TILA Rescission Notice Does NOT Require Justification

Again we return to the issue of rescission under TILA. And again I am correcting the mistaken view that the grounds for sending the notice of rescission must somehow be established before sending it, which is another way of saying that the rescission can be ignored if the proper disclosures were made. That is not the case even though many courts are adopting that erroneous view.

SCOTUS will once again issue a corrective opinion telling all the courts in the land that the TILA rescission statute is (a) plain on its face, (b) must be followed exactly as written and (c) there is no difference between contested and uncontested rescissions. Once notice is given TILA rescission is effective no matter what defense could be raised. If a defense exists it must be brought.

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TILA rescission is counterintuitive to most people who think of lending and enforcement as the guys with the real power (Banks and servicers) against the homeowner who is seeking a technicality to get out of the deal.

It is simple incomprehensible for such people to think that Congress leveled the playing field by setting forth a procedure where the entire burden of persuasion and burden of proof is thrown onto a real creditor to plead and prove that the rescission was not justified. In Jesinoski SCOTUS nailed down the point — there is no difference between contested and uncontested notices of rescission — they are BOTH effective upon mailing.

There is no justification needed for sending a notice of rescission. If it is unjustified, someone needs to attack it. Otherwise the statute and SCOTUS say it is and remains effective.
The lawsuit by the borrower for enforcement is limited to one year, as you say. But that lawsuit would ONLY be for enforcement of the three duties imposed upon creditors upon receipt of the notice of rescission. You are mistaken if you believe that without the lawsuit the rescission is dissolved.
Under the statute and the SCOTUS decision in Jesinoski that is an “interpretation” that (a) is impermissible and (b) wrong. If the Jesinoski decision stands for anything it is that when a statute is clear and unambiguous no interpretation is allowed by the judiciary or anyone else. In other words, we must all follow the wording and content of the statute exactly as it is written.
Put to that test, anyone who attempts to denigrate the content of the statute must or should fail in the courts. Of course it is a matter that could be taken up by Congress who is the only one that could change the wording of the statute to what you think it should say.

No court has the power or authority to “deny a borrower’s otherwise justified rescission.” To the naysayers — you may feel comforted that you are apparently right because courts are doing what you are saying. But they are just as wrong now as they were before Jesinoski.

If they — or you — don’t like the outcome of the statute then the statute must be changed by the legislative body that enacted it. It is because of naysayers who can’t or won’t believe that so much power could be given to a borrower that rescission has not hit the SCOTUS docket repeatedly. But it will hit again and when it does it will likely be too late for many people. And I guess that is the point — run out the clock so that the homeowners run out of resources to pursue it.

With millions of foreclosures to do, TILA rescission is a viable tool that can be used effectively if the homeowner has the staying power to stay “in the game” after a court erroneously dismisses the relevance of the TILA rescission.

20 Responses

  1. Michael –
    The reason for discussing Jesinoski’s ultimate loss at trial court on merits after remand by SCOTUS is because THAT IS THE ISSUE THAT HURT ET. AL. ARE PUSHING AS WHAT IS IMPORTANT and diverting people’s attention away from the Scalia opinion in Jesinoski.

    I sought to clarify why Jesinoski lost at trial court on merits vs. SCOTUS’ affirmation of their right to rescind under TILA.

    Jesinoski’s lawyers said too much in their pleadings, volunteering to make their rescission conditional on proof of failure of lender to provide disclosure documents (instead of just leaving it as an unconditional rescission under TILA), thus giving the judge jurisdiction to transform the case into a hybrid equitable rescission under Minnesota common law.

    Since Jesinoski failed to prove their claim of lack of notice of disclosure documents, their case fell.

    If they had made their rescission unconditional and not asked the court to rule on the conditions, the bank would have had to sue Jesinoski against the rescission within 20 days, and if they did sue, only then would Jesinoski had to have brought their notice arguments forward as an affirmative defense – and only after moving for discovery that the suing entity had standing as a creditor without the note and mortgage as a basis.

    This is why homeowners’ lawyers are 1/2 the problem – they don’t know what to do and have a penchant for writing verbose pleadings which they hope make them look intelligent – at the expense of the homeowner.

