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RESCISSION UNDER TILA MORE VIABLE THAN WE THOUGHT

Editor’s Alert on TILA Rescission: Judges didn’t like the way the statute was worded, but the wording was very clear. “I rescind” is enough to clear the title of your property of any mortgage UNLESS WITHIN 20 DAYS the lender files a declaratory action contesting your right to rescission. To date, hundreds of thousands of people have sent letters saying, in one form or another, that they wish to rescind. Some held back under the mistaken belief that you had to give up the house to rescind. Just the reverse. TILA was written just for times like this and it has a lot of teeth. And an increasing number of Judges are applying the law just as it was written.

So the TILA audit and TILA rescission went out of favor for the last three years because Judges didn’t like the way it sounded — or the banks that put them on the bench didn’t like the way it worked. THE STATUTE SAYS that it is only AFTER the bank sends you the note back marked canceled, and only AFTER they record a satisfaction of mortgage that they are entitled to demand tender of payment on what is now an UNSECURED OBLIGATION.

So as if we didn’t already know it,, the Federal Government is in league with the banks. In this case the Federal Reserve is trying to change that statute by changing Reg Z to say that if you want to use the TILA rescission you FIRST PAY THE AMOUNT demanded, whether it is due or not and regardless of who is making the demand. How they expect to get this through is beyond my comprehension.

Any first year law student will tell you that only the legislating body — in this case the U.S. Congress — can change the law. It was Congress who passed the law as a protection for consumers/homeowners and it gave them real teeth if the dark Dexter passenger of the bankers went wild. That protection is the law and no agency of the Federal government can change the law by enacting a rule in conflict with the law.

Nonetheless, the Federal Reserve has announced it is going to exactly that, proving that this rescission remedy is indeed worrisome. It’s a real problem for all those rescission letters that canceled the mortgage by operation of law. Because none of the “lenders” and none of the pretender lenders filed declaratory actions. They just “rejected” the rescission by letters. By not filing the lawsuit in time, they were not allowed, by operation of law, to foreclose even if they were the proper lender or creditor. And by not producing the note and filing the satisfaction of mortgage they can’t enforce the note, even if the note is authentic and all legal. So many thousands of foreclosures were allowed to take place when the party doing the foreclosing no longer had any title even if they once really had title.

The only possible reason for this brazen design is to try to “fix” our corrupted title system in favor of the banks, since the Federal Reserve is clearly not a consumer agency. In fact, there is even a question about whether the FED has rule-making authority since its status as an agency of the federal government is obscured by its ownership — consisting of private banks.

The most important thing to know is that they wouldn’t be taking this big a chance unless THEY thought that this was so dangerous it had to be sterilized out of existence. If they think that then it is time to renew the efforts at rescission. That includes reclaiming houses that were allegedly sold at auction, and stopping all existing foreclosures. By the way, don’t let the statute of limitations stop you, if you just learned of the facts giving rise to rescission and did not have access to the information (because the agents of Wall Street withheld disclosure) then the statute doesn’t start to run until the day you DID know.

This law was intended to inhibit predatory and fraudulent lending practices. The law was passed fair and square. It’s been the law of the land for many years. It cannot be changed by the FED and it shouldn’t be changed at all.

LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL

by Zach Carter, HUFFPOST

The Federal Reserve is pushing a new mortgage regulation that would effectively eliminate the most powerful federal remedy for predatory lending.

The regulation would severely limit a practice called “rescission,” used to strike down demonstrably-illegal or fraudulent loan contracts and void a bank’s ill-gotten gains from such predatory lending practices. When a mortgage borrower wins a rescission case in court, the bank loses the right to foreclose, and has to give up all profits from interest and fees on the loan. The borrower still has to repay the principal — the original amount of money extended by the bank — but can’t be kicked out of the house.

Under the Fed’s new proposal, however, borrowers would be required to pay off the balance of the loan before the bank loses its right to foreclose — that means borrowers could still lose their homes, even in cases where banks have broken the law.

Unsurprisingly, banks support the move, but consumer advocates say this would essentially make rescission worthless to borrowers.

