Rescission Q&A: 74% of responders either Rescinded or are thinking about it

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The numbers keep changing but it is clear that rescission is looming on the horizon for people who (1) are or were in foreclosure after rescission was sent or (2) are currently contemplating sending the rescission notice now.

One thing I don’t think I made clear is that it is NOT my opinion that a rescission notice can be sent out under any legal theory if the foreclosure auction already occurred. That is because, in my opinion, there is nothing left to rescind. The sale eliminates the mortgage and the note. And there is an arguable point that a foreclosure judgment might do the same thing. Although I am encouraging people to consider rescission with a knowledgeable attorney who is licensed in the jurisdiction in which the property is located, I am not encouraging people to do so if the auction sale has already occurred. After judgment is entered, it is a toss-up — I can see both sides of the argument. The key question is whether the note and mortgage still legally exist.

Answering some recent questions that I did not get to on The Neil Garfield Show, I offer the following — with admonition that most lawyers are NOT familiar with the TILA rescission process but that proceeding without legal advice is not a good idea. There are potential risks if the banks or servicers file the action required within 20 days of rescission. While I think the likelihood is low of the banks and servicers filing that action within 20 days of rescission, if they do it there could be consequences to anyone gaming the system the same way the banks and servicers are doing now with their legal presumptions and motions. And be aware that few judges are going to like this strategy even if it is rubber stamped by the US Supreme Court unanimously one month ago. My primary argument is that the judge has no discretion if the bank or servicer failed to file within the 20 days regardless of how meritorious their action would have been as to the statute of limitations, the adequacy of disclosures, who was the lender etc.


