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.
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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.
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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.

 

Tonight! Open Rebellion By Inferior Courts Threatens Authority of SCOTUS!

Lecturing Courts on Their Duty to Comply with SCOTUS Decisions

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While the Supreme Court of the United States (SCOTUS)  unanimously (9-0) put to bed all of the arguments against the effectiveness of a notice of rescission under 15 U.S.C. §1635, Jesinoski v. Countrywide Home Loans, 135 S. Ct. 790 (2015), all inferior and lower courts have been ruling the other way. Any dispute raised by anyone, even if they have no legal standing to do so, is taken as an excuse for the lower courts to impose conditions not included in the TILA Rescission statute and banned or barred by SCOTUS.

Join me tonight as we discuss what to do about rebellious judges and how to preserve your interest in real property despite a negative ruling from a trial judge, even if it is affirmed by an appellate court other than SCOTUS, the highest court in the land.

RESCISSION: It’s time for another slap on the wrist for state and federal judges.

50 years ago Congress decided to slap punitive measures on lenders who ignore or attempt to go around (table-funded loans) existing laws on required disclosures — instead of creating a super agency that would review every loan closing before it could be consummated. So it made the punishment so severe that only the stupidest lenders would attempt to violate Federal law. That worked for a while — until the era of securitization fail. (Adam Levitin’s term for illusion under the cloak of false securitization).

Draconian consequences happen when the “lender” violates these laws. They lose the loan, the debt (or part of it), their paper is worthless and the disgorgement of all money ever paid by borrower or received by anyone arising out of the origination of the loan.

But Judges have resisted following the law, leaving the “lenders” with the bounty of ill-gotten gains and no punishment because judges refuse to do it —even after they received a slap on their wrists by the unanimous SCOTUS decision in Jesinoski. Now they will be getting another slap — and it might not be just on the wrists, considering the sarcasm with which Scalia penned the Jesinoski opinion.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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TILA rescission is mainly a procedural statute under 15 USC §1635. Like Scalia said in the Jesinoski case it specifically states WHEN things happen. It also makes clear, just as the unanimous court in Jesinoski made clear that no further action was required — especially the incorrect decisions in thousands of cases where the judge said that the rescission under TILA is NOT effective until the borrower files a lawsuit. What is clear from the statute and the regulations and the SCOTUS decision is that rescission is effective on the date of notice, which is the date of mailing if the borrower uses US Mail.

There are several defenses that might seem likely to succeed but those defenses (1) must be filed by a creditor (the note and mortgage are void instruments the moment that rescission notice is sent) (2) hence the grounds for objection are not “defenses” but rather potential grounds to vacate a lawful instrument that has already taken effect. Whether the right to have sent the notice had expired, or whether the right to rescind the putative loan is not well-grounded because of other restrictions (e.g. purchase money mortgage) are all POTENTIAL grounds to vacate the rescission — as long as the suit to vacate the rescission is brought by a party with legal standing.

A party does not have legal standing if their only claim to standing is that they once held a note and mortgage that are now void. {NOTE: No party has ever filed an action to vacate the rescission because (1) they have chosen to ignore the rescission for more than 20 days and thus subject to the defense of statute of limitations to their petition to vacate and (2) they would be required to state the rescission was effective in order to get relief and (3) there is a very high probability that there is no formal creditor that was secured by the mortgage encumbrance of record. The latter point about no formal creditor would also mean that the apparent challenge to the rescission based upon the “purchase money mortgage” “exception” would fail.}

The premise to this discussion is that the so-called originator was not the source of funds. This in my opinion means that there never was consummation — despite all appearances to the contrary.

The borrower was induced to sign a note and mortgage settlement statements and acknowledgement of disclosures and right to rescind under the false premise that the originator was the lender, as stated on the note and mortgage.

