RESCISSION: It’s time for another slap on the wrist for state and federal judges.

50 years ago Congress decided to slap punitive measures on lenders who ignore or attempt to go around (table-funded loans) existing laws on required disclosures — instead of creating a super agency that would review every loan closing before it could be consummated. So it made the punishment so severe that only the stupidest lenders would attempt to violate Federal law. That worked for a while — until the era of securitization fail. (Adam Levitin’s term for illusion under the cloak of false securitization).

Draconian consequences happen when the “lender” violates these laws. They lose the loan, the debt (or part of it), their paper is worthless and the disgorgement of all money ever paid by borrower or received by anyone arising out of the origination of the loan.

But Judges have resisted following the law, leaving the “lenders” with the bounty of ill-gotten gains and no punishment because judges refuse to do it —even after they received a slap on their wrists by the unanimous SCOTUS decision in Jesinoski. Now they will be getting another slap — and it might not be just on the wrists, considering the sarcasm with which Scalia penned the Jesinoski opinion.

Get a consult! 202-838-6345 to schedule CONSULT, leave message or make payments.

TILA rescission is mainly a procedural statute under 15 USC §1635. Like Scalia said in the Jesinoski case it specifically states WHEN things happen. It also makes clear, just as the unanimous court in Jesinoski made clear that no further action was required — especially the incorrect decisions in thousands of cases where the judge said that the rescission under TILA is NOT effective until the borrower files a lawsuit. What is clear from the statute and the regulations and the SCOTUS decision is that rescission is effective on the date of notice, which is the date of mailing if the borrower uses US Mail.

There are several defenses that might seem likely to succeed but those defenses (1) must be filed by a creditor (the note and mortgage are void instruments the moment that rescission notice is sent) (2) hence the grounds for objection are not “defenses” but rather potential grounds to vacate a lawful instrument that has already taken effect. Whether the right to have sent the notice had expired, or whether the right to rescind the putative loan is not well-grounded because of other restrictions (e.g. purchase money mortgage) are all POTENTIAL grounds to vacate the rescission — as long as the suit to vacate the rescission is brought by a party with legal standing.

A party does not have legal standing if their only claim to standing is that they once held a note and mortgage that are now void. {NOTE: No party has ever filed an action to vacate the rescission because (1) they have chosen to ignore the rescission for more than 20 days and thus subject to the defense of statute of limitations to their petition to vacate and (2) they would be required to state the rescission was effective in order to get relief and (3) there is a very high probability that there is no formal creditor that was secured by the mortgage encumbrance of record. The latter point about no formal creditor would also mean that the apparent challenge to the rescission based upon the “purchase money mortgage” “exception” would fail.}

The premise to this discussion is that the so-called originator was not the source of funds. This in my opinion means that there never was consummation — despite all appearances to the contrary.

The borrower was induced to sign a note and mortgage settlement statements and acknowledgement of disclosures and right to rescind under the false premise that the originator was the lender, as stated on the note and mortgage.

The resulting execution of documents thus produced the following results: (1) the putative borrower has signed the “closing documents” and (2) the originator neither signs those documents nor lends any money. This results in an executory contract without consideration which means an unenforceable partially completed documentary trail that creates the illusion of a normal residential loan closing.

TILA Rescission is effective at the time that the borrowers notify any one of the players who represent themselves as being servicer, lender, assignee or holder. The effect of rescission is to cancel the loan contract and that in turn makes the note and mortgage void, not voidable. That the note and mortgage become void is expressly set forth in the authorized regulations (Reg Z) promulgated by the Federal Reserve and now the Consumer Financial Protection Board (CFPB). There is no lawsuit that is required or even possible for the putative borrower to file — i.e., there is no present controversy because the loan “contract” to the extent it exists has already been canceled and the note and mortgage have already been rendered void.

16 Responses

  1. This all sounds great, however, although Justice Scalia ruled on rescission, it is absolutely futile if there is absolutely no credible ageny to turn to in order to enforce it!!! The homeowner does not have to file suit (says Justice Scalia), but without a lawsuit, no one enforces it, so what good was the decision! Do you jump up and down waving your hands around.

  2. just a little too late for me. But, I like living in my car. Making payments for those 26 years and losing the $180k in untapped equity (my retirement, Im disabled and I really? love it on the streets?) just kept me tied down. Yep, too too late for me. But I like living on the streets. Did I already mention that?

  3. Martial Asset Division or dissolution of marital estate…

    Where one spouse is required to sue the other spouse to get insurance or collect from a 3rd party where the debt WAS FUNDED BY THE MARITAL ESTATE.

    His & Hers


  4. Two parties to the NOTE
    Three parties to the implied

    mortgage…(mortgage note)

    KC is one half the 3rd leg.

    If the claim is 3rd party …PROVE UP!
    Your Claim is ….. KC is a borrower ?
    Where is KCs money ?

  5. Jesinoski didn’t offer tender …
    Jesinoski didn’t request payoff figures , conveyance /reconveyance …
    Jesinoski couldn’t refinance or tender because he didn’t ask for .?
    Because without … ? & ? …. He couldn’t tender squat,

    Jesinoski admitted he couldn’t tender. .