  1. Q: My loan was supposedly closed end of 2009. Case was dismissed but Quicken Loans refiled on 12/2014. I have an attorney. Can one rescind this long after the supposed closing and during the process of foreclosure? Thank you. A: Yes if disclosures that are “material” have continued to be withheld from you. No if you knew or should have known the facts for more than 3 years. Maybe if there are ambiguities because if the the “lender” fails to file the action within 20 days, they probably will be deemed to have waived their right to contest the rescission.
  2. I would like to send a letter to rescind, does anyone have a template they can email me to make sure I do it right we have been fighting BOA or about 2-3 years now but our original loan was with countrywide which never notified us of the change and BOA never did the proper transfer with the Register of Deeds in NC until they started the foreclosure proceedings. A: There is no template. Send a letter referring to your “loan” and simply say you hereby rescind it. The failure to notify you of a change from bank to another after the alleged loan closing is NOT a basis for rescission according to what I understand. But considering it is Countrywide, that was an aggregator not a lender. It was not a depository institution and the only way they could have “funded” the loan was as a conduit. Hence the disclosure papers revealed a debt to Countrywide when the the lender was likely another entity or group. That is a two edged sword though. If Countrywide didn’t make the loan there probably was no loan contract so there is nothing to rescind — but there also is nothing to enforce if there was no loan contract. If the circumstances are deemed to be a material wrongful disclosure as to the money (that you owe the principal to the party on the note and mortgage) then there are grounds to send the rescission.
  3. Sent Country Wide a rescission back in 09, of course it was rejected. The home was lost to a short sale to Ocwen in 2013. Your thoughts on any action for damages or other. A: Your rescission notice was not rejected no matter what they said. It was acknowledged so you have no problem with proving delivery of the notice. By operation of law the mortgage and note were nullified according to the statute and Reg Z. That means that legally there was no mortgage and there was no note and money was owed to you. The statute of limitations might have run on your claim for damages but the foreclosure proceedings after the rescission were void because there was no mortgage and no note to enforce. My opinion is it sounds like you might be able get that home back — especially since the short sale occurred in 2013. BUT if you signed their papers you might have inadvertently withdrawn your notice of rescission. My position on that is that rescission is effective by operation of law and neither you nor the pretender lender can do anything about the nullification of the mortgage and note without further “operation of law” which means a court order.
  4. What good would it do to send a rescission letter now since having allegedly closed the loan in 2005? A: Possibly none IF state law takes presidence AND state law has a statute of limitations relating to title and damage actions based upon wrongful foreclosure. Check with licensed attorney about the statutes of limitations and the doctrine of equitable tolling which extends the statute of limitations.
  5. Rescinded during foreclosure by rescission letters to lender, servicer, MERS, & Chase on first and second refi mortgages in June, 2007. Got acknowledgement with rescission letter being forwarded to new servicer, EMC (for Chase). Still in house 8 years later. Have not paid since 2006. Thru 4 judges local court will not recognize rescission but have high hopes now that mortgage and note are void (since 2007). Servicer says I owe $550,000 on a $65,000 second mortgage which was the only new money, if that. Chase claims, long after 20 day period, that my TILA complaint was bogus. Am having trouble with my Brydges and Oh and Assoc. attorneys understanding SCOTUS ruling re 20 day window. A: The Judge doesn’t have discretion in my opinion. The 20 days have elapsed. I know judges hate this but the Supreme Court basically slapped down hundreds of trial and appellate judges for their “legislation from the bench.” Sounds like a notice of filing, suggestion of dismissal and/or motion to dismiss based upon mootness — the mortgage and note no longer exist because TILA says they don’t exist “by operation of law.” If lawyer doesn’t like it find someone else who does. But listen to legal advice even from the lawyer you don’t like. They might suggest things that would change your decision and whatever they say takes precedence over anything I write here for general information.
  6. I sent and recorded Rescission letter in 2012 based on fraud and nondisclosure. They ignored it totally until now. They brought it up in another matter in court as they are trying to get more money from me. I have 2 weeks to respond. I don’t know where to go now for help. A: If they ignored it then they ignored the law and should not be rewarded for it. I think Justice Scalia was saying quite clearly that there is no room for discretion on this issue. If the rescission was sent then the mortgage and note are over and gone until a court order says otherwise; but the court has no discretion to entertain a defense to rescission if it isn’t filed in court seeking a declaration within 20 days after rescission. So based upon my analysis a notice of filing and a suggestion of mootness should be filed because the mortgage and note no longer exist. I think a motion to dissolve lis pendens would probably also be appropriate and a demand that the pretender lender return the canceled note and file the satisfaction of mortgage together with return of all money paid starting from “origination” of the loan. You might want to take this to Federal court where they are more likely to enforce clear announcement by a unanimous Supreme Court. Get advice from competent licensed legal professional — and make sure they have done the research on TILA rescission and that they essentially ignore any rulings prior to SCOTUS saying the borrower does not file a lawsuit to effect rescission and the borrower does not tender money or property to effect the rescission. The burden is entirely on the pretender lender in TILA which is a remedial statute designed to cause the Banks pain if they screw around with lending laws.


21 Responses

  1. Questions: We did send rescission letter before 2 years was up. We received one answer denying right to rescind…they said because it was (at the time) not our primary residence…However, they did not follow the 20 day rule. If the rescission is valid: What would be the next step? Quiet title? Would we have to eventually refund the monies of the the loan? to whom? Or Not? The loan was in 2007. Now after fighting foreclosure for years the servicer asked for dismissal without prejudice as they are not the lender that filed the case. It has been dismissed w/out prejudice. Currently, there is no foreclosure action. Would love to hear a podcast on the ramifications for people whose rescissions now stand.

  2. Christine,
    Contact me at please!
    Thank you!

  3. ilona, on March 9, 2015 at 1:17 pm said:

    I have a question up for discussion:

    No you don’t. Not here. This is Group Therapy for those who got nowhere. I know. I’m the only one who won anything and can direct anyone to solid attorneys with proven records, capable to win.

    Stick around. You’ll see it. When you do, run for your life. LL is dangerous for your life and you lose the house.

  4. Thank you Mr.Garfield for responding to my question #1. I have posed the question of rescission to my attorney and waiting for his response. Prior to the first filing in 2013 I sent QL a letter asking many questions and their response was they were not required to respond to them. Prior to the refiling on 2014 I sent their attorney a letter asking the same questions regarding my loan and they have completely disregarded my letter. I’m assuming having done this and receiving no response from them would qualify for rescission. My attorney does not do TILA work…but I’m hopeful doing this may be a positive move toward dismissal.