  2. @Never Quit ,

    Thanks for the docket info ,, This is going to be sweet … after I Ass-Rape OCWEN for wrongful foreclosure I’m going to go back and collect from Bank of America enforcing the rescission filed immediately after they were determined by a federal court to be my true lender.

  3. I gave you the wrong citation, Keiran vs Homecapital, 17-672

  4. That’s good to know, Never quit.

    I’d like to see SCOTUS certify the question: “Is a borrower’s right of rescission under TILA conditioned upon a violation of TILA by the creditor?”

    That’s the one Bob Hurt keeps tripping over.

  5. Very Good Everyone, the latest tila rescission case has been scheduled for conference on February 16th. Keiran Vs Homecapital has come around for the second time before Scotus. As you may recall, Keiran was the stepping stone for Jesinoski ,out of the eighth circuit. The 8th has a terrible record of rescission denials ,and now they have created new hurdles that are totally erroneous to the statute.
    Keiran is asking Scotus to consider 3 questions. 1. Does the lender and the district court have to follow regulation z rules of finance,calculations of earned interest,or is it not important. 2. What does it take to rebutt the presumption of delivery of Tila required disclosures that are to be viewed in favor of the consumer.
    3. Does the 20 day mandatory response from the lender waive it tenable defenses if not complied with. All of these issues have been denied Keiran thru 2 rounds in the eighth circuit ,over a 9 year protracted litigation . How have they survived this long? 17-692

  6. rciferri, cement boots: the merits of Jesinoski’s pleading had nothing to do with what was before SCOTUS. The appellant could have been one in tens of thousands before SCOTUS. The questions before SCOTUS apply to thousands and thousands. Jesinoski just happened to be the first in line at the time.

    Jesinoski lost on the merits after the unanimous SCOTUS decision. SCOTUS did not look at their merits. SCOTUS did not decide their merits. They lost on the merits when they were sent back to the lower court.

    The Jesinoski vs. Countrywide SCOTUS decision did not require an unwinding of the lender’s security interest. It required a START of the unwinding OR an action to vacate the rescission.

    Talking about the merits of the Jesinoski case is pointless.Talking about what SCOTUS has in store for courts in contravention to their Jesinoski vs. Countrywide ruling is what is important.

  7. So lets use this forum to find a lawyer who will pick up the financially depleted Jesinoski’s case and run it back up the flagpole for that big-win that is just sitting there….

  8. I agree with Cementboots.

    Jesinoski pled his case as if the court had to agree to the rescission for it to be effective.

    That meant – despite his effective TILA rescission, the court could construe his pleadings as seeking equitable rescission, which made it easy for the court to slam Jesinoski’s case into the trash bin.

  9. Michael
    Thank you for agreeing with everything I said in the form of an argument… lol. Please slow down and read before you pick a fight.

  10. Cement Boots – Jesinoski’s merits were not the issue before SCOTUS. The issue was the lender’s responsibilities, obligations under TILA rescission. The lender can contest a rescission within 20 days and if they prevail, they can ask for attorney’s fees and costs. But they must follow the statute, that is the issue.

    When lenders don’t follow TILA, they screw themselves. It doesn’t matter who the Jesinoskis are or what they did, or how strong their case is or how stupid their lawyers are, The only thing that matters before SCOTUS is whether the lender followed Reg Z which implements TILA.

  11. P.S. One might argue that even in spite of the judge’s ruling against the Jesinoskis, that their rescission is STILL EFFECTIVE from the date of mailing and that although they stepped on their own feet in the trial court pleadings, that neither the judge or the Jesinoskis have the power to re-write or reinterpret the TILA statute – even through their lawyer’s stupidity – to forgive the “real creditor” from its 20 day duty to file a suit attacking their rescission.

    The Jesinoskis rescinded under an administrative (non-judicial) process granted to them by congress. There is nothing in the statute that creates a transfer from administrative to judicial jurisdiction, absent a suit by a bona fide’ creditor (HDC) directed against the rescission itself.


  12. boy- talk about beating a dead horse…

    The Jesinoski’s lost after being remanded back to the trial court from SCOTUS because of one thing…

    The Jesinoski’s lawyers ORIGINALLY plead and asked the judge to certify their rescission based upon their claim that they had not been given the appropriate TILA/RESPA documents at closing. This, by their own words, made their rescission “conditional” on a plead fact.