    SIGHS …

  6. Jesinoski sued for damages giving the court jurisdiction ?

  7. Jesinoski was the Plaintiff and was suing for damages, the return of their payments that had been made as required as the first step under TILA after the borrowers rescission letter is mailed …the lender never complied with the procedure …so Jesinoski filed a law suit to try and collect. The trial court misinterpreted that as an opportunity to rule that the Jesinoski rescission was NOT EFFECTIVE…they reversed the Supreme Court who ruled that IT WAS EFFECTIVE. The SCOTUS held that it was effective regardless of being disputed or not, and that tender was not relevant at that stage …it becomes relevant AFTER the lender has complied and fulfilled their duties … But …the Jesinoski opened the door for the court by filing for damages ..the question here is , did all of these things happen within the time frames? Did the bank respond to the rescission within 20 days? Did this case get filed within the 1-year window allowing for damages? Probably YES…meaning that now the courts jurisdiction was invoked ..allowing them to decide if the reason for the rescission had merit … But they all missed the point that the note and Mortgage were already made void .. The bank submitted the signed acknowledgment forms , meaning the court found a loophole to rule against Jesinoski …the court also ruled that Jesinoski admitted he didn’t have the money to tender up front … But again, that is an error because the statute provides for a borrower to go get a new lender to refinance with after the note is cancelled and the mortgage lien is removed from the land records …if the lender complies than the borrower can easily raise the tender by refinancing or selling.

    In my case that was just filed to the Appellate Division ..we rescinded under TILA and the servicer Wells Fargo ignored it …and then after a full 3 months had passed of not receiving payments they filed a foreclosure complaint and said we defaulted. This happened in 2007 …back then I was told that I would need to tender first …so we fought them on other issues of fraud and standing …they eventually requested dismissal of the complaint in 2011 …. Now in 2014 they filed a new complaint based on the same alleged default in 2007 …. We answered the complaint by denying that a valid or legal loan had been consummated ..we asserted that a table funded predatory illegal transaction funded by unknown un-named third parties occurred …we raised affirmative defenses that TILA violations had occurred and that we had rescinded the loan in 2007. We added a counterclaim seeking a Declaration by the court that the note and Mortgage had been made void due to our TILA Rescission…and that the the foreclosure cannot proceed against void instruments. The servicer filed a motion to dismiss our defenses and counterclaims and they based it on the 3-year statute barring us ..arguing that we can’t raise a 2007 rescission in 2014 …they argued that we only get 3 years to raise rescission. The court agreed and dismissed my Rescission. They then filed for summary judgement …and then Jesinoski came out by the Supreme Court … I objected to the summary judgement and filed a cross motion to reconsider dismissing my TILA Rescission…at the hearing the judge said that my motion for reconsideration was late was well beyond the 20 days allowed for a motion of reconsideration. But he held oral arguments on it anyway … He acted as the attorney and desperately attempted to undermine my TILA Rescission …He was all over the map ..bouncing from one thing to the next trying to destroy the rescission … He stated that the Jesinoski case only held that a borrower need not file suit …he rejected that it said anything about being effective ..then he changed direction asking me if I have the 180,000 dollars to tender back to Wells Fargo the servicer, who by the way admitted that Fannie Mae actually owns the loan …but they fabricated a forged assignment saying they have been assigned the mortgage and that they are Holders of the note …a computer copy image that they downloaded in my opinion … During the first case they submitted a certification showing the note they had was missing a stamp blank endorsement from Washington Mutual Bank ..and this was in 2010 … WaMu went out of of business in 2008 ….then they added the blank stamp in 2011 …the judge asked them to bring a witness in to testify under oath about how this happened ..they requested the case be dismissed when he asked for a witness to testify under oath .. So now in 2015 a different judge is asking if I have the money to tender to this servicer Wells Fargo on an alleged loan purportedly owned by Fannie Mae … The hearing was in March ..only 2 months after the Jesinoski decision came down … I didn’t know how to argue it all except to keep saying that they failed to comply in 20 days …when asked if I have thec180,000 dollars .. I would say “I have the house and it’s worth more than that” …andctbe judge would say “well that’s what we’re doing here ..they’re taking the house” … But they never complied with the 20 Day requirement in 2007 ….it was now 2015 …and he would say “but you haven’t paid them since 2007 have lived in that house for free”

    And I would say “but the TILA Statute says I have every right to not pay them and stay in my house …and after another 20 days passes that I can keep the house with no further obligations” … Then he would spin to another issue …the whole time the attorney for Wells Fargo sat quietly watching saying nothing as the judge attacked .. Attorney always asserted in her motion papers that we did not have a right to rescind because 3 years had passed since the 2004 closing …but this judge knew that she was wrong and he was trying to clean up her argument for her …he admiited and acknowledged that I was claiming I had already rescinded back in 2007 , well within the 3 years to do so, and when she got up and spoke she said “well he only had 3 days to rescind and he didn’t rescind this is crazy” …and the judge would shut her up and clean it up for her ..telling her “no, what he is saying is that he had a right to rescind for 3 years because the lender never gave him the required right to Cancel Forms” ….and then she said “oh, well we have signed acknowledgments saying he was given the right to rescind and then after 3 days passes the lender releases the money once they see that the borrower hasn’t rescinded , so I don’t know what has talking about ..because he was givebpnb3 days to rescind and he didn’t, so it’s obvious because the 3 days to rescind had passed and he didn’t rescind” ….

