Rescission, Rescission and Rescission

See 15522201-Tila-Disclosure-Req-Viol-Remedies

Amongst the various emails, requests for assistance and comments on the blog there are some threads. Most people, even lawyers, mistake the remedy of rescission for something else. The first thing you need to know is that, no, you don’t give your house “back” to the lender because you never got your house from the lender (pretender lender) in the first place. You received money and you didn’t receive it from the “lender” if your loan was securitized.

There are several types of rescission and this list is by no means exhaustive:

  1. Truth in Lending
  2. Usury — see appraisal fraud
  3. Common law fraud
  4. Securities law violations
  5. Statutory rescission based upon deceptive lending practices
  6. Statutory Rescission based upon deceptive business practices

Each one carries its own unique set of characteristics. TILA rescission is interesting but is not being used successfully because people don’t understand it and then there is the problem of who you send the notice of rescission to if you already know you are not dealing with the “lender.” You can look up the details of TILA rescission in the search engine for this site. The important thing to remember is that in a TILA rescission the lender is required to either take it to court in a petition for declaratory action or comply and give you a satisfaction of mortgage, a canceled note and release. And the “lender” has a time limit to contest your notice of rescission. If they exceed the time limit you would argue that they have waived their right to refute it. And if they change position on you and claim they are not the lender and therefore your rescission notice is void, then they cannot foreclose. A midway position would be to allow them extra time to file the declaratory action, but that would violate the express words of the Federal Statute.

In TILA your “tender” is not due until AFTER the lender has either complied with the statute or complied with the court order when they lose the petition for declaratory relief. But you might find that the Judge agrees with you that they have no right to foreclose and that for the same reason you sent the notice to the wrong party. That would require you to file also a Petition to Quiet Title naming John Does 1-1000 among others, and anyone else you know that is involved on the creditor side.

The point is that by filing the notice of rescission you immediately create a powerful argument for saying the obligation was converted from a secured obligation to an unsecured obligation. And you have a strong argument to say that the note is no longer evidence of the obligation because it is BY OPERATION OF LAW extinguished along with the mortgage or deed of trust. So if you ever get up to the point where you must tender money or payment to the real lender, whoever that might be, you will tender only so much as the obligation, less the value of your claims, defenses, counterclaims etc. for all the causes of action discussed on this blog.

It probably will turn out that your “tender” will be a demand letter that says to the “lender” now you owe me damages on top of releasing the house from the encumbrance.

If the case proves out under usury because of predatory loan tactics, usury, securities violation or any combination, you could be entitled to treble damages (read that as three times the stated principal of your note). If you expand the claim to include a claim for all undisclosed profits and fees and all money paid at closing and purportedly under the loan, you probably have a claim that totals around twice the amount of your mortgage note.

If you further expand your claim for undisclosed profits in the form of payoff from credit default swaps, your claim could be up to thirty times the amount of the note — right that is “thirty” because that is the amount they got when your loan “defaulted”. Note that in order to score this windfall they had to do everything in their power to make sure the loan goes into default thus triggering the CDS insurance. So when they take money from you, and they are supposedly negotiating with you for modification, what they are REALLY doing is getting you past the point of no return so they can collect on the insurance and take your house too.

Many people are getting letters back from the pretender lender saying they have no right to rescind. Very interesting, but wrong. That statue says that if they think they have a legitimate claim to defer or eliminate your claim for rescission that must do it in the form of a declaratory action. They don’t want to do that because they would be required to reveal many details of the transaction that they never want the Judge to see. The statute does not say the lender can simply send a letter.

If they have failed to comply and they go forward with foreclosure then one strategy would be to bring an emergency action for permanent injunction plus attorney fees and costs, stating that there is no encumbrance BY OPERATION OF LAW (see exhibit “A” Notice of Rescission) plus the allegation that they neither complied nor filed the declaratory action.

And don’t take the narrow response that your loan is a purchase money first mortgage and is therefore excluded from TILA. That probably isn’t true even if it looks otherwise. There was nothing simple about this transaction. And even a cursory look at the snaked path of the transaction from the homeowner up to the investor who bought bonds (mortgage backed securities and was therefore the ultimate source of the funds) will show that if this was a purchase money first mortgage it did not resemble any other purchase money first mortgage before securitization. And then of course there are all those other grounds for rescission and damages.

Why do “lenders’ and “pretender lenders” say “no” and pull all these other tricks amounting to theft, trickery and deceit? Because they can if you let them. It works for them in 99% of the cases and they get the house and the insurance too. Nice deal for them, don’t you think?

60 Responses

  1. GOOD NEWS, NIEL HELPED . . . ME AGAIN ; ) ; ) READING AND JOINING LIVINGLIES Too important for me. I had court today for Summary judgment against me, Countrywide now BOA, like living lies says documents, documents, documents. I removed the case to Fed court in 2008 and on title 15, but should have under 28 USCA 1332. I didn’t have diversity jurisdiction, back in state court in 2010; and a week ago, a surprise motion for summary judgment buy them. When in court today, they,including my own lawyer, said I was done for, we hadn’t had a scintilla of discovery. I had lots of evidence. As said by Niel, affidavit are important, mine was faxed into the court 20 Min before trial.
    My accountant has since moved and had been in a bad car accident so he’s only mentally and physically available a couple of hours a day. They tried to, both, say the ruling in the Fed was on the merits (facts) since “I have published opinion” in the 4th Circuit on res ajudicata, it has to be tried and heard on the merits. After getting a frustrated look from the both attorneys, both holding the order from Fed Court close to their chest, three times telling me what it said. I was pro se and either of them wasinvolved at the Federal level, so each time I went to grab the order they moved it from my reach, (as when I was a paralegal on civil rights and habeas corpus, it was like what criminal defendants are faced with in a forced plea agreement).

