UNANIMOUS SCOTUS: TILA Rescission Effective on Notice: No Borrower Lawsuit Required

For further information please call 954-495-9867 or 520-405-1688





see TILA Rescission

The decision is merely a statement of the obvious. Scalia, writing for a UNANIMOUS court said that the statute means what it says. All the decisions in all the states requiring the borrower to file suit to enforce rescission are wrong. The court says the rescission is effected upon notice to the “lender.” What that means to me is that the subsequent foreclosure, non-judicial or judicial is void because there is no mortgage. TILA says that unless the “lender” files suit within a specified period of time the rescission is effective as of the date of notice. It goes on to say that the “lender” just send back all payments and a satisfaction of mortgage and canceled note.

The three year statute of limitations applies to notice — not a lawsuit filed by borrower. The burden is on the lender to contest the rescission and failing to do so within the 20 days (the time varies depending upon when you sent your notice of rescission) the deal is over.

What you have left is an unsecured debt that can be discharged in bankruptcy because TILA says the mortgage is gone. What effect this will have on the thousands of cases in which borrowers sent notices of rescission and were foreclosed remains to be seen, but it sure will be interesting to see what the courts do.


“Held: A borrower exercising his right to rescind under the Act need only provide written notice to his lender within the 3-year period, not file suit within that period. Section 1635(a)’s unequivocal terms—a borrower “shall have the right to rescind . . . by notifying the creditor . . . of his intention to do so” (emphasis added)—leave no doubt that rescission is effected when the borrower notifies the creditor of his intention to rescind. This conclusion is not altered by §1635(f), which states when the right to rescind must be exercised, but says nothing about how that right is exercised. Nor does §1635(g)—which states that “in addition to rescission the court may award relief . . . not relating to the right to rescind”—support respondents’ view that rescission is necessarily a consequence of judicial action. And the fact that the Act modified the common-law condition precedent to rescission at law, see §1635(b), hardly implies that the Act thereby codified rescission in equity. Pp. 2–5.”

729 F. 3d 1092, reversed and remanded.

SCALIA, J., delivered the opinion for a unanimous Court.

While there are certain parts of this statute that are not completely clear, I have always felt that this law would eventually be the downfall of the entire foreclosure mess.

As for the statute of limitations it is not yet determined when the “transaction” has been “Consummated.” But one thing is clear — the three year period and the more narrow three day period for rescission is not “fixed.” The framers of this law understood that there might be defective disclosures that would and should defeat the claim of the “lender” that the transaction was consummated on the date that the documents were signed. If the disclosures were incomplete or just plain wrong, it appears that the framers did not want the time limit running on borrowers until the disclosures were correct and proper.

If the disclosures had the wrong numbers (more than $35 deviation from true numbers) then delivery of the disclosures has not yet occurred. And the statute is very specific in stating that the “closing” is not complete until those disclosures have been made to the borrower and accepted by the borrower.

There remains many questions that will need to be answered in the Courts. Probably the biggest one is what happens in cases where the borrower properly gave notice of rescission, and where some entity initiated foreclosure after the notice of rescission. Since TILA says that the mortgage no longer exists, the foreclosure would logically be void. Any sales of the property pursuant to the foreclosure of a nonexistent mortgage would also be void.

And any claim for quiet title directed against the parties who claim interests in the recorded mortgage would appear to be a slam dunk in cases where the notice of rescission is effective. The right to receive a satisfaction of mortgage, which TILA calls for, means that the mortgage should not be in the chain of title of the owner of the property.

But that doesn’t clear up the question of what to do about events that have long since passed. There is no statute of limitations (except perhaps adverse possession) on title defects. If the title defect exists, it is there, by law, for all time. People who have purchased property that was involved in foreclosure and where the former owner canceled the mortgage by giving notice of rescission have a built in title defect. None of the sales of such property either through forced sale in foreclosure or third party sales would be anything more than a wild deed.

For more free information about TILA Rescission use the search engine on this blog going back to 2007-2008. The Supreme Court has unanimously confirmed what I wrote back when I was the sole voice in the wilderness. Opinions ranging from scathing orders from trial judges to lofty opinions from appellate courts in the state court and federal system unanimously stated that I was wrong. Now the U.S. Supreme Court — the final stop in any dispute — has also been unanimous, stating that all those orders, opinions and judgments were wrong on this issue. As a result millions of homes were subject to foreclosure actions on mortgages that no longer existed. And millions more, hearing advice from attorneys, failed to send the notice of rescission to take advantage of this important remedy.

19 Responses

  1. Ok, I did the Rescission. They received the letter on February 14, and of course they responded with the normal letter that I was beyond the 3 years and they will not honor the rescission. I received the response on March 14. So what is my next course of action?

  2. Can someone assist me with an issue. I submitted a Rescission with all the required documents, but having trouble getting it recorded in Baltimore County public records. Any ideas on how I can get it recorded? James Smith, jsmith5915@msn.com. 443 677 2799. Thanks

  3. Reblogged this on patrickainsworth and commented:
    get rid of ocwen

  4. Totally agree with you. Now we see why Wilbur Ross dumped Ocwen and took his ball elsewhere.

  5. Ocwen is a criminal company the excutives of Ocwen are guilty of
    RICO! Ocwen should be suspended from doing business in every state.

