Rescission is a Test of Persistence

The “free house” mythology will have become reality. That is what happens when you break the laws governing deceptive and predatory lending.
… for those who don’t give up, the reward is substantial when TILA rescission is reluctantly recognized by the Courts as effective upon mailing.

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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The current judicial climate regarding TILA Rescission is that it doesn’t count — it means nothign, does nothing and cannot be sued to defeat foreclosure. But the signs are all there showing that the banks are bracing themselves for the real consequences of rescission in which borrowers receive the draconian remedy stated in the statute. For those borrowers who persist, there will ample reward despite the dark clouds that appear in the rear view window.
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On the horizon there are positive signs that the Congressional intent in the Truth in Lending Act will been enforced, to wit: “lenders” and “pretender lenders” will lose both their security interest in residential property and the right to collect any debt. The “free house” mythology will have become reality. That is what happens when you break the laws governing deceptive and predatory lending. And that is what happens when Congress decides what should happen to you when you break those laws.
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The current argument is that if the rescission was sent more than 3 years after consummation, it does not count as anything and the judges can ignore it.
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There is absolutely no doubt that judges want to adopt that  reasoning. But the three year limitation is not the only restriction. The same statute says that if the loan is a purchase money mortgage, TILA rescission is not an option. And there are other restrictions. The whole point of the Supreme Court decision was to say that the rescission WAS effective when it was mailed and not when a court ruled on whether it should have been sent in the first place. And there is a provision in the statute to allow an “injured party” (creditor?) to request a court to adjust the procedures that follow the mailing of the rescission.

So if the court was just saying that it was obvious that this was beyond the three year limitation. Or that it was obvious that this was a purchase money mortgage and that therefore the rescission was void or could be ignored, such a court would be reversing the Supreme Court decision — something no court in our country is empowered to do and is in fact prohibited from doing under the US Constitution. Obviously if the rescission was void there would be no limitation.

But the Supreme Court decision basically says that there is no such thing as a void rescission under the truth in lending act. Whether the borrower is wrong or right, it is effective when mailed and the “lender” (creditor) has 20 days to comply — or, to file an action to vacate the rescission because the borrower has unfairly canceled the loan transaction. The whole point was to make it easy on the borrower who felt that they have been the victim of deceptive or predatory lending. The wording of the statute was carefully crafted.

The obvious intention, which can be seen in many other cases that construe the statute, was to provide a mechanism by which a borrower could throw the burden to justify the practices leading up to the “loan” on to the “lenders.”

Both the statute and the Supreme Court decision make it clear that the borrower does not need any resources (except a pen, paper and a stamp) to trigger the procedures under the rescission statute in the truth in lending act.

The consequence of inaction by the “lenders” are very harsh and even draconian. The idea behind doing this was to force lenders into policing themselves, or upon failing to do that, suffer the loss of the security instrument and even the loss of the right to seek repayment. This legislation was a compromise. Some people wanted the creation of a new agency that would be the size of the Internal Revenue Service to review and police loan transactions. This distrust of the banks goes back to the 19060’s when the TILA legislation was initially enacted.

As I have posted on the blog, even lawyers who represent the banks agree in published articles that ignoring a notice of rescission could come a huge cost. Like me, they do not believe that the current environment will continue wherein Judges ignore the notice of rescission. If the bank lawyers agree with what I have been writing, it would seem that we should take this much more seriously in the expectation that the current climate will change with respect to the sending of a notice of rescission and the recording of that notice in the public records.

I agree that the current climate it is virtually entirely negative. And most people who have sent a notice of rescission and most people who have recorded a notice of rescission will probably never receive the remedy to which they are entitled. This may be because of lack of persistence, ignorance of the change in the judicial climate or because of limitations are upheld in going back in time to the moment of the sending of the notice of rescission. For those people who persist, I still believe that they will prevail in the end. And for those entities who who have identified themselves as creditors or lenders, they will be barred from enforcing the underlying debt for failure to respond to the notice of rescission.

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BOTTOM LINE: For those who persist on the issue of rescission, the ultimate remedy under TILA rescission is coming — mostly too late for those who have had their homes go through forced sales that were void because the loan transaction and the loan documents had been canceled. Many of them have “moved on” albeit hobbled by the bite of the banks in the era of false securitization and fictitious appraisals. But for those who don’t give up, the reward is substantial when TILA rescission is reluctantly recognized by the Courts as effective upon mailing.
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