    The two talking as if I wasn’t in the room, looked at the affidavit and concluded (both not liking it’s arrival) that while it’s late, the judge would likely include it, BUT, my motion back 2 1/2 years ago stated the same facts and since they had all the adverse Federal stuff, they had to have the same affidavits that was presented there. They knew the Judge wouldn’t Rule if there was a genuine issue of fact in dispute.

    MY case is “I have paid”, someone, and we all know who it is, got my info from the Countrywide Office, used it to take 44 payments to others homes. Then their resistance to giving my money back. They were to credit my money back, but sold the loan (MERS) to Bank of New York, Countrywide keeping all the money and sending it to Bank of NY Foreclose-able. The same persons also forged most of my credit line, second mortgage different lender, and they wanted my home too, they made a mistake, they actually contacted me through e-mail, that’s evidence. That’s why BOA don’t tell you their name or e-mail, they make promises and don’t keep them. then you lack proof.
    Opposing counsel wanted it off record, knowing Countrywide’s many shenanigans and danced around the affidavit and used one paragraph as a weakness, I had these persons criminal record in Court (326 line items) of course my attorney refused to put it in. They wanted it to appear as if the alleged ongoing interest eclipsed my stolen money, without $100,000.00 I spent with other attorney’s and expensive accounts to prove the obvious. I was told to be quite by my attorney, bad idea, when the crux of the case is being passed over. I got in and “I talked” the Judge gave us 6 weeks and said we’ll talk in a conference and not to show back up again on Summary Judgement. Finally, the first opportunity since 2005, I’ll get a chance to show proof.
    I heard good things about this judge, and the two attorneys are generally honest, but deposing of a scandal like this is the main objective.
    AS TO ALL OF US:
    This day and time we’re being robbed from, all by through third parties, and we have become like Dear in the headlights, these companies over bill and keep it and want more. Understandably if they have been cheated too. but here they know who they are. Additionally, the MERS documents has an undated looking unrelated sign sheet that has me appearing on a date I didn’t to effect my loan, Title Loan Modification agreement in 2006. If this wasn’t needed why was an entire sheet with everyone’s signature on it. but it’s a document by itself, without a page number and relating to that Loan Mod on a day I was at work unknowing this was going on.
    My conclusion, they didn’t credit the $25,000.00 hard cash (Countrywide) they collected Default insurance or Derivatives, They got a “Lost Mortgage Satisfaction”, which means lost title and issued and “PAID OFF” (as per Neil) documents, documents…So they are paid in full, then sold it to Bank of NY, one gets all the money the other gets the house. “WHAT-A-DEAL” and you thought the banks really needed bail-out monies, what-a-ruse, but I’m sure the monies from China have been “passed through to this in some way. NOW, THE MONEY TRAIL, AS NEIL SUGGESTS.

  2. saw on this cite just recently about insurance collected by the lender and then foreclosing, can someone redirect me to that, it was on here.

  3. This is very helpful, but my situation is very different, my case has been moved, by me, to Federal court under title 15, as a debt collector. Someone I know entered Countrywide and used my financial info to debit my account paying for another house, in South Carolina the Statute of frauds “MUST” have it in writting to pay someone elses Debt (prevailing law in this case), actual my cost was about $30,000.00 after two courts (state twice) they merely failed to continue to prosecution and the court wasn’t exactly acting per procedure); an Attorney part of the time and a professional accountant and my time, it exceeded $110,000.00 my loan is $530,000.00 the house loan value fell from 1.5 M to $934,000.00.
    When we had proven this was a fraud, they knew who the people were but Countrywide opted to rectify the situation by offering to apply the (rico type) wire fraud, funds to my account, what was later to be revealed as Parallel foreclosure, before it was ever heard of, they moved for foreclosure them telling me to stop paying for time being, Their idea, not mine. They moved for foreclosure really fast. Besides they were overcharging taxes under Respa, over 1/6 and I wasn’t to be in that scheme since I put down over 20% on my home and had previously owned other homes, Countrywide put this on me at some point.
    Each time I file for a hearing the case seems to disappear, the file was “somewhere” but I couldn’t view it, last time I went to the Court house and the Judge directly told me the case was disposed of. Now they are trying to act as if (now 3 years later) it was awaiting a state Supreme Court Ruling haulting foreclosures for Hamp (Modifications) I never pleaded that, just the fraud and the Statute of Frauds, not to mention that when moved back to state court without a time limit, When the first pleading was filed, and when I received it, I had one day to reply, their Pitty Bose machine stamp was 25 days dated after the pleading date (Trying to manufacture a default) Now I’m “guessing” back to Federal Court??? since the same persons also counterfieted and forged $81,000.00 out of my 2ed Mortgage. Citi, They (Citi) recently sent me a letter asking me to (“Please”) disregard their previous letters about foreclosure, I filed forms TILA Reg Z forms and the person was arrested, but BOA is still trying to turn a fraud against me to take my home, and Countrywide was the one the fruad was going trough. I have actually recorded BOA and they were informed they were being recorded, (they left the open phone thinking I hung up, and it was reported internally as fraud, someone higher up with all this, is still trying to take my home. There best offense is to manufacture a default by not sending me a copy of the pleadings.

    I’M OPEN FOR SUGGESTION HERE???

  4. I took a look at the MERS corporate document . Listed below is one of the directors of MERS. It might be of interest to some of you.

