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EDITOR’S NOTE: FULL CIRCLE. When I started writing this blog I had researched the Truth in Lending law and concluded that it was one of the better pieces of legislation designed to protect consumers and maintain competition in the marketplace. That said, I advised many lawyers to concentrate on TILA violations because the rescission remedy was effective to remove the mortgage and the MONEY (not the house) due back tot he “lender” was subject to constraints (who was the creditor and how much is owed, especially after you offset TILA damages, which are significant.

Alas, Judges read things into the law that were not there. Although the “lender” in rescission was obligated to either return all money paid at closing and return the note cancelled and satisfy the mortgage FIRST (or file a Declaratory Action (lawsuit) within 20 days why the rescission does not apply, the theory emerged even at the appellate level (9th Circuit, Federal) that in order to “rescind” one had to tender the money back and that the amount tendered had to be the amount demanded regardless of the actual amount that was due.

But things are changing. They had to change, because the basic problem with every closing in which their was claim of securitization was that the closing was defective, it lacked the disclosure required by law, and it presented loans that were not within industry standard underwriting of loans, nor were things like borrowers income or the value of the property confirmed by an internal review as was done in all mortgage loans prior to the onset of the securitization cancer.

The proposed CFPB rule simply takes existing law and codifies it in a new way — referring tot hose loans that comply with TILA as “qualified” and those loans that do not comply with TILA as “unqualified.” My prediction is that this new rule will pass. And with it, the challenge to foreclosures for noncompliance with TILA will rise exponentially because TILA fives the lawyer two things that he ordinarily isn’t seeing these days if he is defending foreclosures — (1) attorney fees and (2) damages, a lot of them, on which he can take a contingency fee. Defeat of the foreclosure by invalidating the mortgage lien leaves the homeowner with a lien free house but an obligation outstanding that can be discharged in bankruptcy.

Such an obligation will also be offset by damages for identity theft because the credit record and personal history of each borrower was used to sell bogus mortgage bonds to investors. Many other causes of action like slander of title flow from the that TILA audit. That is why I suggest to everyone who will listen that they get the COMBO, because that is what gives the TILA analyst vital information about what actually happened after closing, but also to get the LIVINGLIES FORENSIC TILA ANALYSIS.



If the Consumer Financial Protection Bureau wishes, it could allow borrowers to challenge future foreclosure actions by questioning whether the loan was a “qualified mortgage” in court.

Banks have been lobbying policymakers since May when the Federal Reserve published several options for how lenders must determine a borrower’s ability to repay a mortgage under the Truth in Lending Act. The new rules were proposed under the Dodd-Frank Act to outlaw risky and misleading home loans.

One of the options, known as the QM rule, would allow lenders to originate “qualified mortgages” under a legal safe harbor, provided the loans do not have certain features such as negative amortization, balloon payments, interest-only payments, or terms exceeding 30 years. As long as the bank stays within these guidelines, it will be in compliance.

Another option for QM, though, provides a “rebuttable presumption of compliance” clause, meaning the lender is presumed compliant as long as it follows guidelines in the first option and also verify the borrower’s employment, debt-to-income ratio and credit history.

The industry is very concerned that the CFPB, which assumed the rulemaking duty from the Fed this summer, will choose option two. According to some, the “rebuttable presumption” would mean any future foreclosure would be thrown into court. Foreclosure defense attorneys will able to challenge whether or not the loan being foreclosed upon was QM compliant or not, and if it wasn’t, judges could award TILA damages to the borrower.

“It would be much more expensive if everyone did this,” said Richard Andreano, a partner at the financial law firm Ballard Spahr. “It would get to a point to where it would almost be malpractice for a foreclosure defense attorney not to pursue the claim.”

Roy Oppenheim at Oppenheim Law Firm, a defense attorney in Florida, said there would only be challenges brought when the homeowner and the defense attorney have evidence of noncompliance.

“Not every foreclosure defense attorney will do this,” he said. “If they make good loans there should never be a problem.”