    The judge would then try to help explain to her that “the defendant is saying he didn’t receive his copies of the right to cancel”

    She would keep saying “when the money was released after 3 days they signed acknowledgments stating they had been given the right to cancel” …

    He then told her to sit down and he ended the hearing …

    He already had his decision prepared before the hearing …granting summary judgement for Wells Fargo …dismissing my cross motion on the TILA Rescission ..

    Regarding my Rescission …He basically said that we did not offer to tender which he said is required in order to rescind ..and then he raised an issue that had not been asserted by Wells Fargo ..he said that he does not know if they ever received the rescission notice because all we had was a copy of the rescission letter that we mailed to them and a reply letter from them dated a month after out or letter was mailed. In their reply letter they don’t use the word rescission …instead they use the word “problem” …they acknowledge that we reached out to them and this “problem” will be addressed shortly, we are here to serve you our cutomers and we value you, etc, etc.

    We also submitted a sworn affidavit certification saying we had mailed the rescission in 2007.

    The judge denied for not offering to tender and by saying he wasn’t sure if we really ever mailed the letter …

    Now here’s the problem … Wells Fargo never denied receiving our rescission letter in court, on the record during oral arguments Or in any of their motion papers …they always asserted that we did not have the right to rescind…they would say that the closing happened in 2004 ..and that it was now 2014 and that We should be time barred from raising it

    Now it has been filed for appeal …

    Their reply to the appeal ???

    They now attempt to latch onto the judges personal views in his decision he read after the hearing …when he said he has no way of knowing if the plaintiff received the letter …now they want to use that argument to the appeal court ..

    But they never asserted that at any point during the trial court proceedings …they only asserted that we did not have a right to rescind.

    They have never in their papers or during oral arguments, never said that they didn’t recieve our rescission notice.

    This was fabricated by the judge ..he invented this and promoted it in his decision when the hearing had concluded.

    My attorney on appeal says the judge abused his discretion ..on a summary judgement filled by Wells Fargo …the court should be careful to view anything drink the non-moving party favorable if it can help them defeat the party motikning for summary judgement ..meaning if we had asserted our TILA Rescission argument ..he should have not abused his discretion by acting as though he was weighing all the evidence of a full fledged trial …he interjected his own personal bias against the defendants rescission and asserted things that the plaintiff Wells Fargo had not even asserted …they never denied that they received the letter …..and thats right on the record.

    So can a party now start asserting new arguments to an appeal court?

    Just because a judge inserted those new atprguments in his decision?

    They had never once denied that they received the rescission letter.

    They had always maintained that we did not have a right to rescind.

    Will the Appellate Judges back the trial court judge for fabricating a defense for Wells Fargo in his decision after the hearing had concluded?

    Is it fair that a case be decided on something the plaintiff never asserted themselves?

    The judge is basically hiding behind the issue of credibility in order to defeat my Rescission …He has personally invented an argumentbout of thin air that the plaintiff never asserted in 10 years of litigation.

    The record reflects that The plaintiff hascalwats maintained that they did not believe we had a right to rescind after 3 days elapsed .

    They have never asserted or argued that they did not receive the letter.

  8. What if I just recently discovered my mortgage was “table funded” (American Brokers Conduit) & the I’m still paying on it? What is the servicer doing with my payment if the Trust no longer or never existed? Found out ABC was just a DBA & never a real business.

    Had an “attempted fraudclosure” in 2010 with confirmed robosigned assignments recorded at the county. Got it rescinded.

    Is a TILA Rescission / Reg Z applicable in this situation? ? ?

  9. Correction…….Putative borrower(s)

  10. The Jesinoskis were crucified in MN trial court after being remanded back there by SCOTUS. Seems they had made certain confessions in their original pleadings acknowledging certain claims by the plaintiff, so they barred themselves from final victory. They didn’t know better that if they had kept their mouths shut and forced the plaintiff to prove claims instead of admitting them they might have prevailed. Bad lawyering on their behalf!

  11. This information is factually and legally incorrect. Jesinowski lost their home after the case was remanded back to the trial court.

  12. Punitive borrower(s )signed the mortgage ,,,correct
    Execotory contract without consideration,,,,correct

    Where’s KC’s money ?

  13. Well, even if it is ‘TIME FOR” a re-visit to the Jeninoski ruling, per the title of Neil’s post, IS any case pending, or any further action in the subject case itself that provides the opportunity for the Supreme court to take on such a ‘revisit’?

  14. Does anyone know the status of Jeninoski case as of today. Are they still in court or did the courts follow the Tila and give them everything according to the statue.

  15. ok here is what I dont understand… on my purchase of my house, the seller was given a check. Isnt that consideration?

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