TILA Statute of Limitations 15 USC 1640(e)


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This article corrects prior articles in which I stated that there is a one year statute of limitations on filing claims under the Truth in Lending Act (TILA). After reviewing the new statutory scheme (post Dodd-Frank) it appears that the limitation language upon which I had based my prior opinions no longer exists. There still is a one year statute of limitations, but as you can see, it is now a little more complex.

There is still language to the effect that there is a one year limitation starting with the date of the occurrence of the violation. BUT then there is a provision that states the limitation is 3 years IF the violation occurs as set forth in 15 USC 1639 (disclosures in mortgage loans). But then the TILA statute (§1640) returns to the one year period, stating that as a defense, one can still bring the claim for TILA violation after one year (apparently without limitation).

Perhaps I didn’t notice before that the wording below was unruly. But upon my review now, it seems to me that to be on the safe side, one should bring an action to enforce a rescission notice, within one year of sending the notice, although the more accurate way to interpret this would be one year after the “violation occurred” which is the day after the party fails to comply with the TILA rescission duties. This would be approximately 1 year plus 25 days from the date that the TILA rescission notice was mailed.

The counterpart for this lies in 15 USC 1635 wherein those duties under TILA statutory rescission are set forth. It appears to me that the alleged creditor also has no right to bring an action to collect what is left of the debt after the expiration of one year. I reach this conclusion because the right of the creditor to claim any money from the borrower is entirely dependent upon FIRST fulfilling ALL of the duties under the statute — return canceled note, release encumbrance and pay borrower all money paid by borrower and paid to third parties as compensation arising out the origination of the loan. Those duties are conditions precedent to making a claim for anything against the “borrower.”

THIS MAKES TOTAL SENSE ONCE YOU THINK ABOUT IT. If the creditor has been unable or unwilling to comply with the TILA Rescission Statute, and has elected NOT to file a lawsuit within the twenty day period to challenge the rescission and demand that it be vacated, then it follows that the rescission was completely justified, to wit: all the disclosure violations that the TILA Rescission Statute was meant to punish banks for violating are and must be deemed true. Since the banks violated statute, public policy and probably some criminal laws, they should get the punishment that Congress decided was appropriate.

Starting with the date that the “creditor” started violating the TILA Rescission statutory duties, at the end of one year, it would appear that the entire transaction is dead. The loan contract, note and mortgage are rendered void at the time the notice of rescission is dropped in the mailbox (USPS). That happens by operation of law regardless of what anyone does.

The debt lives on but it is cut down to the principal since no finance charges or fees can be claimed by the alleged creditor. But, if at the end of one year, the “borrower” has not brought an action to enforce the rescission, it would seem that the borrower is at least subject to a defense that he/she is time-barred from bringing the enforcement action after one year. After 3 years, that is certainly true — as long as we are talking about the date of the violation.

The date of the violation is the 21st day after receipt of the notice of rescission. Thus the action to enforce the rescission matures on the date of violation of TILA. That is the date when the time expires for compliance (20 days after receipt of the notice of rescission) — unless the alleged creditor has, in accordance with the statute filed an action to change the “order” of things as they are set forth in the TILA rescission statute. With mailing times that might be as late as 25 days+ from the date the notice of rescission was sent. That doesn’t change when the rescission became effective (i.e. canceling the loan contract, voiding the note and voiding the mortgage); that date cannot be changed except by legislation, to wit: it is the date of mailing the rescission notice.

So I conclude that after one year starting with the 21st day after the notice of rescission was received, the borrower can no longer enforce the rescission duties. But before everyone gets wild about this, the rescission is still effective by operation of law, which is to say the note and mortgage are void. When such a homeowner files to quiet title he/she can appropriately assert that the mortgage is void by operation of law and should be removed from the public records. In my opinion it is only when the lien is void (not voidable or unenforceable) that it is appropriate for a court to quiet title to the petitioner.

At that point, the alleged creditor, if there is one, has no defense to quieting title, as I see it. And the creditor is barred from asserting any claim against the “borrower” because of the express wording of the TILA rescission statute 15 USC 1635, which says that  no such claim can be made without complying with the three TILA Rescission duties under the statute.

