Stop Feeling Guilty — Be A Warrior

Shame is the reason why most borrowers don’t contest foreclosures. That shame turns to intense anger when they realize that they were used, screwed, abused and now they are targets in a continuing blitz to embezzle much needed money from their lives and from the financial system generally.

The genius behind companies like Citi is… Deception by Branding.  “Citi” is not a company, it’s a brand of a conglomerate of companies.  Even its subsidiary “Citibank N.A.” is deceptive.  First let’s dispel the myth that subsidiaries are equal to their parents.  Not true, not even when they are wholly-owned subsidiaries.  They are separate companies, albeit owned by a common parent. —- From Anonymous Writer
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Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Probably the biggest goof of the court system in foreclosure litigation (and in business litigation) is mistaking a brand for a company and not realizing that there is both a business and legal distinction between even a wholly owned subsidiary and another subsidiary or parent company.

The reason that is such a big goof is that the actual transaction is being ignored while a small part of the transaction is being treated as the entire matter. That is like taking the spark plug out of car and then selling it to someone as though it was the whole car. It doesn’t work that way.

In conglomerates like “Citi” the brand intentionally blurs the factual and legal distinctions. And these distinctions make a difference precisely because the debt, note and mortgage are split and transferred multiple times between subsidiaries wherein each one is either moved off the books entirely or each subsidiary is showing an “asset” that it sells into the shadow banking market.

These practices results in a ten-fold increase in the apparent size of the asset, which is then owned by dozens, perhaps hundreds of different unrelated investors. And that enabled the banks siphon literally trillions of dollars out of the US economy and trillions more out of the world economy.

Through the devices of branding and “off balance sheet transactions” this wealth is controlled by handful of people; but this wealth is directly derived from one simple plan — to market the signature, reputation and identity of borrowers who were led to believe that they were executing loan documents. In fact they were executing the foundation documents for a string of transactions and book entries that would result in profits far beyond the amount of the loan.

These unsuspecting consumers had become ISSUERS without ever knowing it and they still don’t know it or understand it. So they still believe that somehow the investment bank behind the scheme is actually entitled to collect on a debt that the bank sold multiple times through multiple affiliates and subsidiaries in transactions that were often “off balance sheet.” And the fact that in virtually all cases the proceeds of foreclosure sales are not applied to reduce the debt owed to the owner of the debt is completely overlooked.

The clear issue that investment banks have been avoiding is that every one of their originated loans is part of a larger intended transaction, and that the homeowner gets absolutely no clue or disclosure that the bulk of the transaction is actually very different from a loan and actually the antithesis of a loan. Clearly the two were both unrelated and related.

The borrower thought it was a loan and it was a loan but the loan was a part of a larger transaction in which the attributes of a loan were shredded. So the loan was essentially a sham entry to allow the investment banks to profit regardless of the performance of the loan. Hence the transaction was not really a loan anymore. This is true even for loans acquired after origination by an actual lender.

Risk underwriting, the most basic part of lending, was thrown to the winds because it was irrelevant. And legally required disclosures were also thrown to the winds because lending laws (TILA) clearly state that compensation received after the loan closing must be disclosed.

What would have happened if the borrowers knew their signatures, reputation and identity were the real subject of the transaction and that they would be sold in a myriad of way producing compensation far beyond the amount of the loan. How would bargaining have changed? It’s obvious.

Even the most unsophisticated homeowner would have gone shopping for someone who would offer a share of the bounty. And that is why the “free house” PR gimmick is a myth. If the investment banks had not concealed the major attributes of the transaction, the mortgage meltdown would never have occurred.

And if “securitization” had proceeded anyway then homeowners would have received immediate and possibly total reductions in the amount due. Yes I recognize that this is a contradiction because if there is no loan then there are no derivatives to be sold. But that is not a problem created by homeowners or borrowers or consumers. It is a problem created by fraud and deceit by the investment banks.

In the final analysis the investment banks used homeowners and investors to issue unregulated securities and instead of turning the proceeds over to the issuers they kept the money. In any world of law enforcement they should have been jailed for that.

The goal was to get the signature and then sell it. That is not a loan. And the failure to disclose it violated everything about Federal  and State lending laws that require disclosure of identities of the real parties in interest and the amount of money they are getting as compensation for their role in “the transaction.”

The investment banks chose to unilaterally define “the transaction” as just the part dealing with the origination of the debt, note and mortgage. That was a lie. It concealed the fact that the borrower was in fact a real party in interest in a much larger transaction in which at each step profits, fees, and other compensation would be distributed in amounts vastly exceeding the amount that was disclosed to the borrower as the value of the transaction. For each $1 “loaned” there was $20 in profit.

By concealing this information the investment banks took all of the profit, fees and compensation without allowing the homeowner to participate in what amounted to a monetization of their signature, reputation and identity.

Thus the most essential part of the Federal and State lending laws was thwarted: that the “borrower” must know the identity of the parties with whom he/she is dealing and the “borrower” must know the amount of compensation being earned as result of the “borrower” signing documents at loan closing.

Instead the homeowner had become the issuer of unregulated securities, the proceeds of which were largely concealed and withheld from the homeowner. No lawyer would have permitted their client to enter into such a scheme — if the facts were known.

Borrowers get lost in the weeds when they make these allegations because they can’t prove them. Truth be told, even the bank could not prove them because of the number of transactions that occur “off balance sheet.” Abraham Briloff (in his book Unaccountable Accounting) first observed over 50 years ago, the invention of this ploy of “off balance sheet” transactions was an open door to fraud that would likely occur but might never be proven.

We are a nation of laws not opinions. Our laws depend upon findings of fact, not opinions or political views. That is the only control we have to prevent fraud or at least bring fraudsters to justice, or at the very least prevent them from continuing to reap the rewards of their multiple violations of statutory laws, common law  and the duty of good faith, honesty and fair dealing.

So when the robowitness signs affidavits, certifications or other documents or testifies at deposition or in court, be aware that in nearly all cases, he/she is either an independent contractor with absolutely no knowledge or authority concerning the subject transaction (as a have defined it herein) or an employee of a subsidiary with no connection to any transaction involving the homeowner or both.

You can reveal the lack of actual personal knowledge and thus then lack of foundation for evidence proffered in a foreclosure by discovery, motions to enforce discovery, motions in limine and good cross examination which always depends upon one single attribute to be successful: follow-up.

And in many cases the robowitness is not nearly as stupid as his/her script makes him out to be. The  robowintess often knows everything that is contained in this article. Good cross examination can frequently reveal that — that is where the case turns from enforcement of a legitimate debt to a case in which both the claim and the claimant have not been proven by any standard.

That is all you need to win. You don’t need to prove how they did it. You only need to reveal the gaps that exist because the substance is not there — the claiming parties have all long since divested themselves, at a profit,of any interest in the debt, note or mortgage. There is no debt left to pay, at least not to them. Stop feeling guilty and be a warrior.

Unworthy Trusts

The simple fact is that the REMIC trusts do not exist in the real world. The parties named as trustees — e.g. US Bank, Deutsch, BONY/Mellon — are trust names that are used by permission through what is essentially a royalty agreement. If you are dealing with a trust then you are dealing with a ghost.

Discovery is the way to reveal the absence of any knowledge, activity or reports ever conducted, issued or published by the named Trustee on behalf of the “trust” or the alleged “beneficiaries.” Take deposition of officers of the named Trustee. Your opposition will try to insert a representative of the servicer. Don’t accept that.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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For purposes of clarity I am using US Bank as an example. It is the most common.
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US Bank has NO information about the trust, the servicer or the account for the borrower. Thus the purpose of any deposition of any officer of US Bank should be solely to establish the absence of events and data that should otherwise be present.
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This is why as counsel for the lender, lawyers will not recommend going forward with the refinancing. Your opposition is asking you to accept their word for the “fact” that they represent a creditor who is entitled to payment not just because there is paperwork indicating that, but because they are really owed the money.
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Knowing the truth is a basis for establishing gaps and revealing it to the trier of fact but should NOT be a basis of making allegations that you will be required to prove. It’s a thin line and the lawyer needs to be aware of this division, or else you will end up with a burden of proof you cannot sustain and unanswered questions that prevent the closing of refinancing — unless the “source” of refinancing is from another player in the world of securitization.
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The fact that securitization players would accept the paperwork is only testament to the willingness of all securitization players to engage in such conduct as to maintain an illusion of legitimacy. Other lenders rely on such conduct at their peril. Other lenders do not receive the reward from multiple resales of the same debt.
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So in your inquiries to officers of US Bank you want to establish the following, in order to force the true creditor to come forward (if there is one):
    1. US Bank has no duties normally attributed to a trustee.
    2. The “US Bank” name is basically a royalty arrangement in which the name can be used but there is no further substance to its “role” as trustee.
    3. There is no bank account established or maintained by US Bank for the alleged Trust.
    4. US Bank has never received any money through any means in connection with the subject debt. The borrower’s payments to the servicer have never been received by US Bank on its own behalf, as conduit or as trustee for any trust.
    5. In prior foreclosures involving the same trust, US Bank did not receive the proceeds of the foreclosure sale.
    6. US Bank has no reason to expect that it would receive the proceeds of a foreclosure sale involving the subject debt.
    7. US Bank has no mechanism in place where the payment of money to satisfy the claimed debt would be actually deposited into a bank account for the trust that is controlled by US Bank.
    8. The beneficiaries of the trust do not receive any money from borrower payments, foreclosure sales, or prepayments, refinancing or any other monetary transactions. US Bank probably does not know if this is true or not. US Bank has nothing to do with what, if anything, the “beneficiaries” of the “trust” receive or don’t receive.
    9. US bank has no information regarding the identity of the beneficiaries of the “trust.”
    10. US Bank has no information regarding whether any party is a beneficiary of the “trust”.
    11. US Bank has no information regarding the existence of the trust other than the documents forwarded to it for purposes of the deposition.
    12. US Bank does not keep or maintain accounting records pertaining to the trust.
    13. US Bank does not keep or maintain any records or documents pertaining to the trust.
    14. US Bank does not issue reports to anyone regarding the trust or the subject debt, note or mortgage.
    15. US Bank does not include information relative to the business activity of the “trust” or the subject debt, note or mortgage in any report to any regulatory authority, Federal or State.
    16. Except for fee income, US Bank does not include information relative to the business activity of the “trust” or the subject debt, note or mortgage in any financial report published to the public or to any regulatory authority, Federal or State.
    17. There is no “trust officer” appointed by US Bank to actively manage the affairs of the “trust.”There is no “trust officer” appointed by US Bank to actively manage the affairs of the subject debt.
    18. US Bank neither accepts nor gives any instructions to anyone regarding the affairs of the “trust.”
    19. US Bank neither accepts not gives any instructions to anyone regarding the subject debt, note or mortgage.
    20. US Bank has no power to either accept or give instructions regarding the trust or the subject debt.