  6. Go for it with all you got neidermeyer. Your right, you are trying to do the RIGHT thing.

  7. @ Poppy ,

    Agreed , just playing the game until 30 more business days pass and my $$$$ is released , then I can F them royally.

  8. @ neidermeyer

    From the courts mouth: modification is not effective. Ocwen has no authority. And many ledgers have original amounts deducted with “no” evidence of a valid mod (payment unchanged). LOL Playing games with the books I think!

    Last post by Neil: books and records, have a complaint regarding that, calling it an adjudicative matter and the lawyers have presented them as “fact”…diligence has not been met, not even close. These records come from afar, not readily known by any servicer. Can be altered due to them being electronic. All shit. 7 years at Ocwen to date.

  9. @ Deborah Wynn ,

    I agree with your approach … I (like most) are in a position where I am well beyond 3 years but never received funding as outlined in the note but from an undisclosed party alien to the agreement, it’s hard to disagree with a wire report… I don’t see how an unfinished transaction can start a tolling period… If it did that would stand all kinds of precedent regarding contracts and warranties on their heads.

    I have OCWEN scheduled to call me in about 10 mins about a loan mod … like that’s going to happen.. just buying time before I file a rescission and a suit to match… while simultaneously attacking the title company…

    2015 is going to be sweet…

  10. Off Topic (but delicious)

    OCWEN stock is down HUGE this week because they cannot forge (ahem “find”) documents to satisfy the California regulators … license is about to be yanked.


  11. Dulpec .
    Bite your tongue. .. there is more than one way to skin chicken.


  12. Rescission followed up by BK? Ouch!! Play heads up 7 up? My daughter rescinded in less than 30 days after closing in 07 and Owen said she had to tender….Ocwen was Wrong.

  13. And i think Neil is right on this
    He said
    “But that doesn’t clear up the question of what to do about events that have long since passed. There is no statute of limitations (except perhaps adverse possession) on title defects. If the title defect exists, it is there, by law, for all time. People who have purchased property that was involved in foreclosure and where the former owner canceled the mortgage by giving notice of rescission have a built in title defect. None of the sales of such property either through forced sale in foreclosure or third party sales would be anything more than a wild deed”

  14. Louise i tried to flush them out to get to the real party in interest and the accounting. I got a computer printout as a result if a proper QWR, their response to the qwr was late and as for the rescission i git nowhere either, same big bully tactics they say no you cant knowing full well we can, but it has to go to court and from there, certainly in my case things went pear shaped because they lie to the court.

  15. I tried to rescind my loan years ago, and never received squat. I still think that as long as there are no prosecutions, this krap will still go on.

  16. Scot do not bet your life using info you read on here its a blogg site it promotes discussion its very complicated and we all need a monumentally great lawyer. I struggle with every day for over 5 years and at the start i did rescind. Case law as we see is emerging but the best warriors are already wounded.

  17. I agree FWIW ( not an attorney) tolling re sol, the 3 yrs, cant be time barred if the tolling can be Argued as never having commenced. Thing is when you rescind its wise to rescind the loan, state you are ready and willing to tender payment to the real party in interest – minus equitible setoffs, why is it so hard to get the balance owed right. I have a 1099a says the debt ( from a non lender which is wrong anyway) on the one hand and a trustee deed upon sale that has 90,000 usd takked on to the debt owed.
    That number is huge and needs to be explained ( besides the elephant in the room re who i am obligated to owe my collateral home to)

  18. Thank you, Neil. I rescinded my loan in 2008 and had faced multiple pretend lenders in BK courts since then and have defeated all of them,using the strategies you promote here. When I saw the bulletin in another fora yesterday around 1:30 pm, I called my attorney with the news. In Maryland,without the bankruptcy courts protection and the ability to list the voided mortgage as unsecured,the pretend lenders would have won long time ago. I hope the naysayers here would be courageous enough to eat their words and thank you.

  19. Must I file the notice of rescission within 3 years of the closing or within 3 years of the date I first became aware of the violation. We are in foreclosure and in the appellate process. We became aware that the alleged lender listed on our note and mortgage did not fund our note the alleged lender provided no consideration what so ever. I know this because I have a copy of the wire confirmation that proves this. Because the alleged lender did not provide the considerations as stated in my note the alleged lender is in breach of contract and I no longer wish to move forward with this transaction. It is the fact that it had been 9 years years when I was deceived at the closing table. 9 years and the alleged lender still has not funded my note that I filled a notice of rescission. I sent a notice of rescission to the closing/escrow agent, to all the servicers that claimed to have serviced my note and to the attorney for the Plaintiff that sued my for foreclosure. The closing agent or servicers still have not responded ever after several followups. The attorney for the Plaintiff after several followups finally responded with the following statement. The notice of rescission is void do to the statute of limitations. My questions are;

    When does the statute of limitations kick in? I know it starts the moment I sign the note and mortgage. But whats happens if years later I discover violations. Does the statute of limitations start over from the time I discovered the violations? Could someone please answer this for all of us.

    Second Question. If the alleged lender listed on the note and mortgage did not fund my note than they are in breach of contract and that transaction still has not been completed per the terms of my note. Since this transaction still has not occurred. My question is can I or can I not rescind a transaction that after 9 years still has not occurred.

    Any educated answers would be greatly appreciated not only for myself but for everyone else that is in the predicament. Thank you.

Leave a Reply

%d bloggers like this: