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At what point does a final decision of SCOTUS actually mean anything? When confronted with TILA rescission, virtually all lower courts, state and federal, have taken up legislating from the bench, essentially over-ruling the Supreme Court of the United States (literally legally impossible).

Agree or disagree — everyone has that right. But to obey or not obey a SCOTUS decision attacks the foundation of our democratic and judicial institutions and makes the U.S. Constitution into a optional guide to the universe of disputes, delegating the real power to lower courts and removing the power and finality of SCOTUS as delineated in our Constitution.

Opinions like the one reviewed in this article are thus both irrelevant and irreverent — unless we amend or abandon our Constitution as the highest law of the land.

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see Wells Fargo v Frazee

This case is just another example of a judicial tantrum defying the ultimate authority of SCOTUS. Unless the Supreme Court itself reverses the Jesinoski decision, it is quite obvious what the next SCOTUS decision is likely to be on the issue of TILA (Truth in Lending Act) rescission 15 USC §1635. Here is what I expect and hope for:

1. Any court entering a decision or opinion after a notice of notice of TILA Rescission has been delivered must vacate such orders and must dismiss any pending foreclosure.
2. Failure to dismiss the foreclosure is acting ultra vires — outside their authority.
3. Dismissal of foreclosure is mandatory inasmuch as notice of TILA rescission removes the operative documents — note and mortgage — from consideration, rendering them void, by operation of law.
4. As to all prior decisions, judgments and orders that ignored TILA rescission, all such decisions are void, the title consequences of which are left to state legislatures to decide, so long as the Federal Statute is obeyed and the law does not nullify the effect of delivery of a notice of TILA rescission.
5. Any claims to vacate the effect of the TILA Rescission must be brought within one year from date of delivery.
6. Neither tender nor a lawsuit is required for TILA rescission to become effective. An Aggrieved party with standing has adequate remedies at law to vacate a notice of TILA rescission, that must be raised as a new claim for relief from TILA rescission  based upon the pleading that the homeowner was wrong in sending the notice.
7. TILA Rescission is an event, not a claim that a trial or appellate court can grant or deny. The legislature (Congress) has already granted the remedy. As stated in the Jesinoski SCOTUS decision, the statute is clear and unambiguous on its face, thus barring interpretation by a court. That is the difference between the rule of law vs. the rule of man.
8. The Courts may neither overrule legislative action nor overrule a decision from the U.S. Supreme Court. Legislative action may not be overruled by a court unless there are clear violations of constitutional provisions and restrictions.

It’s possible that we will see the above menu in more than one decision from SCOTUS. The essential focus is going to be this: The rule, as stated repeatedly over decades by SCOTUS in admonishments to lower trial and appellate courts is that if it isn’t broken you can’t “fix” it to suit your personal views. 

Now we turn to the unlawful, ultra vires decision of the Superior Court of New Jersey, appellate division in Frazee (See link above).

The Court starts its analysis on page 6.

The opinion of the court is that Wells Fargo had standing because of its possession of the note and mortgage. But the note and mortgage are and were void at the time of this decision. So there is no standing to enforce except by the actual creditor, i.e., the owner of the debt.

This court recognized a potential “issue” (invented by the court, in opposition to the final decision that no court has any authority to interpret the TILA rescission statute). So it creates its own quagmire and falls deeper and deeper into trouble.

The panel obviously recognized that there could be no standing for Wells Fargo unless the TILA rescission could somehow be ignored without a claim to vacate the rescission from a party who owned the debt where the claim was that the rescission was unwarranted because all necessary disclosures had been made.

Diving right in this appellate court immediately misquotes and totally ignores the 2015 Jesinoski decision. It is only by mangling both the statute and the SCOTUS decision that this court can arrive at its predetermined destination. It intentionally misstates the law and effect of Jesinoski. If TILA Rescission was not effective without tender, there would be no TILA rescission.

The whole purpose and methodology of the statutory procedure was to first void the loan contract, second void the encumbrance by operation of law, third void the note, thus allowing the borrower to obtain refinancing from another institution. The key points of the Truth in Lending Act were (1) make certain the borrower knew who he/she was dealing with and (2) make certain the borrower had a fighting chance of understanding the enormously complex loan products being sold, dating back to the 1960’s when TILA was first passed.