Keep in mind that there are experts who believe that the debt no longer exists, and that you are dealing with the ghost of a creditor and the ghost of a debt. This is because the debt was resold multiple times and redistributed to multiple parties (new investors) under the guise of different instruments in which the value of the instrument was ultimately derived not from the debt, in actuality, but from the marketplace where such isntruments are traded. This is an ornate interpretation that has the ring of truth when you examine what the banks did, but this theory will not likely be accepted by any court.

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That theory explains why when appellate and trial courts asked the direct question of whether the creditor can be identified the answer was no. The response was that the courts stopped asking.
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But the issue at hand is whether, pursuant to state law governing foreclosures, a creditor is before the court possessing a valid claim to collect on a debt. If there is, then that creditor is entitled to payment. If there is not, then the claimed “creditor” is not entitled to either payment or foreclosure. 

TILA Rescission and Bankruptcy: What Happens When the Bankruptcy Court Gets it Wrong

When TILA rescission has occurred the encumbrance is eliminated and the debt converts from one arising from a promissory note to one arising from a statute — 15 USC §1635. The debt then becomes subject to the statute of limitations for claims under TILA because the debt now arises under TILA. If the statute has run the debt is barred. Thus when the court gets it wrong and ignores the TILA Rescission it is warping the value of the bankruptcy estate as well as allowing secured status to unsecured creditors.

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Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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The motions for reopening cases in bankruptcy based upon error in ignoring TILA Rescission generally fail to drill home the fact that the error causes the entire bankruptcy estate to be valued incorrectly.

I think the motion is missing something — the effect on the BKR estate that has been overlooked. By virtue of 15 USC §1635 the original loan contract has, by operation of law, been replaced with a statutorily imposed new agreement, the terms of which are spelled out in the statute.

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This means, as per the statute and REG Z which must be read along with the statute, that the note is replaced by a new obligation and the mortgage has been eliminated — all by the express wording of the statute “by operation of law.” Hence the obligation to repay continues as an enforceable liability provided that the claimant satisfies the conditions precedent set forth in the statute. But that obligation is no longer secured — for the express purposes of allowing the borrower to seek new financing from which the obligation could be repaid.
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The parties claiming to be owners of the debt or claiming to be representatives of the owner of the debt failed to comply with their obligations under the new agreement. Hence any right to enforce the obligation became inchoate. That failure was not in any way caused by the borrower.
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The obligation arises not from the original loan agreement but from the statutorily imposed obligation that replaced the original loan agreement. The statute is part of the Federal Truth in Lending Act (TILA). Claims under TILA are barred by the statute of limitations contained within that act.
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Hence the obligation was wrongfully treated as secured when it had been converted to unsecured by the statute. And the obligation itself is now barred by the statute of limitations.
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The effect on the bankruptcy estate is obvious — any claimants under the original loan agreement are moved from secured to unsecured and, since they no longer have the benefit of the written instruments (the void note and mortgage) they must establish their claim by filing a proof of claim in which they establish ownership of the obligation and thereby establish that the they hold the risk of pecuniary loss, without which they cannot be paid.
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No party has established ownership of the statutorily imposed obligation. The time for pressing such a claim is now barred by the statute of limitations.
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Hence the value of the estate that was overlooked is understated by the fair market value of the property that is now unsecured and the liabilities of the petitioner are overstated by whatever amount was erroneously claimed by the claimants.
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These effects change the entire picture of the estate having an undeniable effect on all creditors and the petitioner. The court erred in ignoring these indisputable facts and laws thus casting the estate in an entirely erroneous light. This can only be corrected by re-opening the case and entering orders consistent with the true facts and applicable laws.

The Facts Behind Smoke and Mirrors

Nearly everyone is confused as to the identity of the real holder in due course, or the “creditor,” or the owner of the debt. Nearly everyone thinks that ultimate it is investors who purchased certificates.

In fact there is no holder in due course and there never will be in most instances. There was never any possibility for a holder in course claim because in most cases the origination of the loan took place in what is called a table funded loan, which is against public policy as a matter of law (as expressed in the Truth in Lending Act).

The creditor or owner of the debt is actually a party who was never disclosed in any of the dealings with borrowers and is not adequately disclosed in the secondary market or pretend underwritings and sales of certificates.

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Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
==========================

A Client just asked me if we should consider all the disclosed players as a single entity. Here is what I replied:

You could take that position but in reality they are all taking orders from a single entity that does not appear anywhere in the paper trail.

But it’s not like they are receiving orders on specific cases or events. They have standing orders to which they have agreed.

The party from whom they are receiving instructions is an investment bank who posed as an underwriter for the issuance and sale of bogus certificates from a nonexistent trust. The investment bank used money obtained under false pretenses from investors.

The investment bank might, under law, be considered a creditor — but it can’t assert that without opening itself up to a myriad of liabilities. In fact the investment will move heaven and Earth to avoid the revelation that the only financial transaction that means anything as a basis for foreclosure involves the investment bank and NOT any of the other disclosed parties with whom you are in litigation.

So in the end, the bottom line is that there is party who is willing to step up and claim status as creditor or owner of the debt — ever.

If you push this to the extreme in litigation you get some interesting results. Instead of being afraid that they will pop out a real creditor or owner of the debt, you should know that that in the end they will refuse to produce any such party.

And you will know that when they do assert or imply that this is the creditor you should look carefully at their wording and realize they are using a sham entity to cover up the fact that the investment bank who started it all is the real party in interest.

It is the investment banks’ unwillingness (for good reason) to be revealed as having anything to do with the loan, foreclosure or any other transactions that can be used as leverage if you push hard enough.

Tolling the Statute of Limitations by Initiating Administrative Processes

A recent case brought to mind a possible argument for tolling the applicable statute of limitations (SOL) on certain claims. By submission of complaints to the CFPB (TILA, RESPA, FDCPA etc) you are starting an administrative process. It might even be true that by submitting a QWR (under RESPA) or DVL (under FDCPA) you are starting an administrative process. One could argue that while you were in that process the statute of limitations on certain claims should be tolled.

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Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document. LendingLies provides forms and services regarding initiating administrative processes including Qualified Written request, Debt validation Letter, Complaint to State Attorney General and Complaint to Consumer Financial Protection Board.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth avoiding a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
==========================

The argument would be that you were exhausting your administrative remedies and that therefore the statute of limitations barring your claim should be tolled (extended). The argument against that position is usually that you didn’t need to exhaust your administrative remedies and therefore there should be no tolling of the statute. General doctrine and decisions weigh the balance of the goal of finality of claims and the desire to see all meritorious claims be litigated in pursuit of justice. The courts vary so do your legal research.

Your position is obviously strongest where you MUST exhaust administrative remedies BEFORE filing a claim, as provided by a statute. Your position is weakest where you didn’t need to exhaust administrative remedies. But equitable arguments often prevail.

Remember that if you are successful the statute of limitations will only be tolled during the period that you were pursuing administrative remedies so the filing of complaint with the CFPB and the AG office in your state is probably a good idea if it’s done sooner rather than later. The fact that administrative remedies were available for a time does not seem to advance your position unless you started some procedure invoking administrative action.

And remember that while you can’t bring a claim for remedies under a tort of statutory violation that is barred by the statute of limitations you CAN raise the same issues as an defense under the doctrine of recoupment. Procedurally recoupment only applies if you are sued. State laws and common law vary so again be careful to do your legal research.

If the foreclosure is contested I believe that under the US Constitution, this requires the foreclosure to become judicial — something that every judicial state has in fact made provision for.

As I have insisted for 12 years, the fact that nonjudicial foreclosure is available for uncontested foreclosures should not be an excuse for changing the burden of proof in contested foreclosures.

Hence the proper (constitutional) procedure would be realignment of the parties to where the claimant for foreclosure must judicially claim foreclosure and prove it while the homeowner merely defends with an answer and affirmative defenses and/or counterclaim.

As it stands, courts resist this approach and that gives the claimants in unlawful and wrongful foreclosures the ability to skip proof and go straight to foreclosure. In my opinion that reveals  an unconstitutional application of an otherwise valid statutory scheme for disposing of uncontested foreclosures.

Unlawful detainer or eviction is an attempt to eat fruit from a poisoned tree if in a nonjudicial foreclosure state a contested foreclosure did not require the claimant to assert and prove its claim for foreclosure.

 

“True Lender” Lawsuits Causing Business and Legal Headaches for Banks

hat tip Bill Paatalo

You can’t pick up one end of the stick without picking up the other end as well. Or, if you like, you can’t eat your cake and still have it.

Banks used third party intermediaries all the time, and in non-mortgage loans they are considered as the real lender for purposes of being able to charge the interest rate stated in the consumer loan agreement.

But the situation is quite different and maybe the reverse in most alleged mortgage loans for the past 20 years. Usually a non-bank funding source was using a third party intermediary to originate the loan. Hence the term “originator” which in reality means nothing more than “salesman.”

The actual party funding the loan is not disclosed at all, ever. In most cases it is an investment bank which is different from a commercial bank, but the investment bank is not funding the loan with its own money but rather using money diverted from the advances of investors who thought they were purchasing mortgage backed securities.

In other words the investors think they are getting certificates that are backed by mortgage loans when in fact, in most cases, the certificate holders have no claim on any debt, note or mortgage executed or incurred by a borrower.

Since the loans are mostly originated rather than purchased by a Trust as advertised to investors, the actual ledner is neither disclosed nor shown on any of the closing documents possibly because it is impossible to determine the identity of a “Lender” whose money was  used from an undifferentiated slush fund in which money from investors is intermingled. Information ascertained thus far indicates that the slush fund includes money from the sale of certificates in the name of multiple nonexistent trusts.

Hence the issue of who is the “true lender.” But the Bank’s position in court in unsecured loans may be its undoing when it pretends to litigate a loan in which it was never actually a party to the loan transaction or the loan documents.

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Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
==========================

see https://www.americanbanker.com/opinion/a-remedy-for-true-lender-lawsuits-already-exists

So if you think about it, you can explain why most documents in foreclosures are pure fabrications reflecting nonexistent transactions. If you look closely at these documents you will nearly always be able to ascertain a gap which makes the documents NOT FACIALLY VALID. Or, in the alternative, if the documents are facially valid, it is because of forgery, robosigning and fabrication.

Such a gap might be the oft-used “attorney-in-fact” designation. Without reference to a specific power of attorney and a warranty that it has not been revoked and that it covers the execution of the proffered document, the reference to “attorney-in-fact” is meaningless. Hence the document signed by Ocwen as attorney in fact, is really just a signature by Ocwen who is not in the chain of title, making the document facially invalid. In most cases Ocwen (or whoever is the claimed “servicer” is executing as attorney in fact for a real entity (like US Bank) with a nonexistent role — trustee of a nonexistent trust. Remember that US Bank is a real bank but is not acting in a real role. 