The resulting execution of documents thus produced the following results: (1) the putative borrower has signed the “closing documents” and (2) the originator neither signs those documents nor lends any money. This results in an executory contract without consideration which means an unenforceable partially completed documentary trail that creates the illusion of a normal residential loan closing.

TILA Rescission is effective at the time that the borrowers notify any one of the players who represent themselves as being servicer, lender, assignee or holder. The effect of rescission is to cancel the loan contract and that in turn makes the note and mortgage void, not voidable. That the note and mortgage become void is expressly set forth in the authorized regulations (Reg Z) promulgated by the Federal Reserve and now the Consumer Financial Protection Board (CFPB). There is no lawsuit that is required or even possible for the putative borrower to file — i.e., there is no present controversy because the loan “contract” to the extent it exists has already been canceled and the note and mortgage have already been rendered void.

9th Circuit: Trustee is Not Debt Collector But Reverses Trial Court on Rescission

This decision could be a lot worse for the banks and servicers than it might appear. The Trustee for a valid REMIC trust that owns the debt (and doesn’t just control the paper) is clearly NOT a debt collector. But considering that no Trustee has EVER claimed to be a holder in due course and that the Trust is in fact a holographic image of an empty paper bag, they most certainly are debt collectors. The catch is you have to plead correctly and undermine the assumption that they own the debt.

But the 9th Circuit reversed the trial court on the issue of TILA rescission. As to TILA Rescission, the 9th Circuit was merely restating the obvious after the unanimous Jesinoski decision render by SCOTUS. “The Court noted that it recently held in Merritt v. Countrywide Fin. Corp., 759 F.3d 1023, 1032-33 (9th Cir. 2014), that a mortgagor need not allege the ability to repay the loan in order to state a rescission claim under TILA. However, this was the basis of the trial court’s dismissal of the TILA claim.”

Apparently restating the obvious is what is necessary to get trial courts to fall in line with the fact that rescission is effective when mailed and is legally a perfect defense to foreclosure. But trial courts keeping adding caveats that are not in the statute even after the Supreme Court made it crystal clear that trial courts had no such option. The statute is clear on its face. Trial courts have no right to re-write the statute as they think it should have been written.

The failure of the banks to contest the rescission within the 20 day window is not the fault of the homeowner. And the inability of the banks to file such an action to vacate the rescission is a problem for the banks who have nothing to lose anyway in most of the foreclosures.

As for the three year “expiration” or “statute of limitations” there is still a simple answer. Once you mail the rescission it is effective. Once you record it in the public records, the whole world knows that the mortgage or deed of trust is void. Once you mail it using US Postal Service the parties claiming through the note and mortgage or deed of trust have no further claim unless and until they either perform the three duties specified by statute or they file an action to vacate the rescission.THAT they won’t do because they are not really the owners of the debt.

So THEY have a choice — either go along with the rescission or file something in court contesting the rescission. And the fact that they can’t file anything is testimony that they are not the owners of the debt and do not have any authority to pursue the claim on behalf of the owner(s) of the debt. If that were not true they would gleefully produce the proof to establish the identity of the creditor and their authority to pursue claims on behalf of that creditor. And so far I have seen no lawsuit or even a motion that seeks to vacate the TILA rescission. Foreclosures that proceeded despite the rescission and without the ruling by the court that the rescission was void ab initio are themselves void as of the date of mailing the rescission notice.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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see http://www.insidearm.com/news/00042303-9th-cir-holds-foreclosure-trustee-not-fdc/

The Money Trail: Does anyone meet the definition of a creditor?

WE HAVE REVAMPED OUR SERVICE OFFERINGS TO MEET THE REQUESTS OF LAWYERS AND HOMEOWNERS. This is not an offer for legal representation. In order to make it easier to serve you and get better results please take a moment to fill out our FREE registration form https://fs20.formsite.com/ngarfield/form271773666/index.html?1453992450583 
Our services consist mainly of the following:
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THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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I speak to people across the country. As I discuss the issues that get increasingly complex, we reach areas in which there are differences of opinion which is why you need to consult with someone who is licensed in your state and who has done the heavy research (no skimming allowed). The issue is what payments should be credited to whom. And the answer really is you should be asking an accountant and a lawyer. This is why my team is reaching out to accountants and auditors to round out what is needed in cases.