Being in violation of those duties after 21 days from receipt, the creditor can make no claim for the underlying debt which has been trimmed by statute to only the principal AFTER releasing the lien, returning the canceled note and paying the borrower all the money set forth in the statute which is to say every penny ever paid by the borrower and every penny paid as compensation for the origination of the loan.

So the situation reaches a sort of equilibrium, to wit: the “borrower” can no longer make a claim for money to be paid under the third duty set forth in TILA rescission statute and the “creditor” can no longer make a claim for any part of the debt. The borrower is left to clear title on his/her own. (That is why I strongly recommend recording the rescission notice, since it would, by operation of law, effectively release the lien by self-help).

The creditor who failed to comply with the statute or contest the rescission loses everything, but is no longer liable for damages due to non compliance with the three duties under the TILA rescission statute — unless the “creditor” continued to wrongfully pursue foreclosure without complying with the TILA rescission statute. Thus the borrower cannot bring a claim against anyone to enforce the duties under the TILA Rescission statute, but the decision to ignore the notice of rescission is then met with a wrongful foreclosure action, since the rescission was effective by operation of law on the day it was mailed.

THIS IS WHY IT SO IMPORTANT TO RECOGNIZE THE DIFFERENCE BETWEEN A SUIT ENFORCING THE RESCISSION AND A SUIT FOR DAMAGES FOR WRONGFUL FORECLOSURE OR SUING TO QUIET TITLE BASED UPON THE EXISTENCE OF THE RESCISSION. ANY OTHER INTERPRETATION WOULD BE REWRITING THE TILA RESCISSION STATUTE. Such “interpretations” would render the text of the statute and the text of the SCOTUS opinion in Jesinoski as meaningless — because such an “interpretation” would again require a judicial act before the rescission could be effective at law. That outcome has specifically been eviscerated by all three branches of  government plus the Federal Reserve.

AND this is a good time to remind the attorneys reading this that attorneys fees are recoverable as damages under the Wrongful Act Doctrine (see the Florida Bar Journal last month). So in the wrongful foreclosure claim which I assume exists in virtually every case where the notice of rescission was sent, foreclosure defense attorneys can turn the filings of opposing counsel on their head — using their rendition of billable hours as a guide to the claim for being required to defend an action that should never have been filed for foreclosure.

15 USC 1640(e) Jurisdiction of courts; limitations on actions; State attorney general enforcement. Except as provided in the subsequent sentence, any action under this section may be brought in any United States district court, or in any other court of competent jurisdiction, within one year from the date of the occurrence of the violation [e.s.] or, in the case of a violation involving a private education loan (as that term is defined in section 1650(a) of this title), 1 year from the date on which the first regular payment of principal is due under the loan. Any action under this section with respect to any violation of section 1639, 1639b, or 1639c of this title may be brought in any United States district court, or in any other court of competent jurisdiction, before the end of the 3-year period beginning on the date of the occurrence of the violation. [Editor’s note: This would appear to extend the statute of limitations regarding rescission enforcement to three years, but §1635 is not specifically mentioned]. This subsection does not bar a person from asserting a violation of this subchapter in an action to collect the debt which was brought more than one year from the date of the occurrence of the violation as a matter of defense by recoupment or set-off in such action, except as otherwise provided by State law. [e.s.] An action to enforce a violation of section 1639, 1639b, 1639c, 1639d, 1639e, 1639f, 1639g, or 1639h of this title may also be brought by the appropriate State attorney general in any appropriate United States district court, or any other court of competent jurisdiction, not later than 3 years after the date on which the violation occurs.

23 Responses

  1. Can someone help me out here, I received a notice of acceleration from Wells Fargo and I think they are going to be trying to foreclose on my second mortgage of a securitized loan which has all kinds of illegal issues. Can someone explain to me if I can use Rescission as a defense to prevent the foreclosure. I’m in Maryland a Non Judicial State. Can someone explain in laymans terms what is rescission? Can I afford to do it? Will I need an attorney? Where can I find an example to do it myself and who should I send the notice to. The loan was closed back in 2005, but since then there have been fraudulent DOT’s filed as close at 3 to 4 years ago. Am I at risk of losing my home if I initiate a Rescission? Please assists. James (jsmith5915@msn.com) 443 677 2799. Thanks

  2. NG: “But then the TILA statute (§1640) returns to the one year period, stating that as a defense, one can still bring the claim for TILA violation after one year (apparently without limitation).”

