How to Apply Federal TILA Rescission Rights

Bottom Line: TILA Rescission is looming as a major risk factor to banks and investors who were not informed about the risk of TILA Rescission. The oddity is that the investors were not purchasing the loans and in fact agreed to replace the income stream from borrowers with an income stream from a fake trust.

Court decisions are inching closer to allowing the explicit language of the TILA Rescission Statute 15 U.S.C. §1635 to control situations like any other law passed by Congress and signed into law, with unanimous approval from the Supreme Court of the United States (SCOTUS).

It is highly probable that TILA Rescission will be the undoing of the mass fraud perpetrated on the word in which the banks unlawfully created an illusion of being principals when there was a profit to be made but as intermediaries when there was a loss.

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  1. If we can show that the TILA Rescission Notice was sent/delivered within 3 years of the date of the presumed consummation, then it would be foolish not to raise the issue in blazing lights. But any pleading based upon the rescission should avoid any semblance of being a claim for rescission or relief based upon rescission (i.e., enforcement of the TILA Rescission statutory duties) because the statute of limitations has clearly run on that in most cases. Any such pleading should emphasize that rescission has occurred — i.e., that the written loan contract has been replaced with the statutory scheme — and that the claimants should be barred from avoiding that simple fact. Further, given the same statute of limitations in TILA, the claimants are now barred from pursuing the debt which has expired. Ignoring the rescission was a fatal decision by the claimants who lost not only their right to enforce the paper instruments, but the debt as well.
  2. Notwithstanding some erroneous decisions rendered by state court and even federal courts (other than SCOTUS) there is no statute of limitations that applies to a notice of rescission sent within 3 years of the supposed consummation. Rescission is an event (like a  deed) not a claim. It is effective “by operation of law.”
  3. If the proof shows that the notice of TILA rescission was sent more than 3 years after the presumed date of consummation it is my opinion that SCOTUS will eventually treat it the same as the above paragraph. BUT, a big caveat here, is that SCOTUS might throw a bone to the banks. They could do that by saying that rescission notices that appear from their face to be sent after the three year “expiration” date could be reviewed by the court and declared void ab initio with affirmative pleading, thus removing the judicial standing impediment that the banks face (they have no creditor who would fulfill the requirements of judicial standing). Thus while my analysis shows that SCOTUS and  Congress clearly see the TILA rescission statute as a procedural statute and not a substantive one, there remains a possible interpretation by the high  court that would eviscerate rescissions outside the three year limitation. This is also the opinion of many lawyers who have carefully analyzed the situation, like Beth Findsen in Arizona. I don’t think that is right, but I can see how that could occur.
  4. The 3 year limitation is a viable defense for the creditor, just as the other restrictions on TILA rescission (lack of disclosures, purchase money mortgage etc.). All defenses must be raised as affirmative pleading to vacate the rescission or they are nothing at all. An affirmative pleading would be a lawsuit to vacate the rescission or affirmative defenses raised in a lawsuit brought by the borrower. But since rescission automatically voids the note and mortgage, those instruments cannot be used to plead or even imply standing. 
  5. Multiple deliveries of the rescission notice are a two edged sword particularly if they each bear different dates. Oddly this draws in a separate analysis. If rescission is truly an event as Congress and SCOTUS (and I) have stated, then NOBODY can rescind the rescission without a court order — not even the borrower. Any act undertaken in spite of the existence of a deed or rescission is void, in the sense of a wild deed, particularly if it is recorded in the county records. A new agreement could be reached but the rescission stands until a court order is entered changing the situation. The new agreement would likely be subject to disclosure requirements.
  6. What all of this means is that title could not have been changed even with court orders after the sending/delivery of the TILA Rescission. Here the high court will have a more difficult time allowing any foreclosure sale to stand in the absence of an affirmative pleading seeking to vacate the rescission and an order granting the demand. Title issues are a matter within the bounds of state law, not Federal law except where preempted, as in the TILA Rescission statute.
  7. But in the absence of an affirmative pleading, a trial on the merits, and a final  judgment or order, the state courts would have no jurisdiction over the subject matter and avoidance of the TILA Rescission would be without authority to do so under the US Constitution Article III. The logic is simple, the paper instruments  upon which the foreclosure was brought do not exist and did not exist at the time of the foreclosure sale. Hence title could not change without due process — i.e., a trial on the issue of whether the rescission should be vacated. The caveat here is that SCOTUS could again carve out something for the banks, because this would leave millions of homeowners retaining title to their homes long after the foreclosure sale. They might invent some doctrine based upon laches or some such doctrine that would bar homeowners from asserting their title after some period of time after the foreclosure sale.

5 Responses

  1. That’s why the bank after the firecloure they auction & sell & sell again to challenge & bar the homeowner from asserting their title. Good question how many people were able to rescind again? almost year and half been foreclosed D executive M King who tried to reverse my foreclosure and rescind she talked to us on Frid to continue on Mon., but the next day she was terminated

  2. Louise – hire a real estate attorney who goes in and makes filings regularly and knows the folks at the window to add it to his package of filings… they give them more wiggle room than people…

  3. Register of Deeds would not allow me to file the Rescission Notice I sent to the servicer via certified mail.

  4. So how many people actually were of rescission and Were able to rescind within in 3 years ???
    Rescission only for refinancing or purchase mortgage too ??
    How many Actually are in court with a rescission from 2007-2015 ???

    Finally if you have a new servicer in 2018 are you now able to rescind With a 3 year time ??

  5. Thought – With all the buying, selling, assigning of notes, deeds, changes of servicers, creditors, it would appear that a new TILA
    window opens / opened at every change as the mortgagor had
    a contract with the original lender or whomever and by default a
    new agreement arose with each subsequent entity that held the
    deed / note.

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