“Continuing offense” may extend statute of limitations

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See http://www.lexology.com/library/detail.aspx?g=249bf095-ac84-44ce-836f-6d4988f86d11

The Court of Appeals found it was a “continuing offense” for which the “limitations clock” did not begin until December 2009, when, presumably, the illegal storage ceased. As stated by the Court of Appeals, “Congress, in enacting RCRA, employed language indicating that it understood [illegal] storage to be a continuing offense.”


The issue of the TILA right of rescission being barred by a statute of limitations may soon be resolved in favor of the borrower. However, the courts might carve out an exception in rescission cases as to “when the right of rescission expires.” AND all of this dovetails with equitable tolling and the fact that no lawsuit is required to make a rescission effective.


The fact that the notice of rescission was “mailed” is, in and of itself, all the evidence you need, without any need for a lawyer, judge, hearing or order stating that it is effective. All of that has already been done for the borrower by the TILA rescission statute 15 USC §1635 et seq, Regulation Z, and the U.S. Supreme Court — all three branches of government being in complete and unanimous agreement on that point.


Courts that attempt to ignore this basic fact, as a matter of law, are explicitly denying the boss — the US Supreme Court.


In short, what some courts are doing is wrestling with a problem that does not exist — whether the rescission is effective.


And, compounding the judicial error, is that if they wish to “rule” against the borrower and proclaim some defect with the rescission the Court is committing errors —

The court is ruling AS THOUGH THE RESCISSION HAD BEEN VACATED without a lawsuit,the opportunity of the borrower to cross examine and present a defense (including the statute of limitations for filing a lawsuit demanding that the rescission be vacated). The statute is very clear that if the “lender” or creditor wants it any different they can apply to a court of law — not the US Mail or a motion that skips the due process of filing a claim for the express purpose of asking the court to vacate the rescission.

The statute is quite clear that the creditor or lender must apply to the court to change anything about the rescission — within 20 days from receipt of rescission and thus incorporates normal procedural law — establishing jurisdiction and standing, alleging that the rescission was mailed and is effective, stating why it should be vacated (not why the rescission is ineffective).

Any “interpretation” of the statute violates the directive of their boss — the U.S. Supreme Court.  Justice Scalia said that (1) the statute is perfectly clear and thus does not allow room for interpretation of anything (the express wording of the statute controls) and (2) the statute obviously does NOT make any distinction between disputed and undisputed claims — hence that ALL rescissions are effective even if they were defective or even wrong.

The court is ruling as though such a claim had been brought and is treating the rescission as though it was vacated. This ignores the key issue of standing. There is a body of law, using presumptions at law, that the “holder” of a note has the right to sue for foreclosure or collection; BUT there is no body of law supporting the granting of relief or accepting standing based upon the claimant’s reliance on a void instrument. It is clearly erroneous to accept the assumption by trial judges that the court has jurisdiction to hear a claim that has never been alleged, no defense has been presented, no evidence hearing and no judgment.

Which brings us back to the so-called statute of limitations on sending a rescission. The statute says the right to send that rescission end three years after the consummation of the contract. If the borrower is alleging that the actual consummation date is unknown and might never have occurred with ANYONE in the chain relied upon by the foreclosing parties, THEN THE ISSUE OF THE DATE OF CONSUMMATION IS A FACT IN ISSUE THAT MUST GO TO TRIAL AND NOT RULED UPON BY A COURT WHO SAYS “IT IS OBVIOUS.” The only exception to this is the age-old problem of lawyers filing papers that admit that the date of consummation was on a certain date — which is admitting a non-existent fact, about which neither the lawyer nor the borrower have any knowledge.

There is also the problem of table-funded loans where the actual party who actually loaned the money or whose money was used to fund the loan or fund the acquisition of the loan. It would appear that this IS the creditor. And it follows that only the real creditor can file the lawsuit asking that rescission be vacated (same general procedure as vacating a court order — which leads to an evidentiary hearing). The issue remember is that parties relying upon the void note and the void mortgage have no standing, and thus the court lacks subject matter jurisdiction to enter a ruling on anything about the notice of rescission.

In the case of table funded loans, it is nearly always the case that the actual creditor is not disclosed, so the violation of TILA is continuing and the discovery of the problem usually only is revealed in litigation. It follows that if the violation is continuing and the revelation was recent and the borrower had no other reasonable way to get the real disclosure, that the statute would only start to run when the banks (1) stopped the continuing violation by (2) revealing the identity of the actual creditor.

The presence of this continuing violation is obvious — in most cases the REMIC Trust is alleged to be the holder of the note and mortgage, which by definition means that they have left something out — either (1) the name of the creditor for whom they are attempting to collect or foreclose or (2) allege (and prove) that they are the owner, which would require proof of payment in discovery and at trial.

16 Responses

  1. (e) [2:27] Real property sales contracts/secured notes: “Sells or offers to sell, buys or offers to buy, or exchanges or offers to exchange a real property sales contract, or a promissory note secured directly or collaterally by a lien on real property or on a business opportunity, and performs services for the holders thereof.” [Bus. & Prof.C. § 10131(e)]
    [2:28] Cross-refer—exemptions: Certain persons, though performing the above activities, are exempt from the broker license requirement. See ¶ 2:86 ff.

  2. (d) [2:26] Financing-related activities: “Solicits borrowers or lenders for or negotiates loans or collects payments or performs services for borrowers or lenders or note owners in connection with loans secured directly or collaterally by liens on real property or on a business opportunity.” [Bus. & Prof.C. § 10131(d); see Smith v. Home Loan Funding, Inc. (2011) 192 CA4th 1331, 1335, 121 CR3d 857, 860—broker acts as borrower’s agent; Onofrio v. Rice (1997) 55 CA4th 413, 420, 64 CR2d 74, 77 (citing text)]
    (Individuals who make certain specified loans from their “own funds” also are considered real estate brokers; see ¶ 2:30 ff.)

  3. a. [2:21] “Real estate broker”: A “real estate broker” within the meaning of the state “broker” licensing laws is “a person who, for a compensation or in expectation of a compensation, regardless of the form or time of payment, does or negotiates to do [certain statutorily specified] acts [¶ 2:22 ff.] for another or others … ” [Bus. & Prof.C. § 10131 (emphasis and brackets added); Horning v. Shilberg (2005)
    130 CA4th 197, 203

  4. California Real Estate Finance Practice: Strategies and Forms

    Chapter 10

    Securitized Commercial Mortgage Loans

    Maura B. O’Connor
    James Bryce Clark


    A. Differing Economic and Regulatory Environments for Securitized Loans §10.2

    1. Unbundling the Lenders’ Role §10.3

    2. Lower Cost of Funds and Lower Quality Markets; Emergence and Difficulties of Subprime Loans §10.4

    3. Different Regulatory Incentives and Requirements §10.5

    4. Different Underwriting and Documentation Criteria §10.6

    a. Impact of Bulk Processing and Rating Agency Criteria §10.7

    b. Further Assurances and Other Risk Controls §10.8

    B. Players and Goals During Repayment Life of Securitized Loan §10.9

    1. Discrete Monitoring and Administration Roles §10.10

    2. Less Negotiation, More Formulas in Early-Stage Workouts §10.11

    3. Securitizing Lenders’ Troubled Assets and REO Property; What Happens After (or Instead of) Foreclosure §10.12


    A. Getting the Asset “Off Balance Sheet” §10.13

    B. Special-Purpose Entities (SPEs) §10.14

    1. Structure of SPEs

    a. Controls and Financial Covenants—The “Kon-Tiki” Approach §10.15

    b. Corporate Structuring §10.15A

    c. Bankruptcy-Remote Structures §10.16

    d. Income Tax Concerns §10.16A

    e. Accounting Concerns §10.16B

    2. Future of SPEs; Potential Hazards §10.17

    C. Guaranties and Other Third Party Credit Enhancements §10.18

    D. Junior and Unsecured Debt §10.19

    E. Application of Insurance Proceeds §10.20

    F. Loan Prepayments, Breakage, and Defeasance §10.21

    G. Lenders’ Rights to Transfer Loans §10.22

    H. Restrictions on Borrower Rights to Transfer the Property §10.23


    A. Degrees of Freedom in Drafting Loan Documents §10.24

    B. Incomplete or Defective Documentation §10.25


    A. Collateralized Debt Obligations §10.26A

    B. New Challenges and Tools in Loan Administration §10.26B

    C. Continuing Changes and Turmoil in Both Securitized and Traditional Lending Markets §10.26C


    A. Form: Cooperation and Further Assurances §10.28

    B. Form: Negative SPE Covenants §10.29

    C. Form: Defeasance §10.30

    D. Form: Hyperamortization §10.31

    E. Form: Change of Management §10.32

    F. Form: Restrictions on Transfer of Leveraged Asset §10.33
    Back to Top

    Continuing Education of the Bar – California


  5. STRIKE: …with a “LINO”

    CORRECTION: …by a “LINO”

  6. …more on the undisclosed SECURITIES TRANSACTION with a “LINO”…:

    § 240.3a12-5 Exemption of certain investment contract securities from sections 7(c) and 11(d)(1).