    This is huge, maybe. There’s been a question about whether or not a tila violation may be asserted as a defense / in a counter-claim in recoupment.
    Reminder: a claim in recoupment is one (also remember my memory is getting shot) which may be made as a defense or counter-claim after its normal time limitation has expired. This was the question (for me, anyway):

    MAY a tila violation be asserted beyond its “normal” statute of limitations as a defense and or counter-claim to a claim made by the lender (like one for foreclosure of course)?

    Without some serious study on my own part, I wouldn’t like to guess what all asserting such a claim in recoupment would mean. Neil says if a lender doesn’t 1) rescind or 2) argue timely in court in response to a notice of rescission (the lender would be asking the court for a variance, essentially, from the rescission created by the notice pursuant to TILA -OR- denying that a rescission-invoking violation occurred to justify the rescission), the lender has lost his claim to the balance, the one remaining after it should’ve returned to the borrower anything of value given or paid in consideration of the loan (fees, points, payments, and so on).
    Arguments may exist that tila and all its ramifications are harsh. Well, yeah, they are. But that’s not an accident; it was an intended consequence for a failure on the part of lender’s to self-govern, and again (imo as one who received some early education on tila), for at least two reasons: to protect the consumer and to discourage false advertizing by lenders (which is unfair to competitors). As to the latter, what I’m saying as I’ve said before is that lenders were “in on” TILA legislation and that’s the way they wanted it. They didn’t want the guy across the street getting the borrowers in his door thru false
    advertizing, even if that led to bait and switch by the false advertizer, which it would: One way of another, the honest advertizer lost the business. It still remains unlawful to advertize a rate without the accompanying A.P.R. far as I know, though it goes on every day because no one who should is minding the store.
    At any rate, if NG has accurately conveyed TILA here and I’ve accurately digested what he said, TILA violations may be asserted in recoupment / counterclaims at ANY date.

  3. I apologize. .
    What were there F.K.A.s? Not AKAs.

  4. David…What were the AKAs of those 5 Broker Dealers?
    FIRREA 12 U.S C 1833a

    Didn’t the AKAs lose their investments ?

  5. P.S.
    We had talked about Reversing when my husband retired in 7 years .
    A pension to pay monthly expenses and cash to travel.

    Reverse That,
    Certified Reverse Mortgage Specialist

  6. Standing on the Sidelines
    Waiting in Limbo
    Quiet that Please

  7. ” The creditor Can’t or Won’t comply with those precedents set forth in TILA ”

    SOL runs BOTH ways!

    Many Blessings to All

  8. Thank You for Correcting Yourself Neil.
    I Like people who accept responsibility for their errors , things get resolved much more quickly without all the conflict .

    The 1st time is a mistake. ..
    The 2nd time is a choice…
    I was starting to worry about you .

    Bob G, No one ever will! Behave! LOL!
    On a lighter note … There is much to be found there ….

  9. Wolf v. Wells Fargo Update

    Harris County Superior Court
    Proposed Final Judgment

    “On Plaintiff’s motion, the Court has disregarded the jury’s answer to Question No. 10 (Wells Fargo is a Holder of the Texas Home Equity Fixed/Adjustable Rate Note (Defendant’s Exhibit 2)). Because it appears to the Court, based on the remaining findings identified above, that the jury’s verdict was for Plaintiffs and against Defendants, judgment should be rendered on the verdict in favor of Mary Ellen Wolf and David Wolf and against Wells Fargo Bank, N.A., as Trustee for Carrington Mortgage Loan Trust, Series 2006-NC3 Asset Backed Pass-Through Certificates; and Carrington Mortgage Services, LLC.”

    Judgment is for $1.25 million.

    The final documents will be posted soon.

  10. Well, well, forced to log in to comment.
    What happened? Did anyone abuse our ability to comment anonymously without logging in?

    This post seems to tie into the recent changes with FTC, CFPB, and Department of Justice.

    People fail to file those complaints naming the people who work for these corporations. Then People who fail to ‘do their part’, complain that nothing is being done.

    No one can come into your house to search for evidence of a crime without a complaint from a witness.