    Business Name: Green Point Mortgage Funding
    Contact Person: S A Ibrahim
    Title: CEO
    Gender: –
    Address: 100 Wood Hollow Dr
    Novato, CA 94945
    Office Phone: (415) 878-5000
    Office Fax: (415) 878-3572, ( 415) 878-2082
    Office Email: –
    Web Address: http://www.greenpointcld.com
    Estimated Staff: –
    Industrial Classification: 616201 – Real Estate Loans

  5. to Linda: sorry for prolonged delay Stephen F. Dial. but I would like to warn all of you in california don’t put any faith in attorneys advertising about tila or consumer protection for that matter. be smart and thrifty, hire a paralegal part time they cost $12/hr what attorneys cost $250/hr

  6. A2) Code Of Civil Procedure Section 337.3. (not sure but I believe this is California law?)

    An action based upon the rescission of a contract in writing. The time begins to run from the date upon which the facts that entitle the aggrieved party to rescind occurred. Where the ground for rescission is fraud or mistake, the time does not begin to run until the discovery by the aggrieved party of the facts constituting the fraud or mistake. The time does not begin to run until the representation becomes false.

    And

    The federal doctrine of fraudulent concealment operates to toll the statute of limitations” where a plaintiff has been injured by fraud and ‘remains in ignorance of it without any fault or want of diligence or care on his part.'” Holmberg v. Armbrecht , 327 U.S. 392, 397 (1946) (quoting Bailey v. Glover , 88 U.S. (21 Wall.) 342, 348 (1874)); see Maggio v. Gerard Freezer & Ice Co. , 824 F.2d 123, 127 (1st Cir. 1987).

    Credit for this information goes to Patrick Pulatie …

    Dan Edstrom
    dmedstrom@hotmail.com

  7. Right of rescession extends BEYOND 3 Years?

    Here it is:

    Code of Federal regulations 12 CFR 226.23

    Title 12: Banks and Banking

    PART 226—TRUTH IN LENDING (REGULATION Z)

    § 226.23 Right of rescission.

    (h) Special rules for foreclosures —(1) Right to rescind. After the initiation of foreclosure on the consumer’s principal dwelling that secures the credit obligation, the consumer shall have the right to rescind the transaction if:

    (i) A mortgage broker fee that should have been included in the finance charge was not included; or

    (ii) The creditor did not provide the properly completed appropriate model form in appendix H of this part, or a substantially similar notice of rescission.

    (2) Tolerance for disclosures. After the initiation of foreclosure on the consumer’s principal dwelling that secures the credit obligation, the finance charge and other disclosures affected by the finance charge (such as the amount financed and the annual percentage rate) shall be considered accurate for purposes of this section if the disclosed finance charge:

    (i) is understated by no more than $35; or

    (ii) is greater than the amount required to be disclosed.

  8. I thought that under certain conditions the right of resession was extended without limmit , such as fraud, non-disclosure or disclosure error more than 1%. Can anyone veriify that?

    I am in Hawaii, and fighting foreclosure.

  9. Kara,
    Non-judicial – California. Email me …

    Thanks,
    Dan Edstrom
    dmedstrom@hotmail.com

  10. Dan,

    Where are you at in your process and are you a judicial or non-judicial state? Maybe we can be of help to one another off the boards as well.

  11. Kara,
    Yes! It SHOULD be mutually exclusive. If you have the right to foreclose you can rescind. If you did not notify the “real” lender in order to rescind, you cannot foreclose. That is why you probably want to include rescission and quiet title in your response (judicial) or lawsuit (non-judicial). I already rescinded and gave notice. If they didn’t get notice, I will include it in my lawsuit directly to the parties I know about and indirectly to does 1-100 (or 1-1000 or whatever). They would then be on notice. And I would be asking who the real and indispensible parties are (for the 10th time).

    Thanks,
    Dan Edstrom
    dmedstrom@hotmail.com

  12. Dan,

    True- but if the courts were to say the recission did not stand based on not notifying the REAL lender they would have to uphold they can not foreclose either? If that is true I can pettion to the court for proof of who the REAL lender is so I can rescind the appropriate way- thus tying everyone’s ahnds because the REAL lender is ??????

    I look at it as a form of trapping them at their own game but I could be trapping myself. Thoughts?

  13. zurenarrh,
    You posted a question back on August 26 at 7:15 PM.

    Asking what a Material Disclosure is:
    “When a Material Disclosure violation is found …”

    This is an excellent document on Truth-in-Lending: http://www.scribd.com/doc/15522201/Tila-Disclosure-Req-Viol-Remedies

    Here is specific information from http://www.docmagic.com/compliance/wizard/2005/february-2005/respa-tila:

    Material Disclosures: Initial Disclosure of finance charge, other charges, security interests, statement of billing rights, and the following home equity plan disclosures, as applicable:

    1. A statement of conditions under which creditor may take certain action, as described in Section 226.5b(d)(4)(i);

    2. The payment information described in Section 226.5b(d)(5)(i) and (ii) for both the draw period and any repayment period;

    3. A statement that negative amortization may occur, as described in Section 226.5b(d)(9);

    4. A statement of any transaction requirements, as described in Section 226.5(d)(10);

    5. A statement regarding tax implications, as described in Section 226.5b(d)(11);

    6. A statement that the APR imposed under the plan does not include costs other than interest, as described in Sections 226.5b(d)(6) and (d)(12)(ii); and

    7. The variable-rate disclosures described in Sections 226.5b(d)-(12)(viii), (x), (xi), and (xii), as well as disclosure described in Section 226.5b(d)(5)(iii), unless these disclosures were provided at time of application in a form that consumer could keep and included a representative payment example for category of payment option consumer chose. (12 CFR 226.6)

    Hopefully that is all inclusive but I am not an expert and do not really know.