13 Responses

  1. Hi are there any good lawyers any body can recommend in south Florida?

  2. First let me begin with the Rule of Law is not a set of rules for Law, it is a statement to the effect that the Law rules, it is the King or Ruler if you will. Meaning there is no one above its power, that includes judges.

    Judges, even though we expect them to be impartial neutral etc., are human and are still subject to the many prejudices and influences that can effect the way anyone may behave and/or perform.

    Have you ever read a published court opinion (knowing what laws are relevant) that briefly goes over the facts of the case, points to minor details (apparently important to the judge(s)), and comes to a conclusion inconsistant with what the Law provides for, and wondered WHY?
    I have. Many in fact. So many that, to reach any conclusion other than that judges are being systemically unduelly influenced would be insane. In our current situation, that influence is coming from the financial manipulation of their pensions, which have invested heavily in mortgage-backed securities MBS. For a while Federal Pensions (ie Federal Judges) were holding non-marketable MBS (securities that weren’t performing and they couldn’t sell) and Federal judges had been constantly ruling against homeowners who were in the right. That is, until recently when the FED bought all of those MBS, which now of course all of the sudden federal judges are starting to show a trend of ruling in favor of homeowners. Whereas before they absolutely refused to, no matter what the circumstances.

  3. @DyingTruth

    “If for nothing else People should want to know the answer for their own potential protection.”

    More on this please if you wish….seeking knowledge about all things and bumbling along here trying to connect the dots……

    Never dreamed there would be a need to understand the rule of law much less try to articulate it to a judge with no attorney present to ward off the bankster heavyweights. Understanding where the powers that be are coming from and what they are seeking is critical to acheive a positive result. You can’t push too many buttons in the wrong places and at the wrong times and hope to get your issues taken seriously enough to be considered seriously. Offensive push though does seem like a better place to be than on the defensive.

    Homeowners should not be up a creek without a paddle and about to go over the waterfall but that is what is happening – continues to happen.

    Is it worth the fight or are you saying there is unseen danger in the fight? How are we all going to have peace of mind again? Just handing in the keys too quickly doesn’t work for me. Not prepared to surviive. Hoping to stay put for a least a little while longer…….

  4. joann,
    Yeah but how are Federal judges going to react when they (and a Jury) are presented with convincing evidence that shows the financial standing and health of their Pensions (vis a vis the amount of their unmarketable MBS holdings) have generally had a significant undue influence on their performance (or lack thereof) in enforcing and upholding the Law?

    It shouldn’t be difficult for people to connect the dots.

    Why are Federal Judges suddenly reversing their position and policy of denying any and all relief that homeowners are entitled to and are now ruling in their favor?

    If for nothing else People should want to know the answer for their own potential protection.

  5. If you get an assignment and the new beneficiary does not notify within 30 days you can make a claim for:

    TILA, 15 U.S.C. § 1641(g) “Liability of Assignees

    If the assignment is to a trust, the securitization trustee will try to say they have no liability because they are a trustee (similar to the trustee on a deed of trust who has no beneficial interest) as they have been doing so far. This CA district court judge made it clear that doesn’t fly because trustee for trust administers the beneficial interest of the investors and said all the other claims are pendant on the federal claim for TILA, 15 U.S.C. § 1641(g) “Liability of Assignees – and that his court has jurisdiction over the other claims including quiet title because they are pendant – he also said no tender was necessary (bank tried to get it dismissed if no tender) because standing and beneficiary status was in question not just foreclosure procedure. The homeowners are also making a claim for the recording of a false document subject to Cal. Penal Code § 532f(a)(4). Statutory penalty is $75,000 plus attorney fees.