In order to be certain these two disclosures were made, Congress had a choice. They could either greatly enlarge an existing agency to enforce these goals, laws and rules, or they could create a new administrative agency. Neither of those choices were remotely acceptable by most legislators. So they agreed on a plan that would force the banks to comply with TILA with consequences so horrendous that no bank in their right mind would transgress.

Enter TILA Rescission. By putting enormous power in the hands of borrowers that shifted the entire burden of pleading and proof to the banks it was thought that banks would comply. The statute provides for an order of things (a statutory scheme not unlike nonjudicial foreclosure) after notice of rescission is delivered. Like nonjudicial foreclosures it is a form of extrajudicial relief for homeowners who believe they were not protected at closing.

Within 20 days they must either comply or seek relief from a court of competent jurisdiction. The statute was designed to completely bar stonewalling. But like any law, if nobody enforces it, the statute does not enforce compliance with the two main goals of disclosure requirements — the identity of the lender and the breakdown of the main characteristics of the proposed loan.

Failing to seek relief puts them in violation of the statute, and enables a borrower to sue to enforce the three statutory duties under TILA rescission: return of the cancelled note, release of encumbrance and return of moneys paid by the borrower. If the borrower does not bring such suit within 1 year he/she loses the right to enforce compliance with those three duties.

THIS DOES NOT CHANGE THE EFFECT OF RESCISSION. THE MORTGAGE AND NOTE ARE STILL VOID BY OPERATION OF LAW.

If the bank does not comply with the three statutory TILA duties the bank has no right to demand tender or any relief. If the banks fails to comply within the same one year, they lose the right to demand the money under any scenario. The court goes off the tracks when it states

That statement on its face is true. But ignores the content of TILA’s tender requirement. It only arises AFTER the “lender” fulfills the three statutory duties.

That is what Congress wrote. That is what they meant. And that was the substitute for an unwieldy bureaucracy.

The court confirms the content of the statute but repeats the tender “error” when it says

 

The erroneous nature of the court’s decision becomes crystal clear when it says

Additionally, Jesinoski did not overturn Third Circuit precedent that “a notice of rescission is not effective if the obligor lacks either the intention or the ability to perform, i.e., repay the loan.” Sherzer v. Homestar Mortg. Servs., 707

F.3d 255, 265 n.7 (3d Cir. 2013). Jesinoski also did not take away a court’s discretion to modify the rescission procedures. See 15 U.S.C. § 1635(b) (stating that the rescission “procedures prescribed by this subsection shall apply except when otherwise ordered by a court”) (emphasis added); see also 12 C.F.R. 226.23(d)(4) (stating that the rescission “procedures outlined in paragraphs (d)(2) and (3) of [§ 226.23] may be modified by court order”) (emphasis added).

It is quoting yet another court who has put blinders on and is disregarding the intentionally punitive aspect of TILA rescission. In most cases the homeowner cannot perform unless the “lender” gives up the note and mortgage and returns money paid under the canceled loan contract. The homeowner can ONLY perform if the deck is cleared for them to get a new loan from a new lender and to apply the proceeds of disgorgement required by the statute.

And to add insult to injury the court is putting yet another constraint on the borrower that TILA does not mention, to wit: the intention of the borrower to perform (tender). Forget the logistics of “intention” which is ridiculous — any such requirement places TILA rescission in the position of a claim instead of the event that the statute says has occurred by operation of law at the moment of delivery of the note of rescission. In direct contradiction to the TILA rescission statute (and SCOTUS in Jesinoski), this requires the borrower to submit to a trial before the rescission is effective.

The bottom line is that it appears that all courts are only interested in treating rescission under common law in which the rescission would only be effective upon a court order after a trial. The fact that the TILA Rescission statute clearly and unquivocably says otherwise won’t stop them, because they have prejudged the case as presenting a choice to the courts that can only be made by the legislature — who pays the price for violation of disclosure requirements under the Truth in Lending Act.

 

Filed under: burden of persuasion, burden of pleading, BURDEN OF PROOF, CORRUPTION, foreclosure, legal standing | Tagged: Frazee, intention, jesinoski, SCOTUS, Supreme Court of the United States, tender, TILA rescission, TRUTH, VOID |