  5. crd – I’ve advocated (well, said I would) recording the notice of rescission to of course give notice in public record and because I don’t believe any title company will insure around it. Any lender who refused to do their bit after the notice will have to, imo, deal with the public notice to foreclose, say.
    I can’t rattle off all the justifications for rescission, but I think it’s critical to note that if one sends a letter and records the notice, it better be pursuant to one or more of those justifications.

  6. Yes trespass
    Challenge it all. Take it up with the agencies all three.
    Look at your credit reports look at dates get help understanding it

  7. ilona,

    Check the definition of consummate for contracts.
    It appears you want to state lack of disclosure as a reason but when something is not consummated the actions needed to make it complete has not occurred.

    Say you needed to provide bank statements to get a loan but signed the documents, agreed to the payment plan and was to provide the bank statement within a time period to get the loan, this is an example of not consummated. You signed and want to rescind the signature because you have not provided information they need and they have not loaned the money.
    In others words you have not affirmed the contract by your action (until you provide the bank statement) and they have provided no benefit (if they did you would return the benefit when you rescind).
    I know nothing. If I think I know something I know no thing. I do not give legal advice because I do not know legal things.

    Trespass Unwanted

  8. A must listen.–2015.html

    Alleged robbery in broad daylight.


  9. If the theft, because legally and lawfully only a creditor can foreclose but a judge can endorse a theft, removes the mortgage and the note; why are the thieves claiming to be owed in credit reports? Do they expect to keep getting paid for the property they stole?

    Trespass Unwanted, Creator, Corporeal, Life, People, State, Independent, In Jure Proprio, Jure Divino

  10. Statement of Financial Accounting Standards No. 115
    Accounting for Certain Investments in Debt and Equity Securities
    Introduction………………………………………………………………………………. 1− 2
    Standards of Financial Accounting and Reporting:
    Scope …………………………………………………………………………………. 3− 5
    Accounting for Certain Investments in Debt and Equity Securities…………………………. 6− 18
    Held-to-Maturity Securities………………………………………………………….. 7− 11
    Trading Securities and Available-for-Sale Securities……………………………………. 12
    Reporting Changes in Fair Value……………………………………………………… 13− 14
    Transfers between Categories of Investments………………………………………….. 15
    Impairment of Securities…………………………………………………………….. 16
    Financial Statement Presentation …………………………………………………….. 17− 18
    Disclosures ……………………………………………………………………………. 19− 22
    Effective Date and Transition …………………………………………………………… 23− 25
    Appendix A: Background Information and Basis for Conclusions…………………………….. 26−123
    Appendix B: Amendments to Existing Pronouncements……………………………………… 124−136
    Appendix C: Glossary …………………………………………………………………….. 137

  11. Statement 65 is amended as follows:
    a. In paragraph 4, and mortgage-backed securities
    is deleted.
    b. In paragraph 5, and mortgage-backed securities
    is deleted.
    c. In the first sentence of paragraph 6, or mortgagebacked
    security is deleted. In the last sentence of
    paragraph 6, or mortgage-backed security and or
    security are deleted. The following is added to
    paragraph 6 immediately after the first sentence:

    The securitization of a mortgage loan held
    for sale shall be accounted for as the sale of
    the mortgage loan and the purchase of a
    mortgage-backed security classified as a trading
    security at fair value.

  12. I have a question up for discussion:
    We refinanced our home in 2009. Taylor Bean and Whitaker was the loan originator, but the fund to pay off the old loan was advanced by Colonial Bank (This was never disclosed to us) We never made one single payment to TBW which we have a note and mortgage with and appears as a lien holder on our title to the present date. TBW was out of business one month after our closing. TBW sold our loan to Freddie Mac, reserving the servicing right. After the shutdown of TBW, FM appointed Cenlar as a new servicer, but never recorded anything in the land rerd, all the assignment went through MERS.
    After many attempt to discover where our payment is going, we finally stopped our mortgage payment as of November 1st. 2014. In the mean time, we noticed that our loan was transferred to Nationstar again through MERS but we paid our mortgage still to Cenlar. Canlar was sending the payments to Nationstar not to Freddie Mac. Cenlar threatens us with Foreclosure.
    Question: Our knowledge and belief is that, the loan was never consummated, because the real lender was never disclosed, this was a net funded loan, fraud from the inception can I send a rescission letter to Cenlar and MERS based on those facts after 6 years? On page 8 of this order, you can learn a lot more. Borrower_Protocol_filed_02.24.10.pdf

    Please advise!