By attacking the facial validity of such false documents you are also attacking jurisdiction, which is a deal killer for the banks. Bank lawyers are coming to their own conclusions — independently of their arrogant bank clients and independently of the foreclosure mills who blindly follow whatever instructions they receive electronically. Bank lawyers see trouble on the horizon coming from TILA REscission, and the lack of REAL facial validity of the documents being used in foreclosure which are at odds with the documents used to sell derivatives, synthetic derivatives and hedge products all based upon the same loans.

Here is a quote from the above-referenced article on “true lender lawsuits” brought by borrowers who seek to avoid interest from a non-bank as being  contrary to state law:

As a general rule, the fact that a bank subcontracts marketing, loan servicing or other “ministerial,” or nonessential, lending activities to third-party service providers has no effect on the bank’s ability to export its home state’s interest rate under federal law. To this end, the Bank Service Company Act expressly authorizes banks to utilize the services of third-parties. In short, under the federal banking laws, there is no “tipping point” beyond which a servicer becomes the lender in lieu of the bank — so long as the bank remains the party that is performing the primary, or “non-ministerial,” lending activities laid out in the three-part test, the bank is the only lender.

Yet federal bank agency guidance is silent regarding true lender risk, despite the growing number of states in which such lawsuits have arisen. The FDIC published draft third-party lending guidance in July 2016 that had the potential to provide some clarity, but it is still pending. Moreover, the guidance merely observes in a footnote that “courts are divided on whether third-parties may avail themselves of such preemption.”

As to whether a bank’s status as the lender could be undermined by its use of agents, the guidance says nothing. This silence is problematic because, as things stand, one could evaluate the facts of the same loan program and reach opposite conclusions with respect to the program’s status under usury laws depending on whether federal interest rate preemption rules or judge-made, state true lender rules are applied.

Solving the Puzzle: Settlements with Homeowners Are Rising

Hat tip Michael Bazemore

It’s not easy to see but if you look at the court docket after a ruling against the parties designated as “foreclosing parties” you can see that these cases are often dismissed with reference to an agreement or settlement between the parties.

The typical pleading asking the court to dismiss the case will read as follows:

IT IS HEREBY STIPULATED by and between Plaintiff X and Defendant Y that pursuant to [Federal][State] Rule of Civil Procedure (41(a)(2) [Federal] this action and all causes of action contained therein shall be dismissed with prejudice.

It is further Stipulated by and between Plaintiff and Defendant that each party shall bear their own costs and attorney fees associated with this action.

The parties are submitting a proposed order of dismissal concurrently with this Stipulation.

I took that wording from a case involving a homeowner asserting rights, among other things, that focussed on TILA Rescission. We all know that the consensus is that no court will rule in favor of homeowners. But here you have a settlement that the bank considered too risky to bet on — a case that could have served as precedent for the proposition that there is no note, there is no mortgage and the debt that could have been pursued under 15 USC §1635 (TILA Rescission) is now barred by Statute of Limitations (often stated as “SOT).

I am seeing more of these of late indicating that homeowners who fight aggressively are winning their case and forcing the banks to settle.

PRACTICE NOTE: I think it is error to predicate your thinking about settlement value on the value of the case as it is conventionally determined. The banks are not evaluating cases for settlement based upon what a particular homeowner might gain from a particular verdict. They are evaluating the case based upon potential exposure of the entire fraudulent scheme of foreclosure and the liability associated with false claims of securitization, dubbed “securitization fail” by Adam Levitin.

The threshold question of whether they will settle at all is answered by their evaluation of exposure. The amount of money damages paid is based upon the likely verdict in the case. But it remains to be seen as to whether those with an appetite for risk might bargain based upon the exposure in all cases rather than the risk of a negative verdict in this one particular case.

The index for such valuation could be based upon the amount of gain realized by the investment bank who posed as underwriter and perhaps Master Servicer of a nonexistent trust. Through sales and trading of derivatives based upon the signature of the borrower the investment bank collects as much as 40 times the principal due on the note without any allocation to the benefit of the investors or the borrowers. My opinion is that both investors and borrowers should share in the bounty of $10 million taken in on a $250,000 loan. My opinion has always been that the notion of a default or even a loss should be off the table. The question should not be one of foreclosure but of disgorgement of ill-gotten gains.

Litigating foreclosure defense in this context requires the mindset of a solving a puzzle. Like any word puzzle or video game you need to stare at it for a while. At first you see nothing there. It’s like a painting that upon longer viewing reveals a face. After awhile of looking at the names of parties or their purported roles your mind will kick in and you will see the gaps in their asserted roles.

==============================
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
==========================

 

Distilling the 20 Points of TILA Rescission: 9th Circuit Allows “Claim” for Rescission Under WA Statute of Limitations

I have distilled the legal points and procedure of TILA Rescission down to their essentials and specifics as you can see below. In the case presented the 9th Circuit ruled in favor of the homeowner but in so doing continued to violate the law of the land enunciated by the Supreme Court of the United States and Congress.

Yes the homeowner should win but no, the homeowner should not be treated as having any burden of proof as to effectiveness of the TILA Rescission because the TILA Rescission statute is a self-executing statute that is effective by operation of law. It is not and never was a claim.

Astonishing. The 9th Circuit is drilling down on the premise that TILA Rescission is a claim rather than a self executing statutory event. This decision, favorable to the homeowner, not only engraves the “claim” theory in concrete, it applies a 6 year statute of limitations in Washington State.

The fact that the statute says the rescission is effective “by operation of law” is once again ignored. This may cause the Supreme Court of the United States (SCOTUS) to finally accept certiorari in cases involving TILA Rescission and to once again (See Jesinoski v Countrywide 135 S. Ct. 790, 792 (2015) scold all the lower courts for their excess in reading into the statute what is either not there at all or which is in direct contradiction to what the TILA rescission statute says. 15 U.S.C. §1635(f).

The message from SCOTUS should be clear: Just because you don’t like the result doesn’t mean you can reinvent the statute to say what you think it should have said. Both the trial court and the 9th Circuit were massively wrong, and eventually that will be made clear — but not until considerably more damage is done to American homeowners, the real estate market, our society, and the financial system generally. If you really want to see a correction to bad bank behavior this is the tool.

==============================
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
==========================

see 9th cir hoang v bank of america 17-35993

Had they accepted the simple wording of the statute and the wording of the SCOTUS decision in Jesinoski, the decision of the 9th Circuit would have been on target. As it is, they have muddied the waters even further.

They continue to regard TILA Rescission as a claim, thus applying the statute of limitations and avoiding the distasteful issues (for the courts) that would be raised by recognizing what SCOTUS and the TILA Rescission statute have already said: the TILA Rescission statute is procedural.

Upon sending the required notice the claim of the creditor is changed from the note and mortgage to a claim under the statute. The note and mortgage vanish just like the debt vanishes and when the note is executed (assuming the Payee is the same party to whom the debt is owed). The purpose both the TILA Rescission statute and the merger doctrine is to to bar two claims on the same debt.

The problem that the courts have manufactured is based upon the premise of “I don’t’ like that statute.” But if the statute is to be changed it MUST be done ONLY by Congress. SCOTUS (Jesinoski) has already pronounced the TILA Rescission statute clear and unambiguous permitting no interpretation based upon any perceived “ambiguity.” The courts hands are legally tied but they continue to operate in derogation of the statute and SCOTUS.

Here is the ONLY correct application of the statute — according to 15 USC §1635 and SCOTUS in Jesinoski v Countrywide 135 S. Ct. 790, 792 (2015):

  1. Upon sending a clear notice of a desire or intent to cancel the loan contract, and either its actual or presumed receipt (i.e. US Mail) by the owner of the debt or the owner’s authorized representative (or agent with apparent authority) the loan contract is canceled “by operation of law”.
  2. This renders the note and mortgage void. There is no “but”.
  3. The statute substitutes a different creditor claim for what was the note and mortgage, to wit:  a statutory obligation to pay the debt after the owner complies with three conditions: (a) payment of money to the borrower (b) cancellation of note and sending it to borrower and (c) satisfaction of mortgage filed in the county records.
  4. The three duties are conditions precedent to demanding tender of property or money to pay off the debt.
  5. The fact that the three duties MAY be subject to an enforcement action by the borrower does nothing to change the effect of the cancelation of the loan contract by notice of TILA Rescission.
  6. There is no claim for enforcement of the three duties if the TILA statute of limitations has run.
  7. There is no claim for TILA Rescission. Either it was mailed or it wasn’t. There is no case or prima facie case except in enforcement of the three duties.
  8. There is no lawsuit required or even applicable to demand a court declare that the Rescission was effective. It is already effective simply by mailing. It already happened by operation of law. All decisions by all courts to the contrary are wrong. SCOTUS already said that.
  9. If the owner of the debt fails to either sue to vacate the rescission and/or follow the statutory duties, the statute of limitations under TILA is running and they may lose their right to demand payment of the debt completely. Once the TILA SOL runs out the right to collect the debt is dead after TILA Rescission.
  10. If the borrower fails to sue to enforce the three creditor duties, he/she is gambling on the TILA SOL cutting off the debt. The same statute of limitations cuts off the right of the borrower to sue based upon TILA claims.
  11. If the borrower does sue to enforce the three statutory Rescission duties the ONLY thing he/she should be claiming is that the statutory duties exist by virtue of 15 USC §1735 and that the Defendants failed to comply. Such an action could be after the SOL has run out seeking a declaration that the debt is dead (depending upon how SOL is treated).
  12. Neither the borrower nor the owner of the debt can reverse the effect of the TILA Rescission law. It is effective by operation of law and self-executing.
  13. Whether the notice is sent within 3 years or outside of the 3 years could be grounds to vacate the rescission which was already effective by operation of law. But that creditor lawsuit must be brought within the 20 days due for compliance with the three statutory duties. Minutes of the congressional discussion on this statute are quite clear — there should be no possibility at all for the presumed creditor to stonewall the borrower. SCOTUS said as much in Jesinoski, when it declared that no further action is required from the borrower other than the sending of the notice.
  14. The notice of rescission is facially valid if it declares the intention or desire to cancel the loan contract. There are dozens of cases saying exactly that. But it might be facially invalid if it expressly states that the contract it seeks to eliminate is outside of the three year limitation of “Consummation” (otherwise the 3 year limitation requires parole or extrinsic facts and requires finding of facts). This admission on the face of the instrument used to declare TILA Rescission MIGHT enable the presumed creditor to ignore it and ask the court to ignore it, at their own peril.
  15. If the creditor’s claim is that the rescission should be vacated (especially if it is recorded) or ignored because of the three year limitation or for any other reason, that is a lawsuit or an affirmative defense requiring allegation and proof of facts that are parole or extrinsic to the fact of the notice of TILA Rescission.
  16. There is no statute of limitation on anything that is effective by operation of law. It is an event, not a claim. Hence notice of TILA Rescission cannot be subject to interpretation as a claim and therefore cannot be subject to any statute of limitations.
  17. Thus all claims upon which courts took action or are taking action or will take any action based upon a loan contract that was canceled are VOID and completely undermine judicial standing and jurisdiction of the court. Subject matter jurisdiction is absent because the loan contract no longer exists. The creditor may either sue to revoke the rescission and cancel the instrument of rescission if recorded or make a claim based upon the statutory debt created by 15 USC §1635.
  18. The ONLY thing that could make void “sales” (of title to real property) final is Adverse Possession which typically takes around 20 years to establish. Check state statutes. The elements of adverse possession include but are not limited to continuous, open, notorious, peaceful, hostile (to actual owner), actual, visible, exclusive, and adverse. This is the “reset” that I forecasted 12 years ago. State legislatures are being lobbied to make such sales final even though they are legally void.
  19. All attorneys for the financial industry are in agreement with this analysis. The industry rejects the analysis because they correctly believe that they can persuade judges to act and rule opposite to the express provisions of the statute. So far they are right — except for the the  Supreme Court of the United States who is the sole source of a final definition of the law in this country.
  20. Anyone who seeks a change from the the current statute or the Supreme Court decision must do so through efforts to have Congress change the law.  If the rule of law is to prevail, the above procedural analysis must be followed in every instance.