    “U.S. Bank’s argument conflates the trustee of a deed of trust with other types of trustees….Exempting all trustees from TILA would permit trusts acting as lenders to completely evade TILA’s provisions….Plaintiffs are not saying that U.S. Bank failed to follow the letter of California’s statutory foreclosure law; they are claiming that U.S. Bank did not have standing to foreclose in the first place….PLAINTIFFS ALLEGED THAT THE RECORDED ASSIGNMENT WAS EXECUTED WELL AFTER THE CLOSING DATE OF THE MBS TO WHICH IT WAS ALLEGEDLY SOLD, GIVING RISE TO A PLAUSIBLE INFERENCE THAT AT LEAST SOME PART OF THE RECORDED ASSIGNMENT WAS FABRICATED. Plaintiffs allege that such conduct, if proven, constitutes a violation of Cal. Penal Code § 532f(a)(4).. ”

    Thinking now go straight to the district court with entire list of claims and ask for the statutory penalty for TILA, 15 U.S.C. § 1641(g) “Liability of Assignees” and other statutory claims like RESPA for qualified written request ect. Make the claim for Cal. Penal Code § 532f(a)(4).. (thinking this will compel discovery of standing of “servicer” who records late and false assignment to trust and and the history of ownership of the trust). Other claims pendant and no tender (or bond?) required. Then issues of quiet title and equitable balance and come last instead of first…

    Any attorney out there please weigh in on this approach. Do the statutory penalties especially the statatory $75.000 perhaps times 2 (NOD also) (not dependant on damages even though it is possible to claim damages also see case) plus attorney fees make contingency more possible? Really don’t want to do this pro se and honestly can’t afford attorney.

  6. Charlotte Fogarty Ochoa,
    Ask the judge in your case about the appearance of impropriety in the judiciary (Oregon PERS) substantially investing money and political influence in fraudclosures and a fraudclosure mill (Loan Star) and state clearly on the record that you believe that those conflicting interests have underminded and disrupted the judiciary’s impartiality making it impractical to rest any decision soley with any judge or judges and the only resolve can be by a jury.

    See this video for proof of what I’ve stated

  7. Anyone here…TILA regulation Z; does it not state: when defect is discovered? I know there is a 3 year limit, but does the statement when discovered mean anything?

  8. The biggest problem with all these TILA, RESPA, etc laws is that most of the violations were done before 2006 and now are time barred as you only have a year or two to enforce the laws. Mine were all just thrown out from 2005, and they violated a LOT of them….all to no avail, they get away with it all in court. I wish there was an attorney here in Oregon that would be willing to help, the judge said I was doing a great job, so don’t need any help…..in other words, if I had help I might win……and we don’t want that!!!

  9. Under whos oversight will the CFPB be? The FED
    Therefore the CFPB = Scarecrow (False sense of security)
    Every single Federal Regulator has Consumer Protection Authority, yet none of them use it to protect consumers.

    The FTC brought several TILA Rescission enforcement actions in US District Courts accross the country against several different non-TBTF corporations and were effortlessly granted relief by judges. Yet, individual homeowners’ cases with similar facts that provide for TILA Rescission and seek the same relief are met with complete resistance by judges and eventually pre-disposed of without any relief being afforded to the homeowners at all.

    And you think this new alphabet gang (governed by the FED) is going to solve these problems and improve things how !?!

  10. An interesting Foreclosure Answer with TILA counterclaim by Omar Garcia Esq. one of South Florida elite Foreclosure defense lawyer.
    The case was settled withou going to trial.


  11. Hman,

    It it’s true, I infer from it that any refi and/or mod initiated after 7/30/09 is subject to it, right? There have been so many irregulatities with the mods and that it would be good to know…

  12. My interpetation of this is article is that if this is implemented that it will be applied retro-activly to loans. Is that correct?

    I wrote in a QWR about a TILA requlation Z revision and the response I received was the regulation applies to loans intiated after July 30, 2009.

    I’m hoping if this is not the same scenario here and the “law” will be applied to any loan made previously.

  13. Very few good lawyers that know what thier doing or have the gumption to do it.The courts are a corrupt mechanism thatneed to be revamped or done away with.Lawyers simply follow the lead of the courts.Bad system.Get it?

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