    Thanks,
    Dan Edstrom
    dmedstrom@hotmail.com

  14. J in CO,
    No I have not. I believe that would typically be part of discovery. It is my understanding that the other side will not respond to discovery (but I have no actual proof or experience). It is my understanding that once insurance does kick in (credit default swap or otherwise) it gives the insurer some sort of interest in title to your property (or payments?) – but I do not know how it works. Neil posted something on AIG and it had a lot of information but I have not delved into that area yet.
    Can you send me the SEC filings you have – and especially what you are referring to showing that the principle balance is 0.00?

    Thanks,
    Dan Edstrom
    dmedstrom@hotmail.com

  15. Dan,

    I have a question for you. In the research you have done have you found any resource where you can search to see if the CDS insurance has paid the trust?

    I am going to send everything out to the various parties this week including a rescission since I was never given one and I’m still within the three years. I have the trust info, prospectus from WAMU, servicing agreement showing duties etc. The interesting part to me is that on the report they send to the trust monthly they show the principle balance etc as $0.

    I believe that the original servicer/depositor was supposed to be CW but they declined to take the file from the seller, then it ended up in the WAMU bundle. I think the CDS insurance was paid in the early days or the value paid for the loan from the seller was greatly reduced.

    I am afraid of the small town judges here and want to be as prepared as I can be in case they actually respond when I rescind and thought the proof of the insurance payment would be very telling. Hopefully the burden of proof will be on them to produce the info but I am hoping to be so compelling that I nail them straight from the beginning.

    I am on my 9th month dealing with WAMU on a mod application and have some employees that are trying to help me since it is obvious they do not want this one modified.

    The fraud and violations are enough to hang them but I want to represent myself as long as I can without an attorney. Most I have talked to don’t think I can win as the judge will think it is unfair to allow me to have no repayment or they want to start a class action. I would prefer to stay under the radar and hope they do very little to respond.

    What is your opinion on laying out the claims in the rescission letter so that they think twice about responding to it and/or the quiet title action? I was thinking that if I show them that I understand all of the process and what they have done wrong(documents to prove it have been given to me by them) they may want to pick their battles and let mine slide through.

    My worry is that it is a loan over a million and they may fight to hang on. On the other hand they will be subject to much larger damages if I take the offensive.

    Any thoughts would be appreciated!

  16. Kara,
    You would think it would be. However, the servicer (I assume you mean sub-servicer) does not (presumably) work for the real lender. They are hired by the master servicer. The master servicer works with the depositor who creates the Trust. Together they (master servicer and depositor) hire the Trustee. They are trying to get you to believe the Trustee (and/or the Trust in some cases) is the “lender”, however the “lender” is probably considered the “holders of certificates” that were issued from the Trust. The sub-servicer probably does not know who they are. To complicate this issue further, some of the “sponsers” (I believe this is usually, but not always, the master servicer) pledged the loan to the depositor and kept their fingers in the cookie jar. In my case I have identified 10 companies that have an interest and who might be considered the “lender” – and that doesn’t even include the “holders of certificates”. In my opinion they are all together considered the “lender” and none of them can do anything on their own. They said the assignment was without recourse but the next paragraph said it was with recourse (a security interest, grant, pledge, etc).
    I do not know what a court would uphold though (in either case) as far as notice to the “lender”.

    Thanks,
    Dan Edstrom
    dmedstrom@hotmail.com

  17. Dan,

    Wouldn’t it be the servicer’s responsibility to notify the REAL LENDER? Since we do not know who it is, shouldn’t it be implied that our servicers do since they are suppose to be paying our payments to them. (“servicing the loan”, to me means taking care of all things regarding the transaction…)

    Thus when the servicer receives a rescission notice, I would think that would be the notice, period. Am I wrong to think that way?

    Quiet title will of course cover anyone in the future as well and thus finalize the action.

    Please advise – any attorneys?
    Thank you

  18. Thanks for your reply Don,
    I am in Washington State. I only found one attorney on the list and have left several messages… no call back. Any other suggestions?
    I also have an interesting situation of being names as a creditor in the Bankruptcy case of Accredited Home Lenders. I have till the 6th of October to file my proof of claim but am not sure I have enough experience to enter. Any help will be much appreciated.

  19. Angela – what state are you in? Also look under the Lawyers that get it area on the left side

  20. Has any one had any success with working with an attorney?
    Please send contact of attorney… Thanks.

  21. As far as the lender (or Trustee) not getting a copy of your notice of rescission, debt validation or anything else, I use the following in all letters:

    Notice to Principle is Notice to Agent. Notice to Agent is Notice to Principle.

    Notice to Servicer is Notice to Lender. Notice to Lender is Notice to Servicer.

    Notice to Servicer is Notice to Trustee. Notice to Trustee is Notice to Servicer.

    Notice to Servicer is Notice to Master Servicer. Notice to Master Servicer is Notice to Servicer.

    Notice to Servicer is Notice to Holder(s) in Due Course. Notice to Holder(s) in Due Course is Notice to Servicers.

    Notice to Servicer is Notice to Foreclosing Attorney. Notice to Foreclosing Attorney is Notice to Servicer.

    Don’t know if it works, but I don’t know why not. If the servicer is not working for the lender I don’t know what they are doing collecting a payment.

