for an errant decision in Oregon, no tender of money is required in rescission until AFTER compliance by the “lender.” You can’t give the property “back” because you didn’t buy the property from the lender. You had the house and the lender had the money. Rescission means the Lender gives back the note and mortgage and you then negotiate the terms of the payback — but remember that if you owe them anything, after the treble damages in TILA etc., it is an unsecured debt not a secured debt (i.e., no mortgage). FTC so far has been useless as has the OCC, OTS, FED etc., All the regulatory bodies have basically taken a hands off approach despite the requirements of their charter (enabling legislation).
what happens after the rescission becomes void. As i read the consumer “must tender to the creditor the money or property received, Or, where the latter would be impracticable or inequitable, tender its reasonable value.”
Can we just give back the property and not get a new loan?
Is the value of property determined by current market value?
Can the court modify so that we do not have to keep the primary residence property?
Do you have to wait for the foreclosure process to be initiated on a primary resident property before we file the suit to rescind?
Is it better to file before foreclosure and use the FTC act to protect us?
When do we bring up FTC protection for unfair trade practices?
I am a beginner please forgive my questions if i am off track somewhere?
Thanks in advance and a BIG THANKS to the folks who brought this site to us ALL.
Hi Gary,
Is your mortgage a refinance loan or purchase?
If it were my property and it was a refi, I would use one of the rescission letters that is on this site but you should always check with an attorney.
hello
i have had a mortgage audit done, that proves tila/respa violations, now what should i do and what can i expect as penalties for lender
For all who have issuses with lenders…Your states’ COMISSIONER OF BANKS regulates these companies and will research and advise you for free on how to proceed. They will also require the lender to provide valuable documentation to them that you can then use in court as evidence that would not have otherwise been available to you without a subpoena.
On TILA, can one counterclaim in civil county court or does it have to be in a federal court? thanks.
We have been fighting a foreclosure here with TILA violations, fraudulent title recordings, and all that. We have laid a lot of good ground work for the court case, achieved a temporary restraining order, but it may be time now to obtain more experienced legal help with the case.
Would any good litigators here be willing to step in on a contingency basis?
I was offered a loan modification by an attorney representing Litton Loan. The letter offered a new payment amount and interest rate but did not include the new mortgage amount and an APR. Is this a slam dunk TILA violation?
please email me at mrlinton82@aol.com – oh it also a Florida loan so little FTC violation?
This is for M Mazurette. Please e mail a copy of the complaint you filed for declatory relief etc. My email address is emij2205@aol.com
I just found an answer on this page of the blog:
http://livinglies.wordpress.com/2008/05/29/218/
He says that a FTC and common law fraud would allow recission of a purchase money mortgage
Hi Allan,
Please do let us know. My attorney had me send a recission letter (I’m in the middle of a lawsuit) and they responded saying I have no right to rescind since it is a purchase money mortgage. So why would my attorney have me send a letter and tell them we are rescinding? I will find out on Monday but am anxious to know the answer.
Thanks.
Simonee
Connie,
Alas, my question was NOT answered.
I’ve always understood (hopefully incorrectly) that TILA rescission ONLY worked for NON-PURCHASE money mortgages (e.g. equity, maybe refinances, etc.).
If someone can authoritatively guide me on this TILA matter, I’d greatly appreciate guidance or mentoring.
Thanks,
Allan (Dench)
BeMoved@AOL.com
Dench, I would like to know if you received an anwser to you question, regarding TILA and Purchase Money Mortgages, if so would you be so kind to share? God Bless!!
What can a person do after a sheriff sale
I have 2 i is confirmed the other is not
We sent letter to Homecoming Financial (GMAC) and others requesting accounting of what is owed prior to a foreclosure. They did not respond and went to the court steps and foreclosed in VA on our property. One person bid. Waterfront appraised at $960,000.00 sold for $294,000.00 at steps. We only found out this week that it was foreclosed on by a Summons of Unlawful Detainer. We are making claim against the Lender, Trustees and others that: 1. No accounting given after requested 2. Trustee was a debt collector (not acting in fiduciary position) 3. Price was rediculously low as land alone would be $500,000.00 plus and even the tax assessment is $800,000.00. How do we move the action of summons for unlawful detainer in Gen. District to Circuit Court and because obviously some State Law has removed some law to rescind foreclosures already taken place, do we look at U.S. Code and what is TILA?