The problem is that this is a grey area. Payments made to the beneficiaries of the trust were never intended to discharge the debt from the “borrower.” That’s obvious. But payments were made on account of this debt. So we go back to the law of presumptions. If the creditor receives a payment and the payment is on account of a particular debt due from a particular debtor, then it is discharged to the extent of the payment — regardless of the stated “intent” of the payor after the fact. So servicer advances definitely fall into that category. But in addition, if the entire debt has been discharged by the replacement of the obligation with another obligation from another party, then you have similar issues.

So first of all, the beneficiaries agreed to take payments from the REMIC Trust — not the “borrowers”. There is no relationship between the beneficiaries of a trust and any single “borrower” or group of “borrowers.” The REMIC Trust doesn’t pay the beneficiaries despite the paperwork to the contrary. The REMIC Trust is inactive with no assets, bank accounts, business activity etc.

It is the Master Servicer that pays the beneficiaries. And the Master Servicer makes those payments regardless of whether it has received payments from the beneficiaries. (servicer advances). The note and mortgage name a specific payee that is neither the Trust (or Trustee) nor the Master Servicer. So the first real legal question that I raised back in 2007 was the issue of who was the owner of the debt or the holder in due course?

The debt arose when the “borrower” accepted the benefits of funding that came from an unidentified source. It is presumed not to be a gift. The “borrower” has signed a note and mortgage in favor of a party that never loaned him any money — hence there is no loan contract and the signed note and mortgage should have been destroyed or released back to the “borrower.” Such a loan is table-funded and is almost certainly “predatory per se” as described in REG Z.

Since there is no privity between the “originator” and the Trust or Master Servicer the loan documents cannot be said to be useful, much less enforceable. Those documents should be considered void, not voidable, when the payee and mortgagee failed to fund the loan. The repeated transfers of the loan documents without anyone ever paying for them clearly means that the consideration at the base “closing” was absent. Hence there is no consideration at either the origination or acquisition of the loan documents. Acquisition of the loan documents does not mean acquisition of the loan. If there was no valid loan contract or there is no valid loan contract (rescission) executing endorsements, assignments and powers of attorney are meaningless.

So there is a serious question about whether there is a legal creditor involved in any of these loans. There are parties with equitable and legal claims, but not with respect to the loan documents that should have been shredded at the very beginning. All those claims are unsecured. And the foreclosures, in truth, are for the benefit of parties who have no relationship with the actual money that was used to the benefit of the alleged “borrower” who is looking more and more like a party who is not a borrower but who could be debtor if there is anyone answering to the description of “creditor.” No party in this scenario seems to answer to that description.

And THAT would explain why NO PARTY steps forward to challenge rescissions as a creditor and instead they attempt to retain their status of having apparent “Standing” and attack the rescission through arguments that require the court to interpret the TILA Rescission Statute, 15 USC §1635. But the US Supreme Court has already declared that it is the law of the land that this statute is not subject to interpretation by the courts because it is clear on its face. So such parties are seeking relief they didn’t ask for (vacating the rescission) using the void note and void mortgage as their basis for standing.

Thus without someone filing an equitable claim showing that their money is tied up in the money given to the “borrower” there does not seem to be a creditor at law.

Add that to the fact that most of the “Trusts” were resecuritized by more empty trusts and you have the original beneficiaries completely out of the picture as to any particular loan and the so-called REMIC Trust being completely out of the picture with respect to the loan or loan documents that were originated, even if they were not consummated.

Federal and State Judges Think they Can Overrule the US Supreme Court

Jeff Barnes has put into words what I have been thinking about for several weeks. Barnes is a lawyer who has concentