Rescission is a Test of Persistence

The “free house” mythology will have become reality. That is what happens when you break the laws governing deceptive and predatory lending.
… for those who don’t give up, the reward is substantial when TILA rescission is reluctantly recognized by the Courts as effective upon mailing.

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The current judicial climate regarding TILA Rescission is that it doesn’t count — it means nothign, does nothing and cannot be sued to defeat foreclosure. But the signs are all there showing that the banks are bracing themselves for the real consequences of rescission in which borrowers receive the draconian remedy stated in the statute. For those borrowers who persist, there will ample reward despite the dark clouds that appear in the rear view window.
On the horizon there are positive signs that the Congressional intent in the Truth in Lending Act will been enforced, to wit: “lenders” and “pretender lenders” will lose both their security interest in residential property and the right to collect any debt. The “free house” mythology will have become reality. That is what happens when you break the laws governing deceptive and predatory lending. And that is what happens when Congress decides what should happen to you when you break those laws.
The current argument is that if the rescission was sent more than 3 years after consummation, it does not count as anything and the judges can ignore it.

There is absolutely no doubt that judges want to adopt that  reasoning. But the three year limitation is not the only restriction. The same statute says that if the loan is a purchase money mortgage, TILA rescission is not an option. And there are other restrictions. The whole point of the Supreme Court decision was to say that the rescission WAS effective when it was mailed and not when a court ruled on whether it should have been sent in the first place. And there is a provision in the statute to allow an “injured party” (creditor?) to request a court to adjust the procedures that follow the mailing of the rescission.

So if the court was just saying that it was obvious that this was beyond the three year limitation. Or that it was obvious that this was a purchase money mortgage and that therefore the rescission was void or could be ignored, such a court would be reversing the Supreme Court decision — something no court in our country is empowered to do and is in fact prohibited from doing under the US Constitution. Obviously if the rescission was void there would be no limitation.

But the Supreme Court decision basically says that there is no such thing as a void rescission under the truth in lending act. Whether the borrower is wrong or right, it is effective when mailed and the “lender” (creditor) has 20 days to comply — or, to file an action to vacate the rescission because the borrower has unfairly canceled the loan transaction. The whole point was to make it easy on the borrower who felt that they have been the victim of deceptive or predatory lending. The wording of the statute was carefully crafted.

The obvious intention, which can be seen in many other cases that construe the statute, was to provide a mechanism by which a borrower could throw the burden to justify the practices leading up to the “loan” on to the “lenders.”

Both the statute and the Supreme Court decision make it clear that the borrower does not need any resources (except a pen, paper and a stamp) to trigger the procedures under the rescission statute in the truth in lending act.

The consequence of inaction by the “lenders” are very harsh and even draconian. The idea behind doing this was to force lenders into policing themselves, or upon failing to do that, suffer the loss of the security instrument and even the loss of the right to seek repayment. This legislation was a compromise. Some people wanted the creation of a new agency that would be the size of the Internal Revenue Service to review and police loan transactions. This distrust of the banks goes back to the 19060’s when the TILA legislation was initially enacted.

As I have posted on the blog, even lawyers who represent the banks agree in published articles that ignoring a notice of rescission could come a huge cost. Like me, they do not believe that the current environment will continue wherein Judges ignore the notice of rescission. If the bank lawyers agree with what I have been writing, it would seem that we should take this much more seriously in the expectation that the current climate will change with respect to the sending of a notice of rescission and the recording of that notice in the public records.

I agree that the current climate it is virtually entirely negative. And most people who have sent a notice of rescission and most people who have recorded a notice of rescission will probably never receive the remedy to which they are entitled. This may be because of lack of persistence, ignorance of the change in the judicial climate or because of limitations are upheld in going back in time to the moment of the sending of the notice of rescission. For those people who persist, I still believe that they will prevail in the end. And for those entities who who have identified themselves as creditors or lenders, they will be barred from enforcing the underlying debt for failure to respond to the notice of rescission.