    Thanks,
    Dan Edstrom
    dmedstrom@hotmail.com

  22. About a year ago I closed on a purchase loan for my primary residence, and Quicken mis-stated the escrow payment required to support property tax. Now Chase (who took over servicing about 3 months after closing) send an annual escrow report and demands an increase of the monthly payment by $921 for 12 months to cover the shortfall, then the payment will increase by about $300 a month. My income was borderline to qualify & I believe Quicken lowballed this intentionally. I sent a QWR to both Quicken & Chase; heard by phone from Quicken who offered a possible refi, haven’t heard at all from Chase & it’s over 30 days. Quicken says they relied on a company & got an incorrect tax amount even though the correct annual amount appeared on the appraisal & title report. Would a TILA rescission apply & if not what do you guys recommend? I’m underwater by amount $70k, property is in CA.

  23. I could really use some help as this is the first post but it seems in reading most of the info this could be my saving grace.

    I have been trying to modify my mortgage with WAMU/CHase since February to no avail. Now that I started researching I have requested and received(actually without a QWR letter) my mortgage documents. Upon receipt I have come up with a huge number of questions as to what direction to go. I will try to summarize the loan transaction then the violations that I can clearly see in detail:

    Loan amount was $999,000
    Cashout
    Stated Income
    Neg Am Option Arm
    Sold to Countrywide(not accepted) then to WAMU(now Chase)
    MERS System
    Denied Mod
    Now the interesting part…………..

    There was no rescission period since it was closed as a second home?

    (1) My original loan application from 10/31/2006 is clearly checked as a primary residence which is subject to the refinance. I additionally had to provide a letter of explanation as to why this home mortgage was less than my previous home of which I still owned. In the letter I explained the move to the new neighborhood and included the copy of my child’s enrollment in his new school and the utility bills as well. I had at the time lived in the home for about 6 months prior to the refi.

    The loan documents were changed at the closing to reflect this house as my second home even though it was explained and documented as a primary. The other home is six miles away, why would I have a second home that close. Who decides this?

    Since this is the case and WAMU is clearly in possession of my original primary residence application and not the letter of explanation would they still have to give me the right of rescission? Would this be fraud by the underwriter?

    (2) TIL disclosures-
    Since this is a Neg Am Option ARM I have a few various disclosures that were done and then redone then redone again at closing. The first application was signed 10/31/06 and the disclosures were dated the same day. The GFE reflects a 9.9% rate but no adjustable disclosure for the Neg Am. The second GFE has a rate of 1.5% no adjustable disclosure and is dated 11/17/06? The final disclosures at closing 12/13/06 have a 7.8% rate and the applicable disclosure for the adjustable rate etc.

    I would assume there are multiple issues in correct disclosure by the broker and the lender but have not done a complete audit as money is tight.

    (3) Stated Income- I see some info on fighting the underwriting of the stated income loans as not having sufficient info to determine borrowers ability to repay. Has this direction been successful? The 4506-T was not signed until the closing date 12/31/06 so I assume they never pulled a transcript. The 4506(standard version) was signed as of the 10/31/06 date.

    Not sure if this is a good argument so thought I would include.

    (4) I had already known some info but thought it would be relevant in the process to include that upon pulling a background check on the broker he is a convicted felon in a large S&L failure that served time. Since the licensing wasn’t necessary in the states(both were the property was and the branch location) he was allowed to do mortgage lending.

    To me it seems that regardless of the issues with the MERS system and the mortgage backed securities that I have some legitimate claims to fight for a rescission from the primary residence and the fact that I never was allowed the original rescission period. Is this more fraud or should the battle for rescission be the direction to go?. If rescinded do I have to be able to get a new loan and just get back the interest and fees or can I get rid of the loan altogether?

    I have forwarded and confirmed receipt of the QWR letter to make a more formal request for documents and have asked for underwriting documentation and history of payments and disbursements to see if I can obtain more paperwork. This hopefully is a start.

    I am unfortunately strapped for cash and behind on three payments and my property taxes but not yet being referred to the legal department due to my pending re-re-reapplication for a modification. This makes it hard for me to hire an attorney and I’m unsure if there is a recommended one for CO to review and help me with this.

    I think I can handle some of this on my own with the correct guidance but this seems to be the best place to start with my research.

    I’m sure I have something to pursue but the direction would be what I am most concerned with.

    Any help is truly appreciated!

    Thanks

  24. Chase home finance finded a loan 1.5 million and the home was not complete after telling me they would not close without a certificate of occupancy. They gave me a right of recission on anpurchase money contract and I recinded it. Now they are trying to foreclosure.

  25. Hi Angela,
    There is an obvious discrepancy in the regulations but, in my opinion, you can not deny 15 USC 1639 states 1635 applies if there is a violation. Therefore, I believe the court would have to give consideration to the rescission rather than dismiss it. We will see because I’m going to go with it and challenge the mortgage company as far as they want to take it.

  26. Dying Truth–could you post what attorney you used so others won’t be taken as you were–thanks

  27. Hmm, interesting Marvin, this is good news!… what did your attorney say when you pointed this out to him. I just read that again and though it says “ANY MORTGAGE…..” when you click on 1635, that it was referring to, (e) of that 1635, (e) Exempted transactions; reapplication of provisions
    This section does not apply to—
    (1) a residential mortgage transaction as defined in section 1602 (w) of this title;) it seems like “residential mortgage transactions” does not apply… looking forward to your take on this.

  28. How Rescission Applies To Mortgages (Attorneys, please read)

    I posted several times asking where the regulations are that link a rescission to TILA since most that have been noted here have a caveat that says (paraphrasing) “Does not apply to mortgage transactions.” That would mean that you can’t rescind based on TILA unless it was a re-fi. And that was what attorneys were telling me. WRONG!
    If your attorney pulls this on you, ask him to read 15 USC 1639. In that statute, it states several prohibited acts as well as requirements FOR MORTGAGE TRANSACTIONS. Section (j) of that same code says: “Consequence of failure to comply –
    Any mortgage that contains a provision prohibited by this section shall be deemed a failure to deliver the material disclosures required under this subchapter, for the purpose of section 1635 of this title.”
    AND – 1635 IS THE RIGHT OF RESCISSION.
    Thank you to the keepers of this website – please let as many people as possible know they have this power available to them because banks are crooks…period.