Using TILA Rescission as Jurisdictional Issue

I think TILA Rescission should be approached as a jurisdictional issue since it focuses on the procedural aspects of the TILA Rescission statute. In other words it should always be front and center.

I think a problem with TILA Rescission is that not even borrowers understand that the rescission issue is over. By asking a court to  make rescission effective you underline the correct premise that rescission has already occurred. All your pleadings after that should be based upon that premise or you undermine yourself.

==============================
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
===========================
The plain wording of the statute says that rescission is effective, as a matter of law, when delivered (or sent via USPS). SCOTUS says no lawsuit is required to make rescission effective. The fact that the banks treat it as ineffective is something they do at their own peril. The statute explicitly says otherwise along with REG Z procedures based on the statute 15 USC §1635 and the Jesinoski decision.
*
Under the statute and Reg Z the loan contract is eliminated and replaced with a new relationship under the statute — a set of procedures creating a statutory claim for the debt. It follows that ONLY a party who is an actual creditor or owner of the debt can even appear much less claim or defend anything about rescission. If they claim standing from the loan contract, they have no standing.
*
Hence if the formers holders of the now nonexistent note and mortgage are also creditors they have no problem. They can plead anything they want, including defenses to or motions (or lawsuits) to vacate TILA Rescission. 
*
BUT usually the former holders of the loan contract (note and mortgage) were using the loan CONTRACT as the sole basis of their standing — desiring to raise legal presumptions from the existence of those contracts (note and mortgage).
*
What happens next is incontrovertible by logic or legal reasoning. Although they might be named parties to an action pending in court such ex-holders have lost their standing in that court action or they never had it to begin with. By operation of law the note and mortgage from which all their claims derive do not exist. That is a jurisdictional issue and it MUST be decided against the banks — by operation of law. Failure to present this has resulted in a number of escape hatches for judges who don’t like TILA Rescission. Your job is to close those hatches.
*
The whole point of the rescission strategy is to remove any possibility of an arguable claim for standing to foreclose on the now nonexistent mortgage or deed of trust. Unless the claim for standing is based upon ownership of the debt subject matter jurisdiction is absent.
*
This means that no claim or defense against the effectiveness of the rescission can be raised by anyone other than the owner of the debt.  
*
This also means that there can be no foreclosure because the loan contract has been replaced by a statutory “contract.”
*
Borrowers undermine this premise by filing lawsuits asking the court to declare that the rescission is effective. The TILA Rescission statute 15 USC §1635 has already answered that and THAT is what should be pled. SCOTUS has also already answered that in the Jesinoski case. Asking the court to declare it so means that you take the position that the statute has not already answered that question, that SCOTUS has not already ruled and that therefore it is now up to the trial court to make a ruling.
*
You are opening the door for argument when there is no such argument intended by the statute or the US Supreme Court. Upon being invited to do so a judge who doesn’t like the statute will come with reasons not to declare the rescission effective — usually based upon objections from parties who could not possibly have standing to raise such objections.
*
If that is true (and it is true by definition in our legal system once the highest court has ruled) then a party seeking relief from rescission would need to allege that they are the owners of the debt and then  prove it without reference to the note or mortgage. In other words they would need to prove they funded the debt or they purchased it with actual money.
*
We all know that the fake securitization scheme was entirely dependent upon illegally funding the origination and purchase of the loans in the fictitious name of the trust for the account of the underwriter and that the investors were cut off contractually from having any right, title, interest or even opportunity to review or audit the portfolio of loans claimed to be in a fictitious pool that was being managed by a trust that did not exist, which in turn was managed by a trustee that had no powers of administration for the benefit of nonexistent beneficiaries.
*
Hence the problem of the banks is clearly that they can’t prove funding or purchase because doing so would expose their illegal activities. Whether this would actually lead to a free house is debatable, depending upon the exercise of equitable jurisdiction in the courts.
*
What is clear is that the banks were told by their own lawyers not to ignore rescission or they would lose everything. They ignored it anyway believing they could steamroll through the courts, which was in fact an accurate measurement of their own power.
*
BUT as the banks persist along this strategy they continually build the inventory of homes that by operation of law are still owned by the borrowers, all other actions being void ab initio, not voidable by any stretch of the imagination.
*
AND the banks are by their own actions and inaction causing the debt to slip away from them as well. Under TILA Rescission the old loan contract is replaced with a new statutory contract. Actions for enforcement under that contract must be based on violation of TILA. TILA has a statute of limitations. Thus claims beyond the statute of limitations are barred. And THAT means that claims for the debt are barred after the statute of limitations (on claims arising from TILA) has run — as result of plain arrogance of the banks — and no fault of any borrower.

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.

==============================
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
===========================
  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.

9th Circuit Creeps Up the Ladder in Hoang TILA Rescission Breakthrough

This case comes the closest yet to the truth about TILA Rescission. And it requires that TILA Rescission be applied — if there is an action to enforce within the statute of limitations covering contract actions in the state in which the property is located.

The court’s conclusion that there must be a statute of limitations is derived from its erroneous assumption AGAIN that TILA rescission is a claim rather an event. Jill Smith has done an outstanding job of moving us toward the final step in TILA REscission, to wit: TILA Rescission is procedural and it is an event. Once delivered it has ended the loan, the note and the mortgage by operation of law, just as the statute says. There is no statute of limitations on an event because it is not a claim.

Only a claim for breach of TILA duties could be subject to a statute of limitations. Failure to file suit, as specifically and expressly pointed out by a unanimous SCOTUS decision in Jesinoski does not affect the effect of TILA rescission. Courts don’t like it but that is the law and now this court has moved up to the precipice of saying exactly that.

============================

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
===========================

Hoang v Bank of America 12-6-18

See also ! Financial Freedom Acquisition LLC v. Standard Bank & Trust Co., 2015 IL 117950

! Financial Freedom Acquisition v Standard Bank -Analysis

! If You Own Your Home in a Land Trust

TILA Rescission is no more a claim than a warranty deed. It just exists. You don’t need to sue periodically because by operation of law (the exact wording of the TILA REscission statute) the deed exists and confirms title. In the same way TILA Rescission eliminated the lien encumbrance, the note and even the loan agreement and replaces it with a statutory “agreement” to unwind the debt.

The note and mortgage remain void throughout any time period after the notice of rescission is sent. This court gets close but veers off what they obviously believe is a radical end result — i.e., that the right to claim the debt expires if the creditor fails to comply with the duties imposed by TILA REscission and refuses to even acknowledge the existence of the rescission. That “radical result” is precisely what is mandated by the statute and the courts have no right to legislate it away. The legislature has that power but not the courts. Simple as that.

Contrary to what this court is saying a demand for injunction (as one would do under authority of a valid warranty deed) is NOT a lawsuit to enforce the rescission. The rescission is already in force. And the note and mortgage no longer exist. A Lawsuit to enforce the rescission would ONLY be a lawsuit that seeks to enforce the statutory duties during the time allowed by the statute of limitations in TILA which everyone agrees does not apply.

Ultimately the statute says that regardless of ANY defense a claimed creditor might have (including limitations which is an affirmative defense) the rescission is effective when delivered (mailed under USPS). Even the three years can only be raised by a party with standing and who can prove it WIThout reference to the note or mortgage. Real facts showing they paid for the debt . Those facts don’t exist and most people know it. But because of the “free house” myth they continue to flout the law and legislature from the bench.

But this case almost gets me over the hump where I can say “I told you so.”

Here are some notable quotes from this very important decision.

If a creditor fails to make required disclosures under the Truth in Lending Act (TILA), borrowers are allowed three years from the loan’s consummation date to rescind certain loans.1 15 U.S.C. § 1635(f). Borrowers may effect that rescission simply by notifying the creditor of their intent to rescind within the three-year period. Jesinoski v. Countrywide Home Loans, 135 S. Ct. 790, 792 (2015). TILA does not include a statute of limitations outlining when an action to enforce such a rescission must be brought

On April 15, 2013 (within the three-year period), Hoang sent the Bank notice of intent to rescind the loan under TILA. The record reflects that the Bank took no action in response to receiving the notice.

Once a borrower rescinds a loan under TILA, the borrower “is not liable for any finance or other charge, and any security interest given by the [borrower] . . . becomes void upon such a rescission.” 15 U.S.C. § 1635(b); see 12 C.F.R. § 226.23(a)(3). Within 20 days after the creditor receives a notice of rescission, the creditor must take steps to wind up the loan. 15 U.S.C. § 1635(b). “Upon the performance of the creditor’s obligations under this section, the [borrower] shall tender the property to the creditor . . . [or] tender its reasonable value.” Id. Once both creditor and borrower have so acted, the loan has been wound up.

However, the Supreme Court altered that usual procedure in Jesinoski. It eliminated the need for a borrower to bring suit within the three-year window to exercise TILA rescission. Instead, “rescission is effected when the borrower notifies the creditor of his intention to rescind.” Jesinoski, 135 S. Ct. at 792. “[S]o 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.”

A party may amend its pleading with the court’s leave, which “[t]he court should freely give . . . when justice so requires.” Fed. R. Civ. P. 15(a)(2). “This policy is to be applied with extreme liberality.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (internal quotation marks omitted). “Dismissal with prejudice and without leave to amend is not appropriate unless it is clear on de novo review that the complaint could not be saved by amendment.” Id. at 1052. Leave to amend can and should generally be given, even in the absence of such a request by the party. See Ebner v. Fresh, Inc., 838 F.3d 958, 963 (9th Cir. 2016) (“[A] district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.”).