BOTTOM LINE: For those who persist on the issue of rescission, the ultimate remedy under TILA rescission is coming — mostly too late for those who have had their homes go through forced sales that were void because the loan transaction and the loan documents had been canceled. Many of them have “moved on” albeit hobbled by the bite of the banks in the era of false securitization and fictitious appraisals. But for those who don’t give up, the reward is substantial when TILA rescission is reluctantly recognized by the Courts as effective upon mailing.
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16 Responses

  1. They say Tila was used in foreclosure and can’t be raised a second time against sale of house. But the law allows appeal from sale which was void due to rescission. The court says rescission was raised once and rejected and cannot be used again. It makes no sense the rescission was not vacated.

  2. Dear Orlanda,
    We recommend a consultation with Neil Garfield. You may also contact California attorney Charles Marshall at:

    Law Offices of Charles T. Marshall
    415 Laurel St., #405
    San Diego, CA 92101
    Phone 619.807.2628

    Thank you,
    The Lending Lies Team

  3. I have a case filed in 2009 which is still active, seven causes of action, I just noticed the original lender “Greenpoint Mortgage Funding surrendered their authority to do business in California in 1/9/2004, my loan was done in 10/18/2005, my loan was assigned by MERS to aurora Loan in 1/13/2010 and with a modification pending Aurora Foreclosed. I was cheated by the attorney who released Aurora from the case and my BK….I have recently went to court and was substituted in “in Pro Per” but the judge said lady don’t come back without an attorney. I filed a DEFAULT on greenpoint since they were properly served and I’m waiting for it to come in the mail BUT I need an attorney for the prove-up who understand Yvanova, Glaski and Sciarratta-there is a case in Santa Monica SC123007 that won against greenpoint recently. Is there anyone out there in Los Angeles California to help? Please…Ms O

  4. Ok so I got a loan in 2007. Ive been trying to find the original lender. I’ve been sued by Fannie Mae. I filed a bankruptcy adversary to establish the true creditor. Fannie Mae didn’t show up and defaulted. Can I now file the rescission against the original lender?

  5. Great explanation Anon the other issue to consider is consummation. If transaction as understood was never completed the clock shouldn’t start. Courts could b ignoring the law here as well. Clock would start at discovery of fraud, deception is my understanding. But if sale has gone forward can’t assert rescission right. 20 days before sale is prob the last point can assert rescission.

  6. Rena .. I think what Neil is saying .. is that the Supreme Court held that your rescission is effective upon mailing …whether it’s right or wrong, whether it’s within 3 years of after 3 years’s still effective ..

    Now that point the “Creditor” has 20 days to act – key word “Creditor

    If and when a Party steps forward with a court action seeking to vacate your recission ..and they do it within the 20 days allowed to do so … Then and only then ..may a court begin looking into their arguments that are asking the court to vacate the Rescission … BUT.. at the same time you as the consumer should object to this “Party” / Stranger and you should asset that they are NOT the “Creditor” , that they lack standing because they have not shown or proved up that they own the debt .. Your argument is going to be that TILA never intended for strangers or third parties to have any authority or standing to contest a rescission because the statute doesn’t state that they do ..the statute says that the “Creditor” must comply and/of act within 20 days … So your Honor, we must object to this Party’s standing in this matter …

    The 2 point attack strategy is ….

    1) making the Party prove standing by proving they own the debt. Not just by showing a fraudulent, fabricated, forged documents …but by showing proof of funding of the loan at its inception and proof of purchase for value at every sale of the debt along the chain of title ..

    2) Origination …was this loan even a valid loan? We need to see the proof of its inception ..who actually funded this loan? We contend that the loan was a table funded loan by a straw man pretender lender, which is predatory according to Reg. Z of TILA

    The Judge will get frustrated by point 2 above ..he will rhetorically argue that if it wasn’t a valid loan then “how are you rescinding a loan?”

    Well the point is …. The homeowner wins either way …because no matter who shows up in court to contest YOUR rescission…if a valid origination and funding cannot be proven ..then the loan was a lie was predatory ..and nobody can foreclose on your property.