  29. FOR THE LOVE OF PETE, will SOMEONE please let me know where the right to rescind applies to mortgages! Every regulation I see ends with “does not apply to mortgage transactions”

  30. On Top of the previous post the mortgage on file does name Greenpoint Mortgage (that is what is on file with the county) They do NOT the promissory note and they are tring to reinstate it – We have paid money to have the handwriting analisys and they came back as Forgories!! Bank states that even if they were it is unjust enrichment.

  31. I am a very lost consumer. I have an attorney and we started this process last June (08). I have brought the resission issue to him – but he stated that with the first mortgage there is no right of rescission. Is that true? Our forclosure is stated as Wells Fargo, trustee for bear stearns asset backed securities I llc Greenpoint Mortgage…pass through cert.
    Greenpoint serviced the loan for about 2 or 3 months then it was turned over to EMC that is who we have been paying ever since.
    Also, our mortgage was in Aug. 05 and we tried everything to work with the bank we tried to refi in 07 they would not even sent us a “Forged” prepayment allonge, then we tried a short sale, they never approved or denied and then we received the foreclosure papers in the mail in June of 08. Do we have rights regarding this rescission?
    Please Help!!!

  32. sorry can’t find the application to the court one right now u can get it 4 free online though hope these help you guys….

  33. IN THE __________________COURT OF ___________________________ (County),
    __________________________________________ (State)
    ________________________________ PLAINTIFF
    V. CAUSE NO. ______-______
    DEFENDANT
    ________________________________
    COMPLAINT
    COMES NOW ____________________________, Plaintiff in the above-styled
    and numbered cause, by and through his attorneys, and files this his Complaint against
    Defendant, _______________________________, and in support thereof would show
    unto the Court the following matters and facts:
    1. Plaintiff is an adult resident citizen of ___________________________________
    ________________________ (city, county, state).
    2. _____________________________________________________ is a corporation
    organized and existing under the laws of the state of _____________________________,
    with its principal office located at ________________________________________
    ___________________________________ (street address, city, county, state, zip code),
    and may be served with process and other writs of this Court at
    __________________________________________________________________ (street
    address, city, county, state, zip code).
    3. Plaintiff owns ______________________________________ (e.g., in fee simple)
    and possesses that real property (hereafter called Property) situated in the County of
    _____________________, State of __________________________, and described as
    follows:
    (Insert Legal Description).
    4. Plaintiff and Plaintiff’s predecessors in interest have had exclusive, complete,
    actual, open, notorious, hostile and continuous undisputed possession of the Property
    adverse to Defendant for more than ___________________________ (statutory period).
    5. Defendant claims an estate or interest in the Property adverse to Plaintiff.
    Defendant’s claim is without any right, and Defendant has no estate, right, title, lien or
    interest in or to the Property, or any part of the Property.
    6. (If required by statute, add Plaintiff and plaintiff’s predecessors in interest have
    paid all taxes levied or assessed against the Property during the period of their adverse
    possession).

  34. Notice of Lis Pendens in Action to Quiet Title
    by Person Claiming Title by Adverse Possession
    State of _______________________________________
    County of ______________________________
    The undersigned, _______________________________________________ (Possessor),
    hereby gives notice that an action has been commenced in
    _____________________________ __________________________ (e.g., Civil Action
    No. _____) in __________________
    ______________________________________________________ (name of court) of
    ______________________________________________________________ (name of
    county and state), by the undersigned, to quiet title to the following described real
    property:
    ________________________________________________________________________
    ________________________________________________________________________
    ________________________________________________________________________
    ________________________________________________________________________
    (Insert Legal Description or attach Description as an Exhibit and refer to it here)
    This action is against ______________________________________________________
    ________________________________________________________________________
    ________________________________________________________________________
    ___________________________________ (list of names of known defendants), and all
    other persons unknown, claiming any right, title, estate, lien or interest in the said real
    property.
    The undersigned further gives notice that he has been in actual, exclusive, and adverse
    possession of such property within the meaning of _______________________________
    __________________________________________________ (cite applicable adverse
    possession statute) for a period of ________ (number) years.
    Witness my signature this the _____ day of ______________________________,
    20______.
    ____________________________________
    POSSESSOR

    (page 2 do not copy this part ok)
    STATE OF _____________________________________
    COUNTY OF ____________________________
    Personally appeared before me, the undersigned authority in and for the said
    County and State, on this _____ day of ____________________________, 20____,
    within my jurisdiction, the within-named ______________________________________
    (Owner), who acknowledged that he executed the above and foregoing instrument.
    ____________________________________
    NOTARY PUBLIC
    My Commission Expires:
    ______________________

  35. a couple of words of advice for you decent human beings out there, when exercising your right of rescission make sure you include a tender offer and a response demand within 20 days, then make sure you declare that you made such offer & thier nonresponse constituted as a waiver. for those of you thinking about hiring a Liar think hard about it because guess what they lie & you don’t want to end up like me where your Liar almost succeeds in completely sabotaging your case keeps all the monthly retainer fees he’s been collecting over the past 9 months files a motion to withdraw as counsel but then comes back & files a motion of nonopposition at a hearing that we were supposed to attend but weren’t properly notified resulting in a motion to dismiss with prej. this all after I sent them the 2 right of rescission forms signed where it says “I cancel” with blank rescind deadlines and blank confrm. of receipt along with tender offer of both one or the other. I’d managed to get the defective notice part in but opposing counsel misrepresented my letter saying i only offered the property so the judge denied my recind claim. then i barely had enough money to file an appeal, they said they were gonna resced. the sale til sep. 6 now i have no money Liar took & kept it all. they also raised court filing fees in CA so can’t file lis pendens or appeals motions, briefs etc… that’s why i say be careful who you trust. I have copies of lis pendens, quiet title action, & pro se application for court approval(need if pro se) for ca but could prob. just change state . I’ll post for u guys can’t use anyway good luck don’t get f– you know

  36. May I have the exact statute, link to the statute or where I can find the the statement that states that the lender has to file a declaratory action if they believe the consumer does not have a right to rescind? It will be much appreciated.