    (a) An investment contract security involving the direct ownership of specified residential real property shall be exempted from the provisions of sections 7(c) and 11(d)(1) of the Act with respect to any transaction by a broker or dealer who, directly or indirectly, arranges for the extension or maintenance of credit on the security to or from a customer, if the credit:
    (1) Is secured by a lien, mortgage, deed of trust, or any other similar security interest related only to real property: Provided, however, That this provision shall not prevent a lender from requiring (i) a security interest in the common areas and recreational facilities or furniture and fixtures incidental to the investment contract if the purchase of such furniture and fixtures is required by, or subject to the approval of, the issuer, as a condition of purchase; or (ii) an assignment of future rentals in the event of default by the purchaser or a co-signer or guarantor on the debt obligation other than the issuer, its affiliates, or any broker or dealer offering such securities;
    (2) Is to be repaid by periodic payments of principal and interest pursuant to an amortization schedule established by the governing instruments: Provided, however, That this provision shall not prevent the extension of credit on terms which require the payment of interest only, if extended in compliance with the other provisions of this rule; and
    (3) Is extended by a lender which is not, directly or indirectly controlling, controlled by, or under common control with the broker or dealer or the issuer of the securities or affiliates thereof.

    (b) For purposes of this rule:
    (1) Residential real property shall mean real property containing living accommodations, whether used on a permanent or transient basis, and may include furniture or fixtures if required as a condition of purchase of the investment contract or if subject to the approval of the issuer.
    (2) Direct ownership shall mean ownership of a fee or leasehold estate or a beneficial interest in a trust the purchase of which, under applicable local law, is financed and secured by a security interest therein similar to a mortgage or deed of trust, but it shall not include an interest in a real estate investment trust, an interest in a general or limited partnership, or similar indirect interest in the ownership of real property.

    (Sec. 3(a)(12), 48 Stat. 882, as amended 84 Stat. 718, 1435, 1499 (15 U.S.C. 78c(12)); sec. 7(c), 48 Stat. 886, as amended 82 Stat. 452 (15 U.S.C. 78g(c)); sec. 11(d)(1), 48 Stat. 891 as amended 68 Stat. 636 (15 U.S.C. 78k(d)(1)); sec. 15(c), 48 Stat. 895, as amended 52 Stat. 1075, 84 Stat. 1653 (15 U.S.C. 78o(c)); sec. 23(a), 48 Stat. 901, as amended 49 Stat. 704, 1379 (15 U.S.C. 78w(a)))
    [40 FR 6646, Feb. 13, 1975]


    17 CFR 240.3a5-3 – Exemption from the definition of “dealer” for banks engaging in securities lending transactions.

    § 240.3a5-3 Exemption from the definition of “dealer” for banks engaging in securities lending transactions.

    (a) A bank is exempt from the definition of the term “dealer” under section 3(a)(5) of the Act (15 U.S.C. 78c(a)(5)), to the extent that, as a conduit lender, it engages in or effects securities lending transactions, and any securities lending services in connection with such transactions, with or on behalf of a person the bank reasonably believes to be:
    (1) A qualified investor as defined in section 3(a)(54)(A) of the Act (15 U.S.C. 78c(a)(54)(A)); or
    (2) Any employee benefit plan that owns and invests, on a discretionary basis, not less than $25,000,000 in investments.

    (b) Securities lending transaction means a transaction in which the owner of a security lends the security temporarily to another party pursuant to a written securities lending agreement under which the lender retains the economic interests of an owner of such securities, and has the right to terminate the transaction and to recall the loaned securities on terms agreed by the parties.

    (c) Securities lending services means:
    (1) Selecting and negotiating with a borrower and executing, or directing the execution of the loan with the borrower;
    (2) Receiving, delivering, or directing the receipt or delivery of loaned securities;
    (3) Receiving, delivering, or directing the receipt or delivery of collateral;
    (4) Providing mark-to-market, corporate action, recordkeeping or other services incidental to the administration of the securities lending transaction;
    (5) Investing, or directing the investment of, cash collateral; or
    (6) Indemnifying the lender of securities with respect to various matters.

    (d) For the purposes of this section, the term conduit lender means a bank that borrows or loans securities, as principal, for its own account, and contemporaneously loans or borrows the same securities, as principal, for its own account. A bank that qualifies under this definition as a conduit lender at the commencement of a transaction will continue to qualify, notwithstanding whether:
    (1) The lending or borrowing transaction terminates and so long as the transaction is replaced within one business day by another lending or borrowing transaction involving the same securities; and
    (2) Any substitutions of collateral occur.