“The … proposal would eviscerate the single most effective tool that homeowners have to stop foreclosures and avoid predatory loans,” reads a letter penned by Margot Saunders of the National Consumer Law Center and signed by 16 national public interest groups, along with 33 state housing and legal aid groups and 144 individual attorneys. “Passage of the proposed rule will considerably exacerbate foreclosure statistics in this nation.”

Six Democratic senators, led by Sherrod Brown of Ohio, also urged the Fed to reconsider its rule in a Monday letter. “In this time of record foreclosures and reports of systemic problems with the operations of the largest mortgage servicers, the proposed revisions are unfortunate and unnecessary,” the letter reads. “The mortgage market needs greater oversight and accountability to restore borrower confidence lost in the mortgage crisis. The proposed rules would undermine this goal.” The signatories included outgoing Senate Banking Chairman Chris Dodd (Conn.), incoming Chairman Tim Johnson (S.D.), and Sens. Jack Reed (R.I.), Daniel Akaka (Hawaii) and Jeff Merkley (Ore.).

The controversy comes as the U.S. mortgage market enters one of the bleakest years in its history. Foreclosures continue at a record pace, slowed only briefly by recent concerns that borrowers were being improperly evicted due to bank errors. At the end of September, nearly 1 million homes were in foreclosure, according to data collected by the foreclosure analyst RealtyTrac. According to the Center for Responsible Lending, 2.5 million homes were lost to foreclosure between January 2007 and the end of 2009, and another 5.7 million stand in “imminent” danger of foreclosure today.

“There are thousands of rescission cases in hundreds of courtrooms all across the country,” Center for Responsible Lending spokeswoman Kathleen Day said. “Rescission is a main tool for fighting foreclosures.”

The proposed change is part of a larger package of rules the Fed hopes to adopt, several of which appear designed to protect the public from shady financial hucksters. But while consumer groups are enthusiastic about some of the possible new regulations, they are so worried by the rescission changes that they are asking the Fed to withdraw the whole package. If winning a predatory lending case still means losing their home and owing hundreds of thousands of dollars to the bank that ruined them, they say, many consumers would prefer not to fight.

Dozens of other consumer advocacy organizations and concerned citizens have also sent the Fed comments on new rules. Many of the comments from individuals were more colorful than the letter penned by Saunders. All Fed regulations are open to public comment from anyone, but it is unusual to see a high volume of individuals weigh in on a technical consumer protection rule.

“I view this as nothing less than a criminal ploy to shove hard working Americans out of their homes and onto the streets,” wrote Ann Capotosto in an undated comment letter. “It is immoral and must be stopped.”

“Think of mankind for once, please,” requested Larissa Cavanaugh in a Dec. 4 letter.

“Have you lost your minds?” inquired Beth Findsen in another letter from Dec. 4. “In the depths of an unprecedented catastrophe for the middle class, related to the predatory loans and their rapacious securitization by the financial industry, resulting in millions of middle class Americans losing all of their wealth and their homes, you want to loosen TILA? Are you tone deaf? Have you lost your humanity entirely?”

A Fed representative did not immediately respond to a request for comment.

32 Responses

  1. On March 24, 2010, in Mers v Hubbell, 09-03424,
    the DC in No. Cal upheld the bankruptcy court’s
    determination that “tendering funds”, that is, the amount owed on the note, was not required to
    rescind the loan at the time of rescission. Mers had filed an adversary proceeding against the homeowner, which was later dismissed when the DC upheld the order.

  2. How about under ucc for fraud in the inducment if the contract. If you simply express that ” I want to cancel” from when the fraud Is discovered….. Thing is dhen you say fraud and yes we know we know it’s fraud but you must be able to proove fraud which has 9 legs to it do. We Want to argue about recission …. Neil asked this once hefor… Maybe maybe not. ” I rescind the deed of trust and promissory note signed on …. I tender to the real party in interest minus equitable set off (subject to proof thst you are indeed the real party in interest.) now thst seems fair but The banks seem to laugh at recission they are very quick to state it sppllies only to refindnce …. and I dare say they tried to invite the argument in my case I noticed this…. They did that for a reason.