    Thanks

  37. Bank Locks Farmington Couple Out of House

    A newly engaged Farmington couple says the ‘great American dream’ turned out to be a nightmare for them after they were locked out of their own home.

    Just days after closing on their first home, Kurt Madsen and Stephanie Herbert returned from a weekend vacation to find someone had been in their home.

    “I feel violated. Someone broke into my house and I don’t know why,” Madsen said.

    The couple found the locks had been changed in the doors, leaving Madsen to break into his new home.

    “We were afraid that the previous owners came back and they were angry they were losing the house,” Herbert said.

    But it wasn’t an intruder that broke into their residence—it was someone working for a bank. Once inside, the two found a handwritten note from a property manager.

    “Dear homeowner, today we had an order to change the locks,” it read.

    It turns out the previous owner’s bank, Bank of America, ordered locks changed on the house it no longer owned. It wasn’t until 5 EYEWITNESS NEWS got involved that the couple got answers.

    In a flood of foreclosures, the case simply fell through the cracks.

    “It appears to be a mistake on our end. We will do everything possible to rectify the situation,” a spokesperson for Bank of American said in a statement.

    “It’s a relief that they are taking some sort of action, but it should not have come to that. We should not have gotten the media involved to get an answer,” Herbert said.

    Late Friday, Bank of America says they will reimburse the couple more than $300 to fix all the locks and doors on their home.

    But for Madsen and Herbert, they still want assurances from the bank that it won’t happen again.

  38. Hi,
    Does any body have any sample letters or ideas (outside having to start a lawsuit) of what to do after 20 days of rescission receipt by the lender if the lender:
    1. did not respond to the notice of rescission or
    2. If the lender responds with a denial?

    Does a rescission default letter have to be written to the lender? If so, does any one have a sample?
    Thanks

  39. Hi,
    Does any body have any sample letters or ideas (outside having to start a lawsuit) of what to do after 20 days of rescission receipt by the lender if the lender:
    1. did not respond to the notice of rescission or
    2. If the lender responds with a denial?

    Does a default letter have to be written to the lender? If so, does any one have a sample?
    If a default letter does not have to be written, how does a homeowner demand compliance?

  40. Reg,

    Read Beach v. Ocwen. Mike provided a link below.

  41. Does anyone know how a chapter 7 bankruptcy would effect the 3 year extended rescission. Would the bankruptcy stay “suspend” the rescission clock for the time I am in bankruptcy. My bankruptcy went on for almost 2 yrs. From 12/06 to its file closing date in 1/09

  42. Under Section 1635 of TILA, a borrower has three years to EXERCISE their right of rescission. In Beach v. Ocwen, SCOTUS stated that the 3 years is absolute. Keep in mind this is to EXERCISE the right of rescission. This extended right of rescission is contingent on the creditor having failed to make the proper material disclosures, provide a proper Notice of Right to Cancel, etc. Which is the case of for every single securitized loan.

    Mario is correct when he stated that you only have to send a letter saying “I Cancel” and nothing more.

    If the creditor does not take the proper steps after you have exercised your right of rescission, then they have committed an additional violation. Under 1640, you have one year from the date of the violation to bring suit against the creditor.

    As Neil stated, if they dispute the rescission letter, they must do so by filing a dec action.

    In my case, the trustee and creditor never responded and the servicer replied after 4 months that they denied the rescission letter. In their answer to my federal complaint to enforce rescission, the servicer and trustee stated that since I had attached copies of the mortgage, note, and TIL disclosure, that meant that I had received the material disclosures. WRONG AGAIN!!!! It’s not the documents, it’s the information contained in the documents that constitute “material disclosures.” If the information is incorrect or misleading, then they have not provided the material disclosures.

  43. action to enforce the obligation… this is enforce not rescind !

  44. FROM REUTERS NEWS ONLINE

    EXCLUSIVE: AIG CEO defends holiday, slams “lynch mob” attacks!

    WOW–that is a great idea!! Lynch Mobs for Wall Street Robbers & Thiefs.

  45. Mike,

    It is simply 3 years to the very day of the closing. and I think ” I wish to cancel” is just about enough to say.

  46. U.C.C. – ARTICLE 3 – NEGOTIABLE INSTRUMENTS
    ..PART 1. GENERAL PROVISIONS AND DEFINITIONS
    § 3-118. STATUTE OF LIMITATIONS.

    * (a) Except as provided in subsection (e), an action to enforce the obligation of a party to pay a note payable at a definite time must be commenced within six years after the due date or dates stated in the note or, if a due date is accelerated, within SIX YEARS after the accelerated due date.

  47. If Federal Judge in a TILA suit rules security interest is void, can you then file chapter 13 to and thus avoid Tender requirement? At the end of three years, upon discharge the lender would no longer have any debt they could try to collect? Or is there some prohibition to use Bankruptcy as a form of Incremental/Tendering?