    That means no agency is going to tell a corporation to open their books to scrutiny without a complaint identifying what was done, for the agency to seek the evidence showing what happened.

    A business does nothing. If the business is a corporation, it literally exists in a drawer in a filing area in the Secretary of State where it was created. Then someone purchases or leases a building to perform their ‘acts’ as that business.

    What’s real is there are people doing the things that are done in the name of the business and that veil is lifted, How?

    Lifted by people who are filing complaints naming the people who are doing the acts. Naming a business leaves the entire list of employees to dig through to figure out who did what?

    Who’s gonna do that?

    Better yet, you are near an ant mound and the ant mound is the business or corporation. An ant bites you, and you sue the mound.

    Really is someone going to go through all the ants to figure out who did something, they can’t go after the queen, as the queen was not there, even though the ant works for her.

    So being specific.
    Who did what to you.

    Because some people have awaken a bit, and learned to make their complaints clear and name someone specifically and not the business in their complaints, we are getting somewhere.

    We have December 10, 2015
    Debt Collectors Beware: FTC Takes Broad Reading of Activities Subject to FDCPA and Section 5

    Where excerpts include ” FDCPA also applies to companies that collect on their own debts with consumers while using a different name to do so ”
    “FDCPA contains an exemption for debts that are not in default when obtained”
    “loan servicers can become debt collectors subject to the FDCPA should they collect on loans that default while being serviced”

    Seeing that we do not know these laws and acts as well as the agencies do, and that people like Neil with best efforts has a difficult time interpreting and judges with no effort ignore; it makes sense to make the complaint and let the agency determine the fault.

    We know they are at fraud, it makes no sense to do no thing because we ‘think’ we have no thing to do.

    Going into their court business, you are just paying them to make presumptions that are not fact so they can write it up as if it is fact and take the property with your money, in my opinion.

    These articles appear to indicate that as the investigations continue and the awareness of the criminality is exposed, there is going to be accountability by the people who were ‘just doing their job’, or ‘thought they were doing the right thing’, yeah, right!

    One more: November 5, 2015
    Newly Announced FTC “Operation Collection Protection” Targets Debt Collectors

    “a major law enforcement initiative targeting deceptive and abusive debt collection practices. “Operation Collection Protection” is a nationwide initiative that the FTC is coordinating with the Department of Justice (DOJ) and Consumer Financial Protection Bureau (CFPB), as well as more than 45 state and local enforcement agencies and regulators”

    “intended to combat the increase of deceptive and abusive behavior mainly reported in connection with “phantom” or “zombie” debts”

    “message to bad actors within the debt collection industry is clear: “Clean up your act.”

    Considering the prior link states loan servicers can become debt collectors, the two articles are refreshing.

    It makes no sense someone claims as an asset on their books a property they stole legally (using court as co-conspirator) but not lawfully [there was no documents to support standing or a contract compelling performance or making the property collateral for any debt collection on a non existent contract.]

    I am called Trespass Unwanted, Creator, Corporeal, Life, Free, People, State, Independent, In Jure Proprio, Jure Divino

  11. yea, the 20 day requirement is in the statute… Only courts can modify the rescission procedure, see section 1635(b); Reg. Z 1026.23(d)(4).
    You have to be practical regarding a creditor’s refusal to honor the rescission notice, OK… it is not so straightforward though the statute is fairly simple, the compliance normally requires judicial action and the court will impose proof that the notice was valid when sent.

  12. I’d like to purchase some of your services.

    Thank you,

    Tim Collins

    Sent from my iPhone 206.919.6005


  13. SCOT , i have been here for a a few yrs, but spend 6 hrs day for past 6 yrs investigating all this crap. i feel i have a good understanding of all that was done.

    so how are we suppose to get help from you as a witness or affidavits.
    for our attorneys.

    have something for you to see.





  14. david
    scot reads & posts here… write to him…

  15. GREG , how can we get scot to help us homeowners, with affidavit, or even going into court as expert. ??

  16. bob g./



  17. We need some reliable wrongful foreclosure complaints and quiet title.

  18. BTW – thanks for getting the log-in issue fixed!

  19. cool! thanks for the great research and interpretation Neil!

  20. I still don’t see where the “creditor” has to file suit to challenge the rescission within 20 days of notice of rescission. Anyone here find this 20 day requirement?

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