Kim (needing to file this week)
Is TILA ONLY for mortgages that are NOT purchase money mortgages?
How about if borrower was not competent, her signature was forged, etc.?
Is somebody whose name is on the title, mortgage and note, who is unaware of the transaction not entitled to rescind exactly because she was actually (given her mental condition) never given TILA disclosures, though maybe the forger was?
RSVP
BeMoved@AOL.com
But what if the lender contests the claim? They have right to. I highly doubt a lender is going to say, “Okay, here’s your money. Have a nice day!”
Your article was a very, very big help. The paragraph about lenders ignoring the rescission letter in hopes that the borrower won’t know what to do, was a godsend. Thanks for publishing the article. I am helping a friend fight his foreclosure and we had sent a loan cancellation letter, by certified mail, after finding TILA violations. The lender proceeded to ignore and the letter and sold the home. We got lucky, the lender bought the property so now we have filed a complaint for Declaratory Relief, Quiet Title and a Emergency Motion to set aside the Foreclosure Sale. We also discovered last week that Assignments of the Deed of Trust were held back, recording of documents out of the chain of title has taken place. It’s a nightmare. Thanks to your blog, I have been able to continue with positive actions against the lenders and I hope and pray the courts will recognize the fraudulent actions of the lenders.
I am currently dealing with an issue in court where I actually rescinded a loan within the 3 day period. (The closing atty. at the title co. seemed shady and we did not feel comfortable with the whole deal.) Well, they (WAMU) funded and paid off the other mort. co. within the 3 days which violated the “delay of performance” statute. Then they attempted to collect and I informed them that I had rescinded. (I have a copy of the form, a copy of the express mail label, a copy of the signed delivery receipt, etc.) Plenty of proof that I rescinded in a timely manner. This was 2001. I made no payment to them at all. I attempted to pay my old mort. co. but they sent my payment back. Well I faxed them (WAMU) several copies of my rescission documents over the years and it wasn’t until 2005 that they cancelled the mortgage with a “lost note” affidavitt. Clearly beyond the 20 day requirement in paragraph (d)(2) of reg. Z. Now here in 2008 they are trying to sue for the money they paid out back in 2001. Several questions because my lawyer has never faced anything like this. Wouldn’t violation of Federal Law be used as a defense against an “unjust enrichment” claim? Couldn’t a SOL defense be used because they let so much time expire and in a sense “NEVER” complied with paragraph (d)(2)? Could it be established that I never have to comply with paragraph (d)(3) because they can never comply with (d)(2) technically because of an implied “statute of limitaions” ie. the 20 days? Could my attempts to fax copies and work towards a resolution be considered an attempt to “tender” if a timely compliance with (d)(2) had occurred? Honestly, my wife and I sought a resolution years ago and instead WAMU sought onlt to force a loan on us and then tried all kinds of tactics to collect, EVEN FORECLOSURE proceedings! On a property that they had NO CLAIM to under the Right of Rescission we exercised. Their harrassment has gone on to this day, and now THEY HAVE THE GALL TO SUE US! After all of this, I don’t think they deserve anything. I have done everthing properly under the law, they have at every turn not followed the law and even denied that we had a rescission. Now a Judge may possibly rule in their favor, but I feel that the Right of Recission may be the key to beating them. I know this is a lot, but do you have any advice on this situation?
Thanks in advance and GOD BLESS!
Bryan
Hi,
Thanks so much for this blog… really enlightening & educative.
I am currently in bankruptcy (CH13 – though started with Ch 7). Fraud committed agianst me goes way back to when I first got my loan. I thought it was just a mistake ad oversight on my end and so I had to eat the monetary obligations that arose from the mistake. Amongst other violations, I did not receive a 3 day right of rescission. My loan is less than 3 years old. The mortgage company even violated bankruptcy (law) codes. When I found out about this, I informed the BK attorney but he would do nothing about it as far as he was concerned, he could not see what they did wrong and so would not contest anything. Illegal foreclosure has already been done and my home reverted to the lender. I am having to handle the bk myself since attorneys seem to add to the problems instaed of protecting you (which was the reason you hired them .. at least that’s what I thought)by putting together an adversarial proceeding to include the TILA violation and 3 day rescission claim. Any thoughts about steps I need to proceed? For instance do I need to send my cancellation notice to the mortgage company before filing the adversarial proceeding? Do I need to start a quiet title hearing (what is this exactly?) ..