    And if the origination was valid and proven in court …you still have an argument against the Party in court trying to foreclose if they are not the original lender … You need to see proof that they are the valid creditor …they would have to prove every transfer and transaction in the chain of title leading to them …and their own proof of purchase of this debt.

    The Rescission is effective once you mail it per the Supreme Court.

    The statute states that the “Creditor” must act within 20 days.

    But in Jesinoski , if I remember correctly, Scalia said something about the 3 years being firm (or it was discussed during oral arguments?)

    Maybe what Neil is saying is .. Even outside 3 years it is effective ..unless A TRUE CREDITOR TAKES ACTION WITHIN 20 DAYS AND RAISES THE 3 YEAR RULE AS A REASON FOR THE COURT TO VACATE THE RESCISSIKN.

  7. @Susan Batista

    …I’m prayin’ for you (and the rest of us). BUT, just in case it an error, or someone’s giving you odd info, the 1st Session of USSC begins on January 9th, 2017.

  8. Can you explain why after the 3 years have lapsed whether sending a rescission letter would still be valid. Obviously there can be suspicion of predatory lending many years after origination and (bogus) changes in ownership and services. When a pretender lender can’t admit or deny that the that the payee on the Note and the mortgagee on the mortgage was the source of funds then we make the conclusion that it is predatory per se – and that may happen after the 3 year mark.

  9. TILA restrictions on rescission include purchase loans.
    There is a Cure for That Too!

    Common Law
    Contract Law
    Trust Law
    Estate Law
    Mortgage Foreclosure Law

    Fraud is such an Ugly word.

    The Cure for LuPuS. ..
    Title Insurance?

    1st American Undesirables
    & Trust (NO) Trust Company
    Sleeps amongst BOA Constrictors & Merrill Lynches
    As a Broad Example

    MERS aka ME R’ (u) S

  10. Neidermeyer,

    Are you saying your “True Lender” is a REMIC Trust?

    Who did you file the Rescission against, the True Lender or Pretender Lender?


  11. Susan Batista …what was the Courts reason for denying your TILA Rescission? Or did they not address it specifically? Did they just deny your action based on the fact that the case had already been litigated and dismissed with prejudice before you ever raised the Rescission argument?

  12. United States Supreme Court–January 6, 2017 Rescission Batista v. Countrywide Home Loans, Inc. keep me in your prayers and I always keep you in mine.

  13. The only way it changes is if captured/owned courts/judges are removed or our Constitution is enforced. Still a court trap.

  14. It’s going to be a great 2017 ,,

    I have a federal case decision where my “honest to God” TRUE lender has been identified by a Federal judge based on original underwriting documents,,, and they are not named on my note … I filed a rescission with them within 3 years after the court ruling (when I officially became aware of the deception) and that entity replied stating that they are not my lender and have no interest in the note…

    I’ve found an aggressive honest lawyer that understands it fully … and he’s an ex ambulance chaser so he’s not afraid of taking positions…


  15. Neil, are you saying that we should file a TILA rescission, even after 9 years from consummation of the loan. (In my case WAMU refi cash out happened 7/25/07, foreclosure started sometime in 2010, I filed chapter 13 3/11, and that was recently “dismissed” solely because loan mod was still in “pending status”

    I was looking to file the TILA rescission now, during holidays (catch them off guard) them maybe refile chapter 13, list Chase a an unsecured dept., placing burden on them. Then use the TILA rescission in conjunction with the adversary hearing, using the Bankruptcy Court vs other.

    A question that need to be addressed with TILA rescission SoL: in California fraud has a statue of limiting of four years from the time the fraud was discovered. Can you address how these two SoL are or are not mutually exclusive?

    Best regards
    Chip and Jennifer in California

  16. Is there any evidence the judicial tide is turning in favor of homeowners on rescission or is it just optimism? I was very close to spending $$$ on rescission enforcement, but ultimately decided it was futile. Am nearing the end of our 2+ year battle and about to cave. I suppose there would be no retroactive recourse down the road if a massive shift occurs in the courts regarding rescission, either.

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