  13. Please consider that despite a foreclosure sale you said Neil that theres nothing to rescind but consider a point in BEVILACQUA v. RODRIGUEZ, MASS: SUPREME JUDICIAL COURT 2011 as follows:

    “adhere[s] to the familiar rule that `one who sells under a power [of sale] must follow strictly its terms'” so, where a foreclosure sale occurs in the absence of authority, “there is no valid execution of the power, and the sale is wholly void.”

  14. The “foreclosures” are “self-fulfilling prophecies”.

    Presently, in the aftermath of the “Boom Cycle” of “Sub-Prime Lending”, the banks and their lawyers, are counting on foreclosures to reward their speculation in “derivatives”.

    Evidence of this behavior is best exemplified by Goldman Sachs creating “Sub-Prime” Garbage, then selling that same Garbage to pension plans after Goldman Sachs took “bets” the mortgage payments on that Garbage would fail.

    The bankers and their lawyers need the foreclosures in order to sustain the “Notion” they are anything BUT insolvent.

    Currently, contrary to banking “stress test results” best described as “ridiculous”, the international shortfall to financial markets, should short sale “bets (derivatives)”, fail to “pay off”, will prove the bankers and their lawyers destroyed themselves long ago.

    The amount of these “derivative-short-sale-bets” is estimated as in excess of 682 Trillion Dollars; that is ten times the GDP of every country on the planet combined. The bankers carry these “bets” on their books while described as having value as “Notional Derivatives”, and, as such, a foregone conclusion.

    As described, these ”short sale bets” are taken against borrowers and their ability to pay their mortgage. This is the “Bust Cycle” and it was deliberately designed by the same bankers and their lawyers that manufactured the “Boom Cycle”.

    Evidence (from just a few examples):

    -People current on their loans were deliberately put into foreclosure.
    -BOA among others paid their employees “bounties” to create foreclosures
    -BOA, Wells Fargo and others tricked borrowers to skip payments
    -the bankers routinely misrepresented conditions required to modify “loans”

    These same bankers and their lawyers are currently involved in forgeries and false testimony designed to conceal any number of frauds in an effort to “foreclose” the properties in question.

    Should the property “foreclose”, it will allow the bankers and their lawyers to “scrub” the paper regarding the fatal breaks in the chain of title and collect on their derivatives bets while concealing this immoral and illegal behavior from law enforcement, investors and borrowers alike.

    It is past time these people went to prison.



    This Statement addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. Those investments are to be classified in three categories and accounted for as follows:

    Debt securities that the enterprise has the positive intent and ability to hold to maturity are classified as held-to-maturity securities and reported at amortized cost.

    Debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings.

    Debt and equity securities not classified as either held-to-maturity securities or trading securities are classified as available-for-sale securities and reported at fair value, with unrealized gains and losses excluded from earnings and reported in a separate component of shareholders’ equity.

    This Statement does not apply to unsecuritized loans. However, after mortgage loans are converted to mortgage-backed securities, they are subject to its provisions. This Statement supersedes FASB Statement No. 12, Accounting for Certain Marketable Securities, and related Interpretations and amends FASB Statement No. 65, Accounting for Certain Mortgage Banking Activities, to eliminate mortgage-backed securities from its scope.

    This Statement is effective for fiscal years beginning after December 15, 1993. It is to be initially applied as of the beginning of an enterprise’s fiscal year and cannot be applied retroactively to prior years’ financial statements. However, an enterprise may elect to initially apply this Statementas of the end of an earlier fiscal year for which annual financial statements have not previously been issued.