 

CURRENT STATUS OF TILA RESCISSION AND ITS APPLICATION TO PAST, PRESENT AND FUTURE FORECLOSURES

Ultimately there will be recognition that the courts are vetoing legislation passed by congress simply because the judges disagree or are afraid of the consequences if they were to apply the law. Congress wrote it, passed it, and it was signed into law. In a nation governed by the rule of law there can be no space for exceptions. This is a violation of the most basic tenet of the US Constitution — division of governance into three co-equal branches of government. The courts are required under law to follow the law. Eventually the chickens are going to come home. How and when that will happen remains unclear.

I am of the opinion that an action should be brought to SCOTUS, using perhaps some non-traditional approaches for original jurisdiction to demand a remedy, to wit: vacating all orders, judgments and actions taken to enforce the void note and mortgage after rescission has been sent. The failure of the creditors to contest the rescissions should not be the basis for ignoring or invalidating the express wording of the statute.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.

Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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Here is the current status of TILA Rescission.
*
Despite the clear wording of the statute and the clear wording of a unanimous Supreme Court decision, lawyers and judges continue to erroneously “read in” conditions to rescission under 15 USC §1635. They were told not to do that by SCOTUS in Jesinoski but they continue to do it.
*
The practical effect is that judges are not following the law and therefore ruling in ways that basically ignore the TILA rescission.
*
According to both statutory and case law, no lawsuit, no tender, no condition of any kind and of any nature is written in the statute and SCOTUS says the wording is clear and unambiguous and therefore nobody can read any conditions into the procedures set forth by the TILA Rescission statute. In Jesinoski SCOTUS unanimously said that no lawsuit and no tender was required. Tender is NOT required UNTIL the so-called lender complies with the three statutory duties set forth in the TILA Rescission Statute. In Jesinoski the Supreme Court expressly stated that it was ruling on WHEN the rescission was effective by operation of law. The Court expressly ruled that this was a procedural statute. It provides nonjudicial relief to borrowers just like many states provide nonjudicial relief to lenders.
*
In an abundance of caution, I have been advising my clients to raise the issue but realize that virtually no court in the land, state or federal is going to say that the note and mortgage is void unless they are reversed by an appellate court — and the appellate courts have been doing the same thing as the trial courts. You probably don’t need that to preserve the issue because it is jurisdictional.
*
By law, the rescission statute acts as a cancelation and release of the mortgage encumbrance because that is what the law says. If the note and mortgage are in fact void by operation of law then everything that comes after that is void.
*
But if the courts refuse to apply that law because they have decided they don’t like the result then your notice of rescission will not get you any relief until SCOTUS, in a decision like Countrywide v Jesinoski, explicitly tells all the lower courts to stop pretending they can interpret the statute.
*
Such a decision will only be effective if the court spells out that  rescission is and has been effective by operation of law upon delivery and that no other conditions apply. It can attacked on any number of grounds but the so-called lenders must do so within 20 days or they are time barred. And if they maintain that position for one year, they lose the right to enforce the debt, in addition to the their previous loss of the right to enforce the void note and void mortgage.
*
Bottom line: the lawyer who says that tender is required before rescission is effective is wrong on the law but right as to the practical result. In fact any lawyer who advises clients about the weakness of any position based upon TILA Rescission is wrong on the law but right as to the practical effect.
*
Ultimately the system is going to need to deal with the the consequences of rebelling against the clear pronouncements of law from the US Congress and the US supreme Court. There is absolutely no question that millions of foreclosures have proceeded without jurisdiction because the note and mortgage were void as a result of delivery of TILA Rescission. In many cases they were actually recorded in the chain of title. Decisions and actions taken without jurisdiction to do so are void according to all statutory law, common law and rules of civil procedure as required by the US Constitution.
*
In my opinion that means that all homeowners who were deprived of clear title to their homes through foreclosure after sending a notice of rescission, still own their property. Lawyers for the banks were repeatedly told to ignore rescission at their own peril. They did it anyway.
*
Ultimately there will be recognition that the courts are vetoing legislation passed by congress simply because the judges disagree or are afraid of the consequences if they were to apply the law. This is a violation of the most basic tenet of the US Constitution — division of governance into three co-equal branches of government. The courts are required under law to follow the law. Eventually the chickens are going to come home. How and when that will happen remains unclear.

GARFIELD PREMISES

Most people really don’t completely understand our premise when we investigate, research, examine and analyze a case or case documents. We have several premises with which we start and check to to see if they apply. While the answer is short the work behind it is long and complicated.

Let us help you plan your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

Purchase now Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar including 3.5 hours of lecture, questions and answers, plus course materials that include PowerPoint Presentations. Presenters: Attorney and Expert Neil Garfield, Forensic Auditor Dan Edstrom, Attorney Charles Marshall and and Private Investigator Bill Paatalo. The webinar and materials are all downloadable.

Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

===========================

15 Assumptions we make that show up in all our reports and drafting.

  1. Rescission is an event that occurs upon mailing of the notice. It is not a claim for which the borrower must justify before it becomes effective. It is effective on mailing.
  2. The trusts are empty. They never took part in any transaction in which any loan was purchased. Therefore referring to the loan as being in a trust is erroneous.
  3. The Trusts don’t exist. The use of the Trustee’s name is an accommodation for a fee, and the use of the alleged trust name is the use of a fictitious name of the underwriter for certificates issued in the name of the trust. Hence the certificate owners own nothing (especially since they usually have disclaimed all interest in the debt, note or mortgage.)
  4. Since there is no trust in which the subject loan was entrusted to the named trustee, all claims to servicing rights arising from the written trust instrument (PSA) are also fictitious.
  5. None of the parties in the named trust have any right, title or interest in ownership or servicing the subject loan.
  6. In most cases the named payee on the note was neither a source nor a conduit for funds. All documents, especially mortgage documents, are construed against the drafter of those documents.
  7. The naming of a Payee who is not the source of funding prevents merger of the debt with the note, which can only occur when the payee and creditor are the same.
  8. In most cases the named Payee is different from the the creditor who funded the loan, intentionally or otherwise.
  9. In most cases the recorded mortgage names as creditor (“Lender”) a party (the named payee on the note) who is different from the creditor who funded the loan, intentionally or otherwise.
  10. In most cases (nearly all) the originator of the loan named as Payee on the note and “lender” on the mortgage was never in privity with the actual funding source.
  11. In nearly all cases referring to a lender or servicer as a lender or servicer is erroneous and admits a fact that is not true.
  12. In nearly all cases referring to a trustee as a REMIC Trustee is erroneous and admits a fact that is not true.
  13. In nearly all cases referring to a trustee as a DOT Trustee is erroneous and admits a fact that is not true.
  14. In virtually no case does equitable or legal ownership of the debt get transferred with documents of transfer.
  15. In virtually no case is there a real world transaction in which a loan is purchased and sold. It is the paper that is transferred, not the debt; hence there is no consideration.

The Role of Dynamic Dark Pools in Ponzi Schemes Masquerading as Securitized Loan Pools

The bottom line is that there are no financial transactions in today’s securitization schemes. There is only fabricated paper. If you don’t understand the DDP, you don’t understand “securitization fail,” a term coined by Adam Levitin.

GET A CONSULT

GO TO LENDINGLIES to order forms and services. Our forensic report is called “TERA“— “Title and Encumbrance Report and Analysis.” I personally review each of them for edits and comments before they are released.

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

===================================

I received a short question today to which I gave a long answer. The question is “What happens when an investor decides that he or she wants to cash it in does someone redeem their certificate ?”

Here is my answer:

YES they get paid, most of the time. It is masked as a “trade” on the proprietary trading desk of the CMO Dept. which is completely unregulated and reports nothing. As long as the Ponzi scheme is going strong, the underwriter issues money from the investor pool of money (dynamic dark pool -DDP). It looks like a third party bought the “investment.” If the scheme collapses then the underwriter reports to investors that the market is frozen and there are no buyers.

 *
There is no redemption because there are no certificates. They are all digital entries on a server. Since the 1998 law deregulated the certificates, reporting is limited or nonexistent. The entries can be changed, erased, altered, amended or modified at will without any regulator or third party knowing. There is no paper trail. Thus the underwriter will say, if they were ever asked, whatever suits them and there is no way for anyone to confirm or rebut that. BUT in discovery, the investors have standing to ask to see the records of such transactions. That is when the underwriter settles for several hundred million or more.
 *
They discount the settlement based upon “market” values and by settling for pennies on the dollar with small community banks who do not have resources to fight. Thus if they received $2 billion for a particular “securitized pool” that is allocated to a named trust they will instantly make about 10-20 times the normal underwriting fee by merely taking money before or after the money hits the DDP. Money is paid to the investors as long as sales of certificates are robust. Hence the DDP is constantly receiving and disbursing money from many more sources than a fixed group of homeowners or investors.
 *
It is all about gaps and absences. If a debt was properly securitized, the investor would pay money to the underwriter in exchange for ownership of a certificate. The money would then be subject to fees paid to the underwriter and sellers of the certificates. The balance would be paid into a trust account on which the signatory would be a trust officer of the Trustee bank.
 *
If a scheme is played, then the money does not go into the trust. It goes to the DDP. From there the money is funneled through conduits to the closing table with the homeowner. By depositing the exact and expected amount of money into the trust account of the closing agent, neither the closing agent nor the homeowner understands that they are being played. They don’t even have enough information to arouse suspicion so that they can ask questions.
 *
Hence if you combine the proper securitization scheme with the improper one you see that the money is diverted from the so-called plan. This in turn causes the participants to fabricate documents if there is litigation. They MUST fabricate documents because if they produced real documents they would have civil and criminal liability for theft, embezzlement in investor litigation and fraud and perjury in foreclosure litigation.
 *
It is only by forcing a peek around the multiple layers of curtains fabricated by the players that you can reveal the absence of ownership, authority or even an economic interest — other than the loss of continued revenue from servicing and resales of the same loan through multiple investment vehicles whose value is completely derived from the presumed existence of a party who is the obligee of the debt (owner of the debt, or creditor).
 *
That party is the DDP — fund that is partially authorized for “reserve” and which the prospectus and trust instrument (PSA) state (1) that the mortgage loan schedule is not the real one and is presented as an example and (2) that the investors acknowledge that they might be paid from their own money from the “reserve.”
 *
The gap is that the DDP and the reserve are two different accounts. The “reserve” is a pool of money held in trust by, for example, U.S. Bank as trustee for the trust. There is no such account. The DDP is controlled by the underwriter but ownership is intentionally obscured to avoid or evade detection and the liability that would attach if the truth were revealed.
 *
We win cases not by proving theft from investors but by hammering on the fact that the documents are fabricated, which is true in virtually all cases involving a named trust. We will win a large award if we can show that the intended beneficiaries of the foreclosure were parties other than the obligee on the debt.
 *
Thus the attorneys, servicers and trustee are protecting their ill-gotten gains and seeking to grab more money and property at the expense of the unnamed investors and homeowners. They are then transforming an expected revenue stream into the illusion of a secured debt owed not to the funding sources but to the intermediaries.
Go to LENDINGLIES for more help.