  3. THE A MAN,
    Hey, that Rabbi is only preaching your religion. So why wouldn’t you like him? I don’t need a preacher, but you offered so I figured I’d return the favor.
    I don’t quote David Duke, I actually disagree with most of his views, like his whole “preserving our heritage” thing and how he thinks white people intermingling with other ethnicities is such a bad thing. As for what my bible is, God’s word is unwritten read the book of Enoch it predates Genesis and was found where they found the Dead Sea Scrolls but was not included with the Bible (although it should have been). In the book of Enoch it tells the story about the “Fallen” Angels who descended upon Earth, took mortal women for wives and taught men forbidden arts. In I Enoch 69.8 it says Penemuea was the fallen Angel who “taught mankind the art of writing with ink and paper,” an art which was condemned as evil and corrupting (imagine that). You have no conscience, all you do is complain that “we’re being taken over by Nazis”, when we all know the majority of the jew-ish population are the ones holding the most consolidated power and wealth of our nation and are using it to to control the government and bring us to our knees. All I ask is that every American be equally loyal to each other. Is that too much?

    @Stunned!,
    They use the same logic, rape is more extreme (obviously), but in both situations the law is being broken, the victims rights and liberties are being violated, they’re being deprived of their legal remedy and law enforcement is imposing conditions the law sought to prevent.

  4. leapfrog,

    Very interesting article. Goes forward, but, nevertheless — anything that goes forward — with a change — effectively, acknowledges past mistakes.

  5. Hi UsedKarguy,

    I already had an expert forensic expert analysis completed for the signatures in our case. They were FORGED, including the Notary. In fact, we just spoted OUR INITIALS on the NOTE, which are also FORGED because we never signed them.

    The Notaries involved were terminated but the LAWYER that TOLD the Notaries to FORGED his name is still being protected by the courts and the MD Attorney General.

    I sent the AG our docs and the included the forgeries. If I’m not mistaken, that makes him GUILTY of the FRAUD as well because he is an Officer of the Court. He is obligated (I believe) by law to ACT whenever there is illegal acts committed against citizens in his states by a court.

    Once I get our case moving along – I’ll begin researching how I can legally attack the judges and those in office that have arrogantly aided & abetted these thieves. Whatever must be done WE SHOULD ALL START DOING – file complaints to take out the judges – file complaints to take the AGs or whoever else is in our way.

    It is obvious CONGRESS has BETRAYED the American People. The decision quickly approaching is if that Betrayal has reach TREASON… IMHO – that is where we are heading… Our military is sworn to protect the constitution not politicians. All PEOPLE are asking is for a FAIR SHAKE and CLEAN HANDS dealing with OUR LIVES & FUTURE. If that is too much to ask, why bother with all the formalities – let the games begin… this deadbeat bites…

  6. Another problem with this post is that the right of rescission limitation under TILA is a statute of repose and not a statute of limitations. Therefore, while the date you discover fraud may be relevant to damages, it is irrelevant to rescission (under TILA), as that right expires either 3 days or 3 years after closing. Beach v. Ocwen, etc.

  7. Please add me to your email list.

  8. Please add me to your email list.

  9. http://www.scribd.com/doc/46369509/Conformed-Memo-of-P-amp-as-With-Exhs-1-2-amp-a-amp-B

    more explains why deutsche bank is angry at all the fall out of servicers like indymac

  10. http://www.scribd.com/doc/46371024/Exhibit-B-Deutsche-Bank-v-FDIC-Conformed-Complaint-re-indymac-failure

    deutsche bank vs. fdic over assets of indymac. This is the holy grail of complaints for the innerworkings of the trustee. this describes it in details. from the private banking bond site. big information

  11. […] This post was mentioned on Twitter by Kathleen Turner. Kathleen Turner said: RT @riforeclosures: HUFFPOST: FIGHT FEDERAL RESERVE RULE CHANGE NOW!!! five star alert *****: http://t.co/8SDIbZY […]

  12. HuffPost
    Fed To Back New Rules To Rein In Home Foreclosure Abuses

    http://www.huffingtonpost.com/2011/01/05/fed-caves-on-foreclosure-_n_805008.html

  13. Ditto! All!

    ‘”Have you lost your minds?” inquired Beth Findsen in another letter from Dec. 4. “In the depths of an unprecedented catastrophe for the middle class, related to the predatory loans and their rapacious securitization by the financial industry, resulting in millions of middle class Americans losing all of their wealth and their homes, you want to loosen TILA? Are you tone deaf? Have you lost your humanity entirely?”‘

    Why is it that thieves always look for an escapegoat to hide their crimes?

  14. Tolling is tuff!

  15. Virginia is one of those States where the judges think it is unfair for a consumer to put the lender on notice for having broken the law.

    They expect for you to tender your home.

    They base all their decisions on an obscure line in one of the statutes in TILA or the Federal Reserve Commentary where it some how allows judges to interpret the rescission process.

    In fact most VA lawyers working for home owner tell you from the get go that in Virginia TILA does not exist.

    And I thought I was in America and not in a BANANA REPUBLIC, but I guess I was mistaken.

    We puff our chests saying this is the greatest country in the world , we talk about the American dream and we allow these thieves to run our lives, to ruin our futures.

    You see, as soon as we are kicked out of our homes we just move on and the hell with the rest. I believe that is wrong. We cannot relent. We have to make it a point, we have to set the stage for real change in America, every turn I take, I see the banks working some scam.

    Getting some sweet heart deal. We get shafted they get richer.

  16. David from Maryland: I had a nice talk today with a lady at the Secretary of States Office, Notary division, State of Maryland. She will go unnamed for now.

    When I asked her to compare signatures on the two affidavits, her answer was:
    “How do we know if she signs her name the same way every time?”

    DING DING DING DING DING

    There’s your sign! The fix is in folks, we just don’t know it.

    She said she will check the register of the notaries and make sure the ‘affiant” was in their presence at the time of signing. the signatures are irrelevant.

    Very comforting, huh?

    We’re screwed.

  17. Let us post the phone numbers and email of the federal reserve sold outs that are working against us Americans and flood them with a massive campaign of calls, emails, letters. The more pressure the better

    Does anyone have access to this info and post it????

  18. I sent an email to our Maryland Attorney General. I asked if Attorney General Gansler would join with AGs Richard Cordray & Lisa Madigan to OPPOSE the new TILA proposal.

    The response was typical – here’s a snip “…Attorneys General and Financial Regulators across the country have joined together and undertaken a probe into the robo-signing of paperwork and affidavits filed in foreclosure cases. The probe is ongoing and there is no way to determine exactly how long it will take to complete or what the outcome will be. Foreclosures will continue in the meantime unless the Court finds reason to dismiss…”

    Peggie McKee
    Citizen Response Coordinator
    Office of the Attorney General
    200 St. Paul Place
    Baltimore, MD 21202
    410-576-6972
    —- end snip—-

    I especially appreciated the LAST SENTENCE…

    So, obviously here in MD it’s get the deadbeats out on the streets and let the lenders fill our bank accounts…

    Can we still purchase complete Mortgage Loan Docs from LPS or other places? I think it would be worth the 95-bucks to buy a complete set of Ms. McKee’s mortgage docs and FORECLOSE on her family… I mean, if George Jacob Geesing can file Fraudulent Assignments, False Affidavits, and Commit Fraud on the Court – surely we should follow their examples, right…

    Anyone from MD should send the MD AG an email at OAG@oag.state.md.us – I’m sure they would LOVE to hear from folks about the TILA proposal.

  19. @Dying Truth…your analagous reference to a rape is thoughtless. A foreclosure and a rape are far from being comparable.

  20. The Fed and Government Agencies are all buying time.
    They know what is going on.

    America is Bankrupt and behaving like a Bankrupt nation.

    We are Bankrupt Moraly and Economically.

  21. Dying Truth I agree with you on one thing The Rabbis or anybody who preach hatred should be prosecuted and put in Jail. Any Hate monger of any religion should be prosecuted and put in jail. By the way those Rabbis are under investigation in Israel for hate crimes.

    You are a hate monger. I tried I found you a nice Preacher
    Pastor John Hagee
    http://www.blip.tv/file/4409175

    And you quote David Duke? What is your Bible? Mein Kampf. I tried. My conscience is clear now.

    NEVER AGAIN.

  22. This “pre-condition” which judges require is analogous to a 911 Emergency Dispatcher requiring a current rape in progress victim to “give it up” first or they won’t send any assistance.