  16. no owners knew that they were contracting, in a securities transaction, so how could a homeowner know or should of known?
    so i feel until the homeowners are told that there mortgage/and note will be converted into a security certificate/bond. them what they call
    consummation of the deal/contract hasn’t taken place. so i feel anyone and all should RESCIND . ,
    david belanger (@revolutionnow1), on March 9, 2015 at 11:26 am said:
    john, all am saying is , that it would be impossible for any homeowner to know that his mortgage/and note was going to be CONVERTED TO A SECURITIES. a bond,a certificates, and dice up to 15 to 30 different tranches, meaning your mortgage was sliced into 30 different pieces, so when someone is trying to foreclose i.e. trust, then please show me were my,and what traunch is my mortgage in???

  17. I don’t know anything about this rescission theory…… But this Q&A is very very good to read from NG…… I’ve been waiting to see something like this for over 5 years here……
    It should be his format here at least once a week !!!!

  18. EULE: Yes, mail it in. BNC and Option One, and many others were designed to be throwaway companies to add to the confusion. You need proof of mailing before you go forward.

  19. Neil said: “it is NOT my opinion that a rescission notice can be sent out under any legal theory if the foreclosure auction already occurred.”

    If it can be proven that the Note and/or Mortgage are void, then at least the foreclosure portion of the judgment would be void ab initio because the judgment was based on the misrepresentation that the Note and Mortgage were valid. Would that not render the foreclosure auction void also? SCOTUS and other court decisions held that a void judgment is a nullity, waste paper, of no legal effect, void before reversal, and grants no rights. It is as if nothing ever happened.

  20. this is why i say, there are no mortgages and mortgage notes, once a bank CONVERT THEM TO SECURITIES. you are no longer under the so call normal mortgage /note contract. they (banks) destroyed the mortgage and mortgage note, to CONVERT THEM INTO SECURITIES. THE MORTGAGE AND NOTE DOES NOTE ( EXISTS ANYMORE. )



    For liquidity purposes, state tax planning, capital requirements or other reasons, financial institutions
    might wish to convert whole loans to one or more classes of securities. The accounting
    for loans differs from the accounting for securities in several respects:
    p Loans which are held for sale (or for a securitization to be accounted for as a sale), are
    carried at the lower of cost or market in the aggregate. Thus, temporary declines in market
    value due to rising interest rates might require a charge in the income statement.
    p Loans held for investment require allowances for losses under FASB 5 and are subject to
    the impairment accounting provisions of FASB 114.
    p Securities are accounted for under FASB 115 and are not written down via a charge to the
    income statement unless there is an “other-than-temporary impairment” or the trading
    classification is elected.
    To accomplish the goal of converting loans to securities on the balance sheet and accounting
    for them under FASB 115, a QSPE is generally used as the transferee. The QSPE may be a
    grantor trust issuing a single class of pass-through certificates or it may involve a more complex
    structure with multiple classes of senior and subordinated interests. In a significant change
    from FASB 125, FASB 140 requires that at least 10 percent of the fair value of the beneficial interests
    in the QSPE be acquired by independent third parties, otherwise the entity will have to be
    consolidated and the transferor is back to where it started—with loans on the balance sheet.
    23Can Warehouse Funding Arrangements Be Off Balance Sheet?[36] An exception has been granted for mortgage loans in a guaranteed mortgage securitization,
    which requires a substantive guarantee by a third party (one that adds value or liquidity to the
    security). No part of the beneficial interests needs to be sold to outsiders because the guarantor
    provides legitimacy to the transaction. This exception cannot be extended to any other types
    of loans. Because no proceeds are raised, these securitizations are neither a sale nor a financing
    under FASB 140. In a guaranteed mortgage securitization, the historical carrying value of the
    loans, net of any unamortized fees, costs, discounts, premiums and loss allowances plus any
    accrued interest, is allocated to the sold interests, if any, and the retained interests (including
    servicing) in proportion to their relative fair values. However, if the transferor retains all of the
    resulting securities and classifies them as debt securities held-to-maturity, then FASB 140 does
    not require a servicing asset or a servicing liability to be established. [13]

  21. Where should I send the rescission letter , if BNC Mortgage and Option one is out of business . Mail come back ??

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