    The Jesinoski’s did not have to nor should have given the judge that power through their pleading. The judge then pointed to the document they signed agreeing that they received the proper documents.

    In the absence of other evidence beside their affidavits (say-so), the judge found they had confessed to receipt – and since they made their plea conditional on that alleged failure – he denied them.

    In hindsight, (and as Neil has pointed out) the Jesinoski’s lawyer should simply have submitted the rescission letter and proof of mailing and asked the court to acknowledge its existence – and stopped there.

    Give a judge enough rope to hang you and he/she will.


  13. I just read Bob Hurt’s misguided rant in response to Neil’s post here today concerning TILA rescission.

    Bob, if you’re tuned in, you entirely missed the point of Jesinoski. SCOTUS did not review the merits of the Jesinoski claims, only the clear meaning, and intent of TILA insofar as rescission. SCOTUS intended their unanimous ruling to be applied to thousands of cases having similar circumstances. They never intended to give the Jesinoskis a pass.

    The fact of the matter is the Jesinoskis could very well be scammers as you claim but if a lender, servicer, bank, the holder was notified of a rescission and they failed to take action within 20 days, they have screwed themselves.

    TILA is very harsh against lenders for a reason. To keep them clean. It has nothing to do with the character or moral compass of a specific individual borrower. TILA rescission does not require lenders to lose their security interest. It requires them to comply with the statutes regardless of whether the borrower is Mother Theresa or Joe Izuzu.

  14. Pardon me for asking again but this is important.

    ““SCOTUS will once again issue a corrective opinion telling all the courts in the land that the TILA rescission statute is … ”

    Is this before SCOTUS now? Anyone have any idea?

  15. In contrast, the courts are constantly ruling that there is a difference between “effecting” a TILA rescission and “concluding” one or one becoming “automatic” upon notice (there area a number of cases dealing incorrectly with this issue).

    Essentially there is in fact a difference between an uncontested and contested rescission whereby if contested, the statutory “creditor” (see 15 USCS 1602(g)) must comply within the 20-day deadline at which time the courts can modify the sequence (the so-called “unwinding process”) of the rescission and “tender” then becomes one of the issues. However, if the effected rescission (merely by notice pursuant to Jesinoski) is not contested [within that deadline], then the “creditor” has acquiesced to the rescission, it becomes “automatic” and the security interest is void (see, e.g. Merritt v. Countrywide Fin. Corp. (9th Cir. 2014) 759 F.3d 1023, 1027).

    Whereas, if the “unwinding process” is not [started or] completed and no lawsuit is filed by either party within the statute(s) of limitations (there is only one, the 1-year SOL on damages; the other is a statute of repose and is 3-years after “consummation”); although arguably, the “creditor” has only 20 days, then the voiding of the security interest and rescission is effective as a matter of law as of the date of the notice (see, Paatalo v. JPMorgan Chase Bank (D. Or. 2015) 146 F.Supp. 3d 1239, 1245 [appealed and dismissed on other grounds]).

    The courts constantly fail to comply with stare decisis and the SCOTUS decision in Jesinoski.

    What kind of judges? When the “creditor” fails to comply with its duties under 15 USC 1635(b) within 20-days, and it MUST be the statutory “creditor” as defined in 1602(g), anyone else lacks standing to challenge the rescission thereby depriving the court of subject matter jurisdiction rendering any decision to the contrary void. From further comment I digress.

  16. What would be the effect of mailing a rescission notice after a judgment of foreclosure, in a judicial foreclosure state like Florida, while such judgment is on appeal?

  17. “SCOTUS will once again issue a corrective opinion telling all the courts in the land that the TILA rescission statute is (a) plain on its face, (b) must be followed exactly as written and (c) there is no difference between contested and uncontested rescissions. Once notice is given TILA rescission is effective no matter what defense could be raised. If a defense exists it must be brought.”

    Is this corrective action before SCOTUS now?

  18. One must ask, what kind of judges willfully and wrongly ignore a USSC decision? Its beyond law issues and is an ethical issue that can be referred to state ethics commissions over judges. Corruption must be challenged.

  19. The judges do not like TILA Rescission and are not abiding by it. Register of Deeds are also not allowing the Rescission to be filed. Let’s hope that the SCOTUS clears it up and makes it work.

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