Tonight — Silent Roles of Fannie Mae and Freddie Mac — Hiding Behind the Obtuse

How to Withhold Vital Information from Homeowners

Thursdays LIVE! Click in to the The Neil Garfield Show

Or call in at (347) 850-1260, 6pm Eastern Thursdays

Charles Marshall, Attorney and Bill Paatalo, licensed investigator discuss the moral hazard created by the Government Sponsored Entities (GSEs) banks, the courts and the regulators in allowing “presumptions” to be used even when the actual facts are different from the presumed facts.

Fannie and Freddie have long been a mystery wrapped in an enigma.

Before false claims of securitization, before fabrication and forgery of documents, the GSEs had fairly clear role in the origination, servicing and enforcement of mortgages. Now they are used as cover to hide lack of ownership where the banks and servicers make the homeowner travel and endless loop leading nowhere.

Now, as to any specific loan, we don’t know which of the following applies:

  1.  GSE is the guarantor of the loan (basically like a third party insurer with government backing)
  2. GSE is Master Trustee of a REMIC Trust in which there is a named Trustee who has the same powers, rights and obligations as the Master Trustee — i.e., no powers to actively administer the active affairs of the trust because there is no business or assets in the trust.
  3. GSE is or was a purchaser for cash.
  4. GSE is or was a purchaser using MBS issued by a named trust that either exists or doesn’t exist.
  5. GSE, using Trust A MBS paid Trust A for loans owned by the Trust or for loans not owned by the trust.
  6. GSE was a seller of the subject debt, note or mortgage.
  7. GSE claimed ownership when it didn’t own the subject debt, note or mortgage.
  8. GSE showed subject loan on its website but had no interest in the subject debt, note or mortgage (or foreclosure).
  9. Third parties claimed that GSE owned the subject debt, note and/or mortgage and it was true.
  10. Third parties claimed that GSE owned the subject debt, note and/or mortgage and it was false.

Bank Fraud News: The reason why banks and servicers should receive no presumption of reliability

The following is but a short sampling supporting the argument that any document coming from the banks and servicers is suspect and unworthy of any legal presumption of authenticity or validity. Judges are looking into self-serving fabricated documentation and coming to the wrong conclusion about the facts.

Chase following bank playbook: screw the customer

“Chase provided no prior notice to its cardholders that their crypto ‘purchases’ would be treated as ‘cash advances’ on a going forward basis,” according to the suit.

Tucker claims he was hit with about $140 in fees and a “sky-high” interest rate of 26 percent without warning after Chase reclassified his purchases as cash advances, a violation of the Truth in Lending act.

Fannie Mae and Freddie Mac Stealth: Hiding the elephant in the living room

Its never been a secret that Freddie Mac’s business policy is to remain stealth in any chain of title if possible, and to rely on the servicers to keep its presence a secret in foreclosure proceedings. In fact, this PNC case which was overturned against PNC, involved the Defendant’s assertion that PNC was concealing Freddie Mac’s interest in the loan. Freddie Mac’s business policy appears to rely upon nothing more than handshakes with the originators and servicers. Here is some verbiage from a “Freddie Mac – Mortgage Participation Certificates” disclosure (See: Freddie Mac – Mortgage Participation Certificates):

Deutsch files lawsuit against private mailbox troller following the Deutsch playbook of foreclosure

“Defendants, and each of them initiated a malicious campaign to disrupt the chain of title to prevent Plaintiff from enforcing its contractual rights in the 2006 DOT by way of recording fraudulent documents to purportedly assign the rights under the 2006 DOT without the consent of Plaintiff, and otherwise thereafter fraudulently transfer all rights via a trustee deed upon sale, even though no trustee sale was ever conducted. All subsequently recorded or unrecorded transactions are therefore null, void, and of no effect.”

EDITOR COMMENT: So Deutsch is admitting that its practice of recording fraudulent documents are “null, void and of not effect.” In order to get to that point Deutsch is going to be required to prove standing — i.e., definitive proof that it paid for the debt, which it did not. Deutsch is on dangerous ground here and might deliver a bonus for homeowners. As for the defense, is it really a crime to steal a fraudulent deed of trust supported by fraudulent assignments and endorsements?

Barclays Bank settles for $2,000,000,000 for fraud on investors

Barclays’ offering documents “systematically and intentionally misrepresented key characteristics of the loans,” and more than half of the loans defaulted, federal officials said.

Additionally, the Department of Justice reached similar settlements with two Barclays’ employees involved with subprime residential mortgage-backed securities. They will pay $2 million collectively.

The agreements mark the latest in a string of U.S. settlements with major banks over sales of tainted mortgage securities from 2005 to 2007 that helped set the stage for the real estate crash that contributed to the financial crisis.

Deutsch Pays $7.2 Billion for Fraudulent securitizations

Confirming settlement details the bank disclosed in late December, federal investigators said Deutsche Bank will pay a $3.1 billion civil penalty and provide $4.1 billion in consumer relief to homeowners, borrowers, and communities that were harmed.

The federal penalty is the highest ever for a single entity involved in selling residential mortgage-backed securities that proved to be far more risky than Deutsche Bank led investors to believe. Nonetheless, the agreement represents relief of sorts for the bank and its shareholders, because federal investigators initially sought penalties twice as costly.

Credit Suisse‘s announcement said it would pay the Department of Justice a $2.48 billion civil monetary penalty. The bank will also provide $2.8 billion in consumer relief over five years as part of the deal, which is subject to negotiations over final documentation and approval by Credit Suisse’s board of directors. [Credit Suisse owns SPS Portfolio Servicing.]

Ocwen Settles with 10 States for Illegal Servicing

“The consent order provides that Ocwen will transition its servicing portfolio off of its current servicing platform to a platform better able to manage escrow accounts and establish a new complaint resolution process,” the Georgia Department of Banking and Finance said in a press release. “Ocwen shall hire a third-party firm to audit a statistically significant number of escrow accounts in high-risk areas of the portfolio to determine whether problems continue to exist around the management of escrow accounts and to identify the root cause of those problems.

“Ocwen has faced many legal and regulatory challenges in recent years. In December 2013 it reached a settlement over foreclosure and modification processes with the CFPB and state regulators. A year later, it made a separate agreement with New York regulators that removed company founder William Erbey as CEO.

Wells Fargo Whistleblower is Fired Among Others Who refused to Lie to Customers

In 2014, according to Mr. Tran, his boss ordered him to lie to customers who were facing foreclosure. When Mr. Tran refused, he said, he was fired. He worried that he wouldn’t be able to make his monthly mortgage payments and that he was about to become homeless.

Joining a cadre of former employees claiming they were mistreated for speaking out about problems at the bank, Mr. Tran sued. He argued in court filings that he had been fired in retaliation for blowing the whistle on misconduct at the giant San Francisco-based bank. Mr. Tran said he didn’t want his job back — he wanted Wells Fargo to admit that it had been wrong to fire him and wrong to mislead customers who were facing foreclosure.

 

 

 

Why Borrowers Have the Right to Rescind under the Truth In Lending Act

In my opinion any foreclosure judgment or foreclosure sale that took place after a notice of rescission was sent and delivered is completely void and should be treated the same as a wild deed. This is particularly true in cases where courts have ignored the rescission completely and failed to issue an order effectively vacating the rescission. And it is particularly true where the rescission notice was sent within three years of consummation (assuming there was consummation). As with any wild deed, the actions and events subsequent to the void foreclosure judgment and/or void sale are also void. The effect of a rescinded loan is to make the note and mortgage void by operation of law effective the date of mailing or delivery. Void means they don’t legally exist.

Where the rescission was sent within three years of the purported consummation and was completely ignored  I am positive that SCOTUS will agree. And it is at least doubtful, if not legally impossible, that any subsequent law passed by any state legislature could effectively ratify a court’s action where it had no subject matter jurisdiction. In plain language, if the effect is the same as a wild deed, the only way title can be divested from homeowners would be through various state laws governing adverse possession (usually used in boundary disputes, but nonetheless applicable). Absent that, homeowners who have sent notices of TILA Rescission remain the legal owners of the property, even it goes back many years.

The banks know and understand this. They have lobbied extensively and successfully in state legislatures to bar or limit actions to “take back” title. By doing so they distract from the main issue, to wit: homeowners already have title by operation of law and thus need make no claim in court or otherwise. That was the whole point of the TILA Rescission statute as confirmed by SCOTUS in Jesinoski.

Bankers are rejoicing over the nearly universal rejection of TILA Rescission in trial and appellate court — with the notable exception of the Supreme Court of the United States, (SCOTUS) who unanimously ruled in Jesinoski that (a) the statute was constitutional, (b) that the statute was clearly worded thus barring “interpretation”, (c) that no lawsuit was needed to make rescission effective, and (d) that the rescission notice is effective on the date of delivery (mailing, if USPS is used).

Any “logic” or rationale that leads to a result contrary to these points is equally void and without merit simply because it is the law of the land from Congress and from the highest court in the land — SCOTUS. All adverse decisions and arguments are based upon the premise that the statute runs against the grain of personal beliefs that borrowers should never have that much power. Without aggressive enforcement of the consumer rights enunciated in TILA, the rights and protections of the statute and regulations are effectively revoked leaving consumers in the same position they were in back in the 1960’s when the law was considered and passed.

While I am certain that SCOTUS will slap down all the courts of the country who tried imposing limits and restrictions on TILA Rescission, just as it did in Jesinoski, that doesn’t mean that that all cases would be reversible based upon Jesinoski and the next decision.

This is especially true when a court considers TILA Rescission as a claim instead of an event effective by operation of law — just as the statute says it is. The effect on procedure and burdens of proof is enormous.

If you regard it as a claim asserted by the borrower, then the borrower must prove that the rescission was properly sent and for good reasons.

If you regard it as an event, then it is the “lender” who must file a claim seeking to set it aside. The TILA Rescission statute and SCOTUS both state the same thing: rescission is an event that is effective upon mailing (delivery).

The burden is clearly on the party claiming to be a lender to file a claim seeking to vacate the rescission which has same effect as a court order or statutory law. But they must plead and prove standing without using the note and mortgage as the foundation for their assertion of legal standing.

Let us help you plan your TILA RESCISSION strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

Purchase now Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar including 3.5 hours of lecture, questions and answers, plus course materials that include PowerPoint Presentations. Presenters: Attorney and Expert Neil Garfield, Forensic Auditor Dan Edstrom, Attorney Charles Marshall and and Private Investigator Bill Paatalo. The webinar and materials are all downloadable.

Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

===========================

In the 1960’s Congress was faced with a problem. The banks were forever seeking ways to deceive borrowers in increasingly complex loan transactions. Congress was passing TILA, but in order to have any effect in protecting consumers, a compliance enforcement mechanism was needed.

One choice was to create a massive new federal government agency to enforce compliance with the new Truth in Lending Act (TILA). Nobody took that seriously because of the huge expense and logistical problems in analyzing the closing statements on each loan and selectively auditing loans during their term to see if the disclosures were correct or had been false or misleading. Tens of thousands of people would need to be hired, trained, and educated. Systems would have had to be invented to keep track of the huge amount of data that would be collected.

The other path was to create a self activating mechanism that would impose draconian penalties on lenders who violate the law and spirit of TILA. Faced with virtual loss of the loan the banks would scrupulously comply. The extraordinary provision gave consumers the right to rescind the transaction if they believed they had been deceived — i.e., that the disclosures were absent, false or misleading (all of which apply to loans during the great meltdown leading up to the 2008 crash).

Key to the effectiveness of the statute is that there was no requirement that the borrower had to be right, inasmuch as this would enable banks to stonewall even further. Nothing was required except that the borrower send a notice of rescission. The entire burden thus falls completely and solely on the “lender” to apply to a court of competent jurisdiction to vacate the rescission, which was effective by operation of law, upon mailing or delivery.

Congress rejected any notion that consumers had to go see a lawyer or a court in order to get redress for the consumer’s perceived grievances. Hence the TILA Rescission statute was passed stating that the rescission was effective by operation of law upon delivery (or mailing). 

For years the banks had internal controls that usually assured compliance, although there were some major exceptions. Then starting in the 1990’s the banks embarked on a scheme that required  violations of the protections afforded by TILA. When people sent notices of rescission they were frequently ignored or “contested” by a letter.

In court, judges were driven by a fear that such power delivered into the hands of borrowers with little to lose might destroy the entire socio-economic fabric of the country and that the “sanctity of contract” must be upheld. Accordingly judges began to “interpret the statute thus imposing limits and restrictions that effectively denuded the primary objective of the legislation — to punish participants in the lending process for withholding disclosures or making false and misleading disclosures.

In short, as pointed out by SCOTUS in the Jesinoski decision  judges were attempting to legislate from the bench by proclaiming what the judge thought the statute should have said. SCOTUS truck down all the restrictions and limitations invented by the courts and appellate courts that affirmed such decisions. Still judges try to avoid the draconian results on “lenders” that were intended by Congress and President Johnson. And so the real truth about these loans and these foreclosures is still emerging very slowly.

The practice pointer here is that lawyers should not present rescission as a claim for any relief except perhaps enforcement of TILA Rescission duties imposed on lenders. The relief has already been granted by Congress. Don’t fall into the trap of alleging the rescission as a claim in a complaint or in affirmative defenses. The proper motion is a motion to dismiss. In the absence of an actual pleading setting forth standing and the timely contest (20 days) of whether the rescission should have been sent, the “lenders” either must admit they are not lenders or comply with the three duties imposed by delivery of  TILA Rescission:

  1. Return of moneys to the homeowner/borrower
  2. Return of the canceled original note
  3. Cancellation and release of the mortgage recorded in public records.

It is only after the lender has complied or a court has vacated the borrower’s rescission that the creditor or obligee can demand money from the homeowner/borrower. But here is the rub: Under TILA Rescission, there might to recover money arises from either timely compliance with the statue or an order vacating the rescission. The right to receive money under TILA Rescission arises from the rescission statute, not the debt, note or mortgage. If no claim has been made under TILA within 1 year, then the debt is unenforceable. And no claim can remade without compliance with the TILA Rescission statutes.

 

 

 

 

 

TILA RESCISSION: The war is NOT over contrary to bank disinformation

The banks have not asked for an order vacating a TILA RESCISSION because they know that following standard procedure would block  them from challenging TILA RESCISSION.

This is PROCEDURE vs SUBSTANCE. That is what this has always been about. As more courts continue to “rule” on TILA RESCISSION, getting it wrong every time, the effort to discredit TILA RESCISSION is picking up steam.

Here is the bottom line: I never said that the borrower would always prevail if challenged. I only said that the borrower must be challenged if a creditor wants to avoid the consequences of rescission. And failing to do that means that the rescission stands, by operation of law. I have also said that only a party with standing can bring that challenge and that on its face such a party does not seem to be the same as the party seeking to enforce the paper.

Let us help you plan your TILA RESCISSION strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

Purchase now Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar including 3.5 hours of lecture, questions and answers, plus course materials that include PowerPoint Presentations. Presenters: Attorney and Expert Neil Garfield, Forensic Auditor Dan Edstrom, Attorney Charles Marshall and and Private Investigator Bill Paatalo. The webinar and materials are all downloadable.

Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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In the past couple of weeks I have received hate mail from those who are pretending  to be on the side of homeowners whilst adamantly opposing TILA Rescission. The banks are more scared of TILA RESCISSION than anything else. So their effort is directed at discrediting the express wording of the statute, the Supreme Court decision directly on point and of course anyone (e.g., me) who persists in pushing the use of TILA RESCISSION. I will say openly that the courts have managed to tie up rescission now just as they did before SCOTUS stopped them. And once again, SCOTUS will administer a stern warning about playing with the express wording a clearly worded statute.

Remember when the general rule was that rescission was a claim and not an event — i.e., that homeowners had to bring an action to enforce rescission in order for rescission to be effective? That’s gone now.

So now they are saying that the likelihood of the defeat of the homeowner in a hypothetical lawsuit directed at vacating the TILA RESCISSION means that the rescission should be ignored (but not subject to a final judgment in which the TILA Rescission is vacated. That will be gone soon too.

Judges are not empowered to render decisions based upon a hypothetical lawsuit. The lawsuit to vacate the rescission must be real and must be filed by a party with standing. And standing cannot be based upon the note and mortgage which are void by operation of law. Standing in such a suit can ONLY be established by a party to whom the underlying debt is owed.

These purveyors of “bad news” will continue to report each erroneous court decision (as I predicted) until once again, the US Supreme Court smacks down the bad decisions for (a) not following the statute, (b) not following the SCOTUS Jesinoski decision and (c) not following standard due process procedure. Such a decision is extremely likely considering the unanimous Jesinoski decision.

And I would ask them — “If you are so sure that TILA Rescission is a dead horse, why are YOU spending any time rebutting TILA RESCISSION?”

Once again these paid shills for the banks are intentionally confusing procedure with substance. I never said that the borrower would always prevail if TILA RESCISSION was properly challenged. I only said that the borrower’s rescission must be challenged if a creditor wants to avoid the consequences of rescission. And failing to do that means that the rescission stands, by operation of law. I have also said that only a party with standing can seek relief from a court including bringing that challenge. I have also said that on its face such a “creditor” party does not seem to be the party seeking to enforce the paper and oddly enough, might not exist at all.

The error that occurred in the remanded Jesinoski case was the assumption or presumption that the party claiming to be beneficiary under the deed of trust was an actual creditor instead of a possessor or holder of the note. As per the express wording of the TILA RESCISSION statute, such a party relying upon paper documents are relying upon a note and mortgage that are void by operation of law and thus could never be the basis of legal standing to challenge TILA RESCISSION.

The court and the parties continued with a basic erroneous assumption:  that somehow a party who claims only to be holder of a note or mortgage can somehow challenge the notice of TILA RESCISSION. By failing to challenge their opposition on the question of standing (because the note and mortgage were void) the Jesinoskis sealed their own doom. This in turn enables the sometimes nonexistent claimant for a nonexistent claim to twist legal procedure and simply attack the notice of rescission with a motion and/or affidavit instead of a complaint in which it alleges standing to sue based upon the underlying debt.

The remand of the Jesinoski case to the trial court should have resulted in a stay of the proceedings for a defined period allowing the “creditor” to affirmatively allege that it has standing because it is the party who would suffer financial injury and that all disclosures were made, —thus requesting from the court that the rescission be vacated — something that has yet to be done anywhere — despite direct advice and counsel from lawyers for the banks. The problem they face is that the banks were given 20 days to challenge rescission— just as the homeowners being given up to 3 years to invoke rescission.

Despite the FACT that a TILA RESCISSION is effective upon mailing or delivery by operation of law, the courts simply refuse to treat it that way. As a result, no order has been entered nor has it been requested by the banks — a court order in which the rescission was vacated. The banks have not asked because they know that following procedure would block  them from challenging TILA RESCISSION.

You can’t blame them. Steamrolling seems to work for the banks. It’s better than law!

But a decision from the US Supreme Court along the lines expressed in this article is likely to materially effect many of not most foreclosures where the notice of rescission was delivered prior to the foreclosure sale or the foreclosure judgment.

PRACTICE HINT: If you are dealing with a party claiming rights to foreclose on the basis of being “holder”, that is probably an admission that they are not a creditor. Hence they would not have legal standing to demand relief from a court when seeking to vacate the rescission. If they had purchased the underlying debt, in all probability, they would assert themselves as having the status of a “holder in due course” (and of course prove it). This needs to be fleshed out in discovery — and by demanding discovery on the issue of standing you are highlighting the fact that the rescission is effective and that a challenge to rescission must be a pleading of a case of action — in other words, where they are forced to allege their basis for asserting legal standing.

TILA RESCISSION: The Bottom Line for Now

Probably the main fallacy of the people who say that TILA Rescission is not possible or viable is that they project the outcome of a lawsuit to vacate rescission. Based upon their conjecture, they assume that Rescission is no more than a technicality. Congress, and SCOTUS beg to differ. It was enacted into law 50 years ago in an effort to prevent unscrupulous banks from screwing consumer borrowers.

Let us help you plan your TILA RESCISSION narrative and strategy: 202-838-6345. Ask for a Consult.

Register now for Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar.

Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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I keep getting emails from non lawyers who have a “legal opinion” that not only differs from mine, but also the opinion of hundreds of lawyers who represent the banks and servicers. They say that because disclosures were probably made that rescission is nothing more than a gimmick that will never succeed and they point to the many case decisions in which courts have ruled erroneously in favor of the banks despite a rescission that eliminated the subject matter jurisdiction of the court, since the loan contract, note and mortgage no longer exist. The debt, however, continues to exist even if it is unclear as to the identity of the party to whom it is owed.

First the courts ruled erroneously when they said that tender had to be made before rescission was effective. Then the courts said that no rescission could be effective without a court saying it was effective. That one put the burden on proving the figure to make proper disclosure on the homeowner. The Supreme Court of the United States, (SCOTUS — see Jesinoski v Countrywide) after thousands of decisions by trial and appellate courts, told them they were wrong. As of this date, no court has ever ruled that the rescission was vacated — the only thing that could stop it.