    Jim

  48. Great post — too bad more people here in Arizona aren’t using this information to save their homes.

  49. We have filed a TILA/RESPA, fraud et. al. suit in US Eastern District of California. Lender originally agreed to a rescission based on lack of the word “Monthly” on the Disclosure Statement – Payment Schedule. Negotiations broke down. A new rescission demand letter citing APR violation and RESPA violations. Assuming we win the first round and Judge voids security interest, what would be wrong with filing for Chapter 13, listing void mortgage as unsecured debt?
    Three years down the road when BK is discharged, the lender would be out of luck, no?

  50. Here is another sample rescission letter:
    http://www.foreclosureprose.com/storage/forms/NoticeOfRescission.pdf

    Marcus @ foreclosureProSe .com

  51. My favorite part about that letter is the last paragraph. 🙂

  52. Here’s the UCC recession posted by Tim not to long ago.
    Maybe Neal can comment on it, but the UCC recession extends it from 3 years to 6 years if I read Tim’s post correctly:

    HERE IS AN EXCELLENT UCC RESCISSION LETTER WE CAME ACROSS IN OUR TRAVELS SO NEIL MAY WANT TO COMMENT BUT IT LOOKS GOOD TO US AND, OH, THE STATUTE IS LONGER TO RESCIND UNDER UCC, FYI, 6 YEARS VS. 3 YEARS UNDER TILA;

    August 6, 2009

    Washington Mutual CONSUMER
    Customer Service Dept. CONSUMER
    Rescission Dept. 666 SCREW YOU BANK WAY
    P.O. Box 2441 Bowie, MD 20720
    Mailstop N010207
    Chatsworth, CA 91313
    Phone: 866-926-8937

    cc:
    Long Beach Mortgage
    Customer Service Dept.
    Rescission Dept.
    1400 S. Douglass Road
    Anaheim, CA 92806

    bcc:
    Bierman, Geesing & Ward, LLC
    4520 East West Highway, Suite 200
    Bethesda, MD 20814
    Phone: (301) 961-6555
    Fax: 301-961-6545

    RE: Notice of Right of Exercise of Rescission, CONSUMER and CONSUMER
    Account Loan No’s. 1st Lien 000000, 2nd Lien 00000

    Dear Washington Mutual, (WAMU), Right of Rescission Department Customer Service Agent AND Mr. Jacob Geesing, Esq.:

    On August 2, 2006, we entered into a mortgage loan with Long Beach Mortgage and Washington Mutual, secured by a security interest taken in our primary residential home.
    Be advised, pursuant to Uniform Commercial Code, Article 3, § 3-202, Negotiation Subject to Rescission AND, OR, other like state or federal statute, these consumers hereby rescind the above noted first and second loans secured by said instruments.

    The exercise of rescission by these consumers puts into affect a strict liability for compliance against WAMU and its agents.

    Notice of this rescission, negates the “Trusts” claims to foreclose.

    Pursuant to Uniform Commercial Code, Article 3, § 3-305, WAMU AND ITS AGENTS AND TRUST, are advised by this rescission, these consumers are raising all claims known or that will be discovered and which include all or some of the following, incapacity, infancy, duress, illegality and fraud in the factum.

    Moreover, should the Trust/Trustees maintain and or continue with any purports of any right to foreclose the above loans, these consumers will hold all said liable for fraudulent actions as they failed to take the instrument in, good faith, for value, without notice that the loan is overdue and without notice that the consumer has a defense, as is the case here and now with these consumers.

    We are further demanding a payoff statement reflecting the effects of the recession and are demanding the production of the original, ink signed Deed of Trust and Note, verification of the disputed, averred to debt, an exacting accounting of mortgage payments and actual loan disbursement history on this loan, a date, time and place where we may schedule an inspection of the complete mortgage file and all assignments to any party claiming interest in our property, including all vendors or third parties as a part of this loan consummation transaction on August 2, 2006.

    Best Regards,

    I WISH TO CANCEL

    __________________________ August 7 ,2009
    CONSUMER, Signature Date

    I WISH TO CANCEL

    __________________________ August 7, 2009
    CONSUMER, Signature Date

  53. Great article, Neil. I have been considering TILA rescission lately. My only problem is, I’ve read a lot about TILA and how complex it is and how it has to be used just right or it won’t work. A lot of articles list several general circumstances that constitute TILA violations but then don’t get more specific.

    For example, here’s one regarding when TILA rescission is possible that fits me to a “T” except I’m unclear about #4:

    1. The loan is a refinance transaction;
    2. Funded in the last three years
    3. On the borrower’s primary residence;
    4. When a “material disclosure violation” is found

    The article goes on to say that there are only 4 potential “material disclosure violations” but never says what they are. I need to get a loan audit done, I guess, but can anyone shed any light on what the 4 potential material disclosure violations are?

    I am now heading over to re-read Living Lies’ TILA and rescission sections.

  54. I thought that under the “equitable tolling” of the statutes of limitations, that the period begins when the homeowner could be ” reasonably expected to have knowledge of fraud”, which could be YEARS, which voids the actual stated time period. Can anyone please comment? THANKS

  55. opps.

    BofA servicer, Citigroup Holder, XYZ -2007 trust, listed as investor.

  56. Ok, in this case who would you send the recession letter too? BofA Servicer, Citigroup HOlder, XYZ trust owner?

    does anyone have a Quiet title action or recession action they coudl post?

  57. do you have a copy or link to Beach v. Ocwen?

  58. Mike,

    I believe that was decided in Beach v. Ocwen and it’s 3 calendar years.

  59. I have a question about the 3 year extended rescission – is it 3 calender years or do you skip Sundays and holidays in your counting of 3 years?

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