Any comments will be appreciated.
ps: this lender is notorious for not complying with any law – they have not bothered about answering anything I have sent to them in the past.
Hope to hear from someone soon (they are corrently trying to evict me).
Thanks & Have a Great Day!
can you do a TILA challenge after the sheriff sale and redemtion is over (im in Minnesota) My attorney said you cant, ive worked with a lot of attorney’s and found they are wrong sometimes too.
Two issues keep popping up for me on TILA, RESPA, REG Z which are:
Fundamentally, if I have two TIL statements, one from the mortgage broker is completely in error and the lender got theirs right who is accountable? All the docs including the mortgage brokers TILA went to the Lender who bundled them altogether and sent on the buyer.
Second question and more complex is how does TILA Reg Z RESPA relate to a “one time close” “construction to perm” loan. Very complex. A buyer who has elected to stay on the construction loan as the variable rates are lower but has the above noted TILA issues and is going into default due to loss of income may not have standing with TILA. The purchase was a vacation home. The attornies appear unclear in all of this.
This is really good however do you have the exact law a judge is held to when reviewing a pro se TILA litigants case? Thank you again Neil and all bloggers especially all of the other lawyers now joining in this blog, we salute and applaud you all for your patriotic good will and deeds!
Hello:
I was given this website and found it very interesting and informative. A question arises, where can one obtain a copy of the banker’s handbook? I look forward to hearing from you.
Russ Thompson
[…] with TILA questions. So I went out hunting to see if anyone had already written about it in terms thhttp://livinglies.wordpress.com/2008/05/07/foreclosures-tila-right-of-rescission-and-consequences/Top Scoops Scoop.co.nzI don’t like money very much, but it calms my nerves. – Joe […]
I have a very unique situation I was probably one of the first victims of the predatory lenders.
1998 I answered an ad for a lower interest loan (I was laid off at the time) I have reason to think the broker falsified my employment. I wanted to consolidate my debt and lower my monthly payments. [I will not mention the lenders involved for I am still trying to figure out what to do for the paper has changed hands several times and I’m not sure who really owns the note.] My wife and I sat down at he closing to sign the paper work and the numbers where not what we where told. It became a high pressure closing and I told her for the sake of argument we would simply rescind the next day which we did.
[have documentation]
However the lender did not wait the three days and (1) filed the mortgage the very next day (2) paid off our existing mortgage, for it was a refinance. We was stuck, we contacted the lender in a few days via phone to try and work things out to no avail . We new a storm was brewing so we hired an atty and sure enough outlandish demands were made by the lenders atty and threatened to foreclose. A suit soon followed to cut to the chase the suit was dismissed without prejudiced by the lender. But here is the crux we have not made one mortgage pmt in ten years and the mortgage is still recorded I am now disabled and need to sell the house but cannot because the erroneous mortgage is recorded. What to do?
[…] with TILA questions. So I went out hunting to see if anyone had already written about it in terms thhttp://livinglies.wordpress.com/2008/05/07/foreclosures-tila-right-of-rescission-and-consequences/LEGAL NOTICES 5-8-08 DrummerNOTICE IS HEREBY GIVEN that default has occurred in the conditions of […]
[…] Finance, Economy-Business News, Stock Market wrote an interesting post today onHere’s a quick excerpt TILA RIGHT OF RESCISSION and CONSEQUENCES TRUTH IN LENDING FEDERAL CIVIL COURT, FEDERAL BANKRUPTCY, STATE COURT INFORMATION I have been inundated with TILA questions. So I went out hunting to see if anyone had already written about it in terms that a lay person might be able to understand. What I found is shown below. I believe it to be generally correct and the citations are good citations of law. See this site for the entire write-up. It should give most lay people an idea on how to ha […]