The Eighth Circuit’s affirmance in the present case rested upon its holding in Keiran v. Home Capital, Inc., 720 F. 3d 721, 727-728 (2013) that, unless a borrower has filed a suit for rescission within three years of the transaction’s consummation, §1635(f) extinguishes the right to rescind and bars relief.

That was error. Section 1635(a) explains in unequivocal terms how the right to rescind is to be exercised: It provides that a borrower “shall have the right to rescind . . . by notifying the creditor, in accordance with regulations of the Board, of his intention to do so” (emphasis added). The language leaves no doubt that rescission is effected when the borrower notifies the creditor of his intention to rescind. It follows that, so long as the borrower notifies within three years after the transaction is consummated, his rescission is timely. The statute does not also require him to sue within three years.

..Section 1635(a) nowhere suggests a distinction between disputed and undisputed rescissions, much less that a lawsuit would be required for the latter.

The above quotes are from  Jesinoski v Countrywide

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The above quote was penned by Justice Scalia writing for a unanimous Supreme Court of the Untied States, the highest court in the land. It is the boss of bosses, ruling over all appellate and trial courts in every U.S. Jurisdiction. It leaves ZERO room for interpretation and in fact the opinion prohibits any interpretation by anyone, including judges on trial or appellate courts:

Nothing in our jurisprudence, and no tool of statutory interpretation, requires that a congressional Act must be construed as implementing its closest common-law analogue. Cf. Astoria Fed. Sav. & Loan Assn. v. Solimino,501 U. S. 104, 108-109 (1991). The clear import of §1635(a) is that a borrower need only provide written notice to a lender in order to exercise his right to rescind. Jesinoski v Countrywide

I think the key error made by homeowners, their lawyers and judges is buying into the bank argument that rescission is a claim. If it is a claim it must be litigated. Once notice of rescission is given, rescission becomes a fact or an event, not a claim. The clear meaning of the opinion in Jesinoski is that no interpretation is required or allowed AND no stonewalling the rescission can be accomplished by merely announcing a dispute with statutory TILA rescission on ANY grounds.

Statutory (TILA) rescission is different, then, from common law rescission in one huge way, to wit: statutory TILA rescission puts the burden of PLEADING and PROOF on the “banks”. If they file a lawsuit on behalf of a Plaintiff with legal standing and  presenting their claims as to why the rescission should be vacated, then a court has jurisdiction to hear the claims providing that the right to file such claims has not already expired. No such lawsuit has EVER been filed in any case.

Further errors occur when homeowners file suit to “confirm”: or “declare” the validity of the rescission, as it creates a false issue — just like the Jesinoski case. No such lawsuit is necessary and any order entered upon such a claim would be void for lack of subject matter jurisdiction — there is no claim recognizable at law before the court to be decided. The analogy would be filing suit to declare that the sun rises and sets. The failure to recognize rescission as a fact and the continuing impulse to treat it as a claim is responsible for many unfortunate rulings and decisions.

Just as a creditor with legal standing could file suit within 20 days to vacate the rescission, the “borrower” can file an action to enforce the duties of the parties who received the notice of rescission within one year. This should not be a suit to enforce the rescission because that fact has already occurred and forms the basis of your pleading, to wit: “rescission was effected on the above date and the Defendants continue to ignore the that fact and prosecute claims under a canceled loan contract and void note and mortgage.”

If neither the creditor with standing nor the homeowner file suit, then certain claims arising under TILA expire. Specifically, the borrower cannot, outside of the time limits imposed by TILA, seek to force the recipients to disgorge the money required to satisfy the duties under TILA rescission and cannot force the recipients to file a release of the encumbrance nor force anyone to return the original canceled note.

BUT, the rescission is still a fact. It is history. It is or was an event. So a quiet title action would be completely appropriate since the mortgage or deed of trust were rendered void by operation of law — back when rescission was “effected” (i.e., when it was delivered.) Damages and disgorgement could also be sought for violation of the duty to comply with law and the willful pursuit of false claims — i.e., fraud and maybe even unconscionability.

As a fact instead of a claim, the predisposition of the courts to simply ignore it means that they are issuing void orders and judgments. Such courts lack jurisdiction to determine the rights and obligations under the loan contract, the note or the mortgage, because those instruments no longer exist. Such order then are void. And as with all real property interests, there is no statute of limitations on clearing your chain of title, canceling and removing an encumbrance which, by operation of law, no longer exists.

But in the period outside the time limits imposed by TILA, the only claims a homeowner can bring are those permitted by other statutory law or common law.

But that also holds true for the “banks.” Having failed to satisfy the duties imposed by statutory TILA rescission their right to obtain or enforce a judgment for the “refund” or “tender” has also expired. Their only right to that money, after rescission, comes from the TILA rescission statute. Having failed to comply or file suit within the 20 day period, there is no permissible claim for money against the homeowner and obviously no permissible claim for foreclosure of the void encumbrance appearing on the county records.

Most lawyers for the “banks” have already published nearly identical opinions regarding rescission. The banks have chosen to steamroll the courts and homeowners because that seems to work, even though they are wrong. Keep it simple and the courts will be required to change, no matter how much they hate statutory TILA rescission.

18 Responses

  1. Chris
    Seems a bit like filing for divorce then living with your spouse anyway… Did you consider your follow up actions might show you never intended to rescind? What do you think those subsequent mortgage payments were, a gift?

  2. We’re currently trying to avoid foreclosure with Ocwen. We rescinded our mortgage in Dec. 2009. Notices to rescind was sent and signed for by 3 parties and none responded within 20 days. About a week later the originator of our refinance responded and said “you received all you closing documents at closing.”

    Our notice said we rescinded under regulation z for defective TILA disclosure.

    Just like then (2009) no lawyer is even interested. The court may have ruled the rescission was effective once mailed and that no lawsuit was needed to enforce rescission, but we knew what would happen if we simply stopped paying and so we didn’t.

    We moved, we couldn’t sell it so we rented it until the mortgage increased and rent no longer covered the payment. We still paid hundreds a month over the rental just in hopes the value would return enough to sell. The value did come back some but still just short of our ability to make up the difference.

    Now 4 years later and our renters have left. We filled the papers earlier this year asking Ocwen to help but they denied us. We just sent the papers again and are currently waiting on a reply from them.

    Do you think they care that we rescinded the loan before they acquired it from Litton? lol. That we may never know.

  3. They want foreclosure not your money. They will take money and you will still get in trouble. They will steal money and not give to rightful owner, because [drumroll] there is no rightful owner/creditor.

  4. @CBoots,

    I get it. But, it sounds more like a counter claim than a filing/service.

  5. @Steve,

    Because what the banks need is new paper. The existing stuff is all bad, so a “modification” fixes it. Then, so does a court judgment.

    The goal of the banks is new paper, such that all the old stuff can be shredded. And, they’ve a captive audience.

  6. Then why were we told by our Government to modify instead of the option to rescind as instructed in the financial crisis?

  7. Wiley

    The problem is that most states have a statutory definition of “consummation” pertaining to contracts “hidden” somewhere in their Compiled Statutes. This is an attempt to create a legislative consummation “BY EDICT” were there is none by performance. It is likely unconstitutional or a violation of the principals of equity.

    In a simple transaction like if I sell you my car, we agree to the terms, we sign a bill of sale, you pay me and I give you the car and sign over title to you… so yes, in that case consummation occurs when we sign the contract – because all things to perform are concurrent with the paperwork.

    The old legislative definitions of consummation are based in great part on this kind of transaction. They did not foresee the labyrinth of deception that the banks would later create.

    Judges turn to their state’s statutes on defining consummation and refuse to acknowledge failure of timely performance as a legal argument to show that consummation by performance never occurred.

    Imagine getting married and never “consummating” the marriage with your recorded spouse, and instead, he/she sends in their brother/sister to “do the deed” with you. Is that a consummation or a fraud?


  8. CBoots, how is that done? Unless it included with a general rescission? I saw where one court recognized the execution/consummation of a contract because it was attempted to be rescinded, with the rescission being invalid in some way (out of time?).

  9. Wiley – not true – you still want to rescind your signature and consent from the contracts, note and mortgage documents for failure of performance – so they can’t come in later and “cause it to be fulfilled”

  10. Then again, if there was no consummation, there’s nothing to rescind.

  11. As to consummation, I will repeat myself as I have posted this on previous Living Lies blogs before….

    In our case, there was a purported refinance deal attempted in Sep 2004 with New Century with Title Services Inc. of Illinois acting as “closer”…

    There were problems with the contract in that they failed to secure a signature from the Land Trust Trustee who held legal and equitable title to the property… (the beneficiaries only hold private property – not title and cannot pledge the property as collateral subject to a lien)

    The FIRST instance/indication that the original purchase loan from 1999 was discharged occurred in Aug 2008 – over 4 years after the refinance papers were signed by the beneficiaries alone.

    The 2008 notice of Discharge of Mortgage was created and recorded on the county land record by now-infamous self-admitted forgers/robosigners Ms. Crystal [METH] Moore (as VP of some firm with nothing to do with the original deal) and Bryan Bly (as Notary) – both from NTC (National Title Clearing)!

    How this could have happened a year after New Century went belly-up in bankruptcy is a mystery – as Mr. Alan Jacobs, the US bankruptcy Court appointed trustee for New Century Liquidation Trust never executed any such payment at that time.

    Until that time, there were 2 concurrent liens on the title to the property… clouding the title…

    No other proof of payment of the original purchase loan was ever recorded anywhere… least of all submitted into court as evidence of proof of claim during US BANK’s illegal foreclosure.

    When we had our accountant review our record in late 2009, he noticed all the red flags and advised us to rescind the New Century transaction. We did so in early 2010… within 3 years of the Moore/Bly Discharge of Mortgage notification.

    We believe – even if forged or fraudulent, that the Moor/Bly notice occupies the position as the first attempt of proof on the record of a possible date of consummation of the New Century deal.

    I could go on-and-on, but I think you get the drift…

    Use for your own development of the right questions to ask…


  12. Another question is…

    “Did the originator of record ever fund the transaction or did they assign it in blank (or other) before funding, then relying upon a third party to fund the deal – (if ever)?”

    If the originator never consummated the deal by performing all their duties within the contract PRIOR to transfer or assignment, then they only transferred the papers – not the debt – because under that condition, it would follow that they never paid for or risked anything and had no debt to sell or transfer, and were not in fact the original funder “originator” and only acted as a broker on commission.

    The contract calls them the “lender” – if they failed to lend, then there is no performance or consummation by them, and funding from a third non-contracting party (assignee) binds nothing upon the alleged borrower – and is also a non-consummation event.

    So where is the proof that the originator timely provided the funds from their own account?

    Where is the proof that the originator sold and transferred the debt to a third party AFTER it spent its own money to fund the transaction?

    Does that make sense?

  13. Yeah but, if you hit the bricks into your 80s, get your ass kicked by our Sec of Commerce, Wilbur Ross (who is now in the “line of fire by Investigator Meuller in the Trump Cabinet Crime Investigations case), like I have, and a fed Dist Ct Judge sides with the criminals and shoots us low life in the ass, well I ain’t gonna be alive I suspect to see any justice, not for me, no doubt, that prick has bilions including my $340k equity to beat as all to dath..but maybe, just maybe Meuller will put him and al of Trumps cronies behind bars at Ft leavenworth, KS for their crimes against the USA…maybe, pray to God to save us from these modern day robber barons and thieves….please dear God. y’all ignore me, I am just “venting” as usual, my self directed psychotherapy, eh?

  14. Can a Recission be filed after the 3 years if the bank’s fraud was only discovered recently (less than 3 years)?

  15. We could do with some arguments for lack of consummation, too. Allowing rescission after the 3rd year due to that lack.

    Another question: Just when does a note become a “bearable instrument”? The one I signed wasn’t bearable at that time. As I understand it now, it becomes bearable only once it becomes endorsed in blank by the originator. In my loan document, it states, “lender or to lenders successors or assigns”. Assignment in blank is not “to” anyone. That would seem to be a change in terms.
    Had I known the note would become bearable, it would give me pause.

    The Lender (originator) who provides a blank endorsement is not assigning the note “to” anyone, that is to anyone, or everyone, whomever has possession. That disengages all potential for consideration to effect such/any transfer. And, engages great potential for unjust enrichment by whomever holds the note. It could be stolen by any number of individuals along the way who handle the note in transition.

    So, I suggest, authorization to be a holder should be required.
    And, such authorization extends from the originator with intent to allow successor or assign to hold.

    A blank endorsement, by itself, could be considered a compromise of Lenders’ fiduciary responsibilities. And, since securitization is the expected end of line, why are not these made to the trustee? Doing so would successfully alleviate any question as to who the successor might be. Why is the flexibility of blank endorsement even needed, or desired? (hint: to allow banks to keep them).

  16. In 2004 we agreed to a conversion of our ARM to a fixed but discovered in 2013 that we were given a refinance that was then immediately sold to WaMu.
    If we pay the mortgage servicer(1st Chase, then Bayview) proceeds of sale of house even though they have not proven they are the rightful owner nor have they shown that they will forward our payment to the rightful owner, would we be liable to pay this amount again if the rightful owner should come forward and demand payment?
    Would rescission of the mortgage ensure this does not happen?

  17. The question still is: When was the loan/note/mortgaged consummated. Fraudulent, forged documents cannot produce consummation.

  18. […] via RESCISSION IS A FACT — NOT A THEORY OR CLAIM — Livinglies’s Weblog […]

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