    [72 FR 56567, Oct. 3, 2007]

  8. The key word is ‘consummation’. 15 USC 1635(f) reads: “An obligor’s right of rescission shall expire three years after the date of consummation of the transaction..”

    Now congress could have said: “after obligor receives funds..” or “after funds are disbursed..” or any other such language. They did not. They specifically used the word ‘consummation’. Consummation means a lot of things and one of them, to comply with TILA is full disclosure and identification of parties.

    Remember, the Mortgage or Note are not consummated – the loan itself -money – is and is the thing (not the mortgage or note) what is to be rescinded. (BTW – for you out there who are considering filing a notice with your county clerk: The filing is a NOTICE OF RESCISSION OF LOAN, period. Not NOTICE OF RESCISSION OF MORTGAGE or DEED OF TRUST. You can’t rescind something that’s void. In the recitals within the NOTICE OF RESCISSION OF LOAN, you state that in accordance with the TILA statutes, the mortage/deed of trust and note – as to your property – are were made irrevocably void ab initio on the date of mailing of the TILA rescission.

    The note and mortgage are thereby void ab initio. Like they never happened, and the so-called ‘note holder’ must comply with their duties under the statute. The only person who can dispute or move to set aside the rescission is the person who must show, by facts, that they are the current beneficiary of a properly consummated ‘loan’ of money in accordance with TILA and State contract law. And Neil is right, they must show facts that money/consideration was paid for the right to own the ‘loan’ without the voided note and mortgage/deed of trust. Voided checks, wire transfers, etc.


  9. SoCal 7,

  10. “I” means the Borrower(s) named above.
    “You” means the Lender named above.

    YOU & I have entered into an original obligation which is a CONSUMER .


  11. The three years in TILA is a statute of ‘repose’, not limitation, as the US Supreme Court explained, but Neil’s theory still applies to a statute of repose. The fact that its a statute defines a beginning point and if the party to the alleged loan is not known, then the beginning point does not begin to run until that entity is known. How would someone know to whom to send the TILA rescission, if they haven’t been identified? It must be sent to who is known: the pretender/lender cum Table Funder, the servicer and anyone claiming against the note/mortgage, but that still doesn’t mean they have standing and does not diminish the effectiveness and finality of the rescission letter.

    This was the whole reason for the enactment of the TRUTH IN LENDING ACT. Sheesh.

    Just thought I’d parse out ‘limitation’ v. ‘repose’, because if you say ‘limitation’ to the judge, it means something different than ‘repose’, but again, neither kick in until the actual party to the transaction is known.


  12. Seised of an Estate

    I recall those words being used in the Misrepresented Mortgage.

    Plaintiff, One Half of the Estate

  13. CROAK


  14. What is CONSUMMATION?
    The completion of a thing; the completion of a marriage between two affianced persons by cohabitation. Sharon v. Sharon, 79 Cal. 633, 22 Pac. 26.

    What is CONSUMMATE?
    Completed; as distinguished from initiate, or that which is merely begun. The husband of a woman seised of an estate of inheritance becomes, by the birth of a child, tenant by the curtesy initiate, and may do many acts to charge the lands, but his estate is not consummate till the death of the wife. 2 Bl. Comm. 120, 128; Co. Litt. 30a. CONSUMMATION 257 CONTEMPT

    One consisting of a continuous series of acts, which endures after the period of consummation, as, the offense of carrying concealed weapons. In the case of instantaneous crimes, the statute of limitations begins to run with the consummation, while in the case of continuous crimes it only begins with the cessation of the criminal conduct or act. U. S. v. Owen (D. C.) 32 Fed. 537.

    What is ATTEMPT?
    In criminal law. An effort or endeavor to accomplish a crime, amounting to more than mere preparation or planning for it, and which, if not prevented, would have resulted in the full consummation of the act attempted, but which, in fact, does not bring to pass the party’s ultimate design. People v. Moran, 123 N. Y. 254, 25 N. E. 412, 10 L. R. A. 109, 20 Am. St. Rep. 732; Gandy v. State, 13 Neb. 445, 14 N. W. 143; Scott v. People, 141 111. 195, 30 N. E. 329; Brown v. State, 27 Tex. App. 330, 11 S. W. 412; U. S. v. Ford (D. C.) 34 Fed. 26; Com. v. Eagan, 190 Pa. 10, 42 Atl. 374. An intent to do a particular criminal thing combined with an act which falls short of the thing intended. 1 Bish. Crim. Law,

  15. Yup.

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