  23. Well, this is one way to save the USPS, I guess. Imagine the certified mail about to be delivered.

    One question: TILA only applies to refinanced loans, right?

  24. Now that you’ve planted the seed, please explain to the readers that recission DOES NOT apply to a “purchase-money” mortgages. Only a re-finance contract is subject to rescission.

    That’s one of the inherent problems with this whole extravaganza we know as “foreclosure defense blogs”.

    Please explain this to the folks. Otherwise, you get lots of people going on a wild goose chase.

  25. Neil, gwen caranchini, and anyone else who isn’t grasping the big picture,

    “because Judges didn’t like the way it sounded” seems to me like there’s a reason why they didn’t like it. Around when did judges suddenly stop understanding what it ment and began refusing to enforce it completely? 2000-2001? When was the housing bubble in booming season and and the point in time that public pension investment firms shift substantially? Same? Well even if they issue the interpretation, wouldn’t change much and there’s always ‘other’ remedies right? How well are those doing? Oh not so good huh.. Judges find arguments unpersuasive. hmmm. Sometimes not even reading the pleadings .. uhhh.. throwing them straight in the trash… Well seems to me like it’s really not a FED reserve problem, especially if Congress had such a problem with it they would amend 1635 to remove judicial discretion and mandate that continued willful non-compliance will result in criminal charges (a liability originally in TILA) resulting in forfeiture of charter and license – And if judges have such a hard time with the law and really don’t like what they know it says then there’s reason to believe that problems would arise regardless what the law said because judges are just going to ad hoc legislate, advocate, and arbitrate to adjudicate with whatever arbitrary fiat makes them “feel comfortable” and say that that’s the law.

    And honestly Neil, what can we actually do about it? What do you suggest? They’ll just shoot down another argued remedy and say their not convinced.

  26. You’d figure they might or will say something like “but this wILL bring CONfidence to the housing MARKet and HELLp jumpstart the eCONomy” but I don’t think they’ll say too much about this one.

  27. GIVEN THIS PURPORTED OR PROPOSED CHNGE IT DOES NOT MAKE SENSE TO RECOMMEND TO PEOLE TO DO THIS UNDER TITLA RIGHT NOW–THEY COULD GET STUCK BADLY–WE SHOULD BE WARNING PEOPLE ABOUT THIS REMEDY AND NOT TO GO THERE RIGHT NOW– THERE ARE OTHER REMEDIES: quiet title a declaratory judgment action with a preliminary title report showing broken title and finally filing a lis pendens will effectively stop foreclosure–if the bank proceeds, given this suit ad lis pendens a ct will enter a tro to stop foreclosure. I am a firm believer that the quiet title is the way to go–worse yet the titla action puts you in federal court and generally federl judges are not good supporters o the little guy but they are of the big guy. I finally figured out how to get my removed case back to state court which after my hearing today it appears that the state court judge will approve and join with the claims before her against the trustee. I will be amending the state court claim to add back in the quiet title and declaratory judgment, and once granted dismiss the claims in fed court. With the trustee who must be amo res in mo and in most states is a resident of the state where the foreclosure is taking place, the case cannot be removed to fed court. Also there are more fed decisions now saying that these in rem quiet title and ddeclaratory judgment and foreclosure actions CANNOT be in federal court–they must be in state court–good news. I hav a tentative trial date of Oct 24 which I got today–ONWARD!

  28. More of the same. The feds and the crooked reps we have in Washington are going to try to kill one more law related to predatory lending. There is no hope for the average American losing their home. Things are going to get worse before they get better. It is just like a spoiled child: the longer you let them get away with it, the more they will do it. Do we have any idea when that is coming to the floor of the legislature so we can make their lives miserable with E-mails, letters and phone calls?
    http://www.challengingforeclosure.com Sirak@challengingforeclosure.com

  29. The FED was only authorized to make calculation adjustments and issue staff interpretations of Congress’ regulations (derived from examination of TILA’s legislative history) that ensure “creditor compliance” with the statute, and since they are in fact NOT a federal agency or Government entity and factually a private bank it would seem that such a conflicting interpretation would be Ultra Vires

  30. I don’t get it ,, a “regulation” is always trumped by “law” … the banks are just going to usher in 60M pieces of registered mail by this futile act…

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