The lay naysayers keep harping on how wrong I am about rescission. Unfortunately many people believe what they read just because it is in writing. In my case I simply instruct the lawyers and homeowners to simply read the TILA Rescission statute and the unanimous SCOTUS decision in Jesinoski. What they will discover is that I am only repeating what they said — not making it up as some would have you believe.

To the naysayers and  all persons in doubt, i say the following:

As I have repeatedly said, in practice you are right, for the time being.
But the legal decision from SCOTUS will undoubtedly change the practice. The law is obvious and clear. SCOTUS already said that. So no interpretation is required or even permissible. SCOTUS said that too. TILA Rescission is mainly a procedural statute, not a substantive one. SCOTUS said that too. On the issue of when rescission is effective, it is upon mailing (USPS) or delivery. SCOTUS said that too. On the issue of what else a borrower needs to do to make TILA rescission effective, the answer is nothing. SCOTUS said that too.

Hence the current argument that you keep making is true “in practice” but only for the moment. SCOTUS will soon issue another scathing attack on the presumptuous courts who defied its ruling in Jesinoski. There can be no doubt that SCOTUS will rule that any “interpretation” that contradicts the following will be void, for lack of jurisdiction, because the loan contract is canceled and the note and mortgage are void:

  1. No court may change the meaning of the words of the TILA Rescission statute.
  2. Rescission is law when it is mailed or delivered.
  3. Other than delivery no action is required by the borrower. That means the loan contract is canceled and the note and mortgage are void. They do not exist by operation of law.
  4. Rescission remains effective even in the absence of a pleading filed by the borrower to enforce it.
  5. Due process is required to vacate the rescission. That means pleading standing and that proper disclosure was made, an opportunity for the borrower to respond, and then proof that the pleader has standing and that proper disclosures were made.
  6. Pleading against the rescission must be filed within 20 days or it is waived.
  7. At the end of one year both parties waive any remedies. That means the borrower can no longer enforce the duties imposed on the debt holder and the debt holder may no longer claim repayment.
  8. The only claim for repayment that exists after rescission is via the TILA Rescission statute — not the note and mortgage. This is based upon the actual debt, not the loan contract or closing documents.
  9. Any claim for repayment after rescission is predicated on full compliance with the three duties imposed by statute.
  10. A court may — upon proper notice, pleading and hearing — change the order of creditor compliance with the three duties imposed upon the debt holder. This does not mean that the court can remove any of the duties of the debt holder nor summarily ignore the rescission without issuing an order — upon proper notice, pleading and proof — that the rescission is vacated because the proper disclosures were made or for any other valid legal reason that does not change the wording of the statute.
  11. The three duties, which may not be ignored, include payment of money to the borrower, satisfaction of the lien (so that the borrower might have an opportunity to refinance), and delivery of the original canceled note.

Virtually 100% of lawyers for the banks and servicers agree with the above. They have advised their clients to file a lawsuit challenging the TILA Rescission because such a lawsuit could be easily won and would serve as a deterrent to people attempting to use TILA rescission as a defense to collection or foreclosure efforts. Yet their clients have failed to follow legal advice because they know that they have no debt holder to whom funds can be traced. If they did identify the debt holder(s) they would be showing that they played just as fast and loose with investor money as they have done with the paperwork in foreclosures.

Does this mean a free house to homeowners? Maybe. Considering how many times the loans were sold directly and indirectly, and how many times the banks received insurance, bailout and purchases from the Federal Reserve, that wouldn’t be a bad result. But the truth is that everyone knows that won’t happen unless the courts continue their decisions with blinders on.

In the end, the homeowners do owe money to the investors whose money was used too fund the loans, directly and indirectly. Whether it is secured or not may depend upon state law, but as a practical matter very few borrowers would withhold their signature from a valid mortgage and note based upon economic reality.

Even the Bank Attorneys Admit that NO Tender or lawsuit is Required in TILA Rescission. Burden is on the “lender” side.

It appears that I have struck a nerve with many of the people who seek to prove me wrong in my “theories.” They are facts, not theories. And as explained by yet another attorney writing an article for the banks and bank attorneys, it is up to the “bank” side of the equation to do anything about rescission. The borrower need do nothing except send the notice. If the “bank” side does nothing they do so at their own peril — not the homeowner’s peril. READ THE STATUTE and the unanimous decision by SCOTUS in Jesinoski v Countrywide.

Although trial judges treat the matter as unsettled or even settled opposite to the express wording of the statute and the only case that matters, the issues raised defensively by the “bank” side relative to TILA Rescission are plainly without merit and well-settled by statute and SCOTUS.

The article below seeks to point out that the TILA Rescission statute allows a court of competent jurisdiction to change the order of things — if petitioned to do so. She avoids the obvious problem: that nobody has filed such a suit because they (a) don’t have standing and (b) they are winning anyway by playing to the bias of judges.

“A borrower may effectuate rescission “by notifying the creditor.” 12 U.S.C. § 1635(a). The United States Supreme Court held in Jesinoski v. Countrywide Home Loans, Inc. that a borrower need only send written notice to a lender “in order to exercise his right to rescind”; it is not necessary for the borrower to also sue for rescission to “exercise” the right of rescission. 574 U.S. ___, 135 S.Ct. 790, 793 (2016).”

Let us help you plan your narrative and strategy: 202-838-6345. Ask for a Consult.
Register now for Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar.
Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-

SeeLaw360: When to Consider Modifying TILA Rescission Procedures

Guide to understanding TILA Rescission.
  1. If someone is giving you advice or analysis and they don’t have a law degree and some experience practicing law, ignore them.
  2. READ THE STATUTE YOURSELF: 15 USC §1635.
  3. READ THE ONLY CASE THAT MATTERS: Jesinoski v Countrywide, decided by the highest court in the land — the Supreme Court of the United States. (SCOTUS)
  4. Be prepared for push back because that is working for the “bank side.” They are wrong and they know it but they are still convincing judges to ignore the wording of the statute and ignore the word of the boss of bosses (SCOTUS).
  5. A court decision that does not vacate the rescission is no decision at all. The courts have been careful to avoid this obvious issue. Since the rescission is effective when mailed (or delivered), that is the moment when the loan contract is canceled, and the note and mortgage rendered void. Any court that moves forward despite rescission is exceeding its jurisdictional authority as there is no longer subject matter jurisdiction.

There many shills and well intended people out there on the internet who have strong opinions about TILA Rescission. Nearly all of them have no law degree and no experience practicing law and lack any useful knowledge about court procedure. They should be ignored. Even the “bank” lawyers ignore them.

Their erroneous points come down to this:

  1. if the disclosures to the borrower were complete, then rescission doesn’t count
  2. it is up to the borrower to make TILA rescission effective.
  3. if the borrower cannot tender the principal back then the rescission is not effective.
  4. the TILA statute allows courts to change the order of duties of the “bank” side and the borrower side.

All four points are dead wrong because of due process. You can’t get relief unless you plead for it. So far the “bank” side has convinced judges they don’t need to file a pleading to get rid of an effective TILA Rescission. That is going to change.

The statute contains no presumptions that the disclosures are complete. In our legal system that means that a party with standing must bring an action that requests relief from rescission on the grounds that disclosure was complete. And they must bring such an action timely under the TILA Rescission Statute (i.e, within 20 days).

TILA rescission is effective at the moment of mailing or delivery by operation of law (i.e., the TILA Statute). The Supreme Court has already ruled unanimously that no lawsuit or other action is required by the borrower on the issue of rescission. Sending it means the loan contract is canceled and the note and mortgage are void.

No tender of money or property is required by the TILA statute in order to make rescission effective. This is not a theory. This is what the statute says and what the Supreme Court of the United States says. You can disagree with it all you want but the matter is legally settled.

The fact that the statute allows the court to reorder the statutory duties and obligations does not mean anyone asked the court to do so. If they did, the borrower would be entitled to due process — i.e., time to respond to the new order of things. Obviously that pleading is not going to submitted by the borrower. Just as obviously that pleading must be filed seeking relief from the rescission and allowing due process — i.e., litigation over whether the sending of the rescission was lawful but only in the context of a pleading filed by a party with standing.

And that is the point. There probably is no party with standing once you strip away the note and mortgage. The owner of the debt is most likely unknown. And that is where we are. Eventually SCOTUS will rule again on TILA Rescission. If the next ruling is consistent with their last ruling they will once again strike down the procedures and substance of court rulings that ignore the existence of the TILA rescission which was effective by operation of law, from the moment it was sent or delivered.

Here are some relevant quotes from the article cited above, written by an attorney working for a firm that represents banks:

Lenders at times find themselves assessing how to handle a claim by a borrower that he or she is entitled to rescind a loan under the Truth in Lending Act (TILA). Rescission under TILA is distinct from common law rescission due to one main difference: unlike common law rescission, which requires the rescinding party to tender any benefits received under the contract back to the other party as a condition precedent, TILA allows a borrower to exercise the right of rescission before such tender must occur. This can result in putting a lender on its heels, seeking to defend against the merits of a TILA rescission claim before even knowing if the borrower can fully effectuate the rescission by ultimately tendering the proceeds of the loan back to the lender.

However, it is possible to avoid this situation, even when operating within the framework of TILA. A strategically useful but often under-utilized tool for lenders in litigation involving rescission under TILA is to seek an order altering the statutorily prescribed procedures for rescission.

Overview of Rescission under TILA

Ordinarily, under section 1635(a) of TILA, a borrower has the unconditional right to rescind a loan for three days after the consummation of the transaction, delivery of notice that the borrower has a right to rescind or delivery of all material disclosures – whichever comes later.[1] Thus, if the lender provides the borrower with the requisite material disclosures upon closing the loan, a borrower’s right of rescission under TILA is extinguished after three days.

Assuming, however, that a lender does not provide a borrower with all necessary “material disclosures,”[2] section 1635(f) of TILA extends a borrower’s right of rescission to three years after the consummation of the transaction.[3]

While common law rescission requires a rescinding party to tender the benefits received pursuant to an agreement back to the other party as a condition precedent, TILA prescribes otherwise. Section 1635(b) states that when a borrower “exercises his right to rescind under subsection (a), he is not liable for any finance or other charge, and any security interest given by the obligor … becomes void upon such a rescission.”[4] Moreover, upon the exercise of rescission “under subsection (a)” of TILA, the lender is required to return any down payments provided by the borrower and “take any action necessary or appropriate to reflect the termination of any security interest created under the transaction” within 20 days of receiving a notice of rescission.[5] Only after a lender performs its obligations under subsection (b) is the borrower required to tender back any benefits received, such as loan proceeds.[6] Notably, however, both section 1635(b) and TILA’s implementing regulation, Regulation Z, provide that the procedures for rescission under TILA may be modified by court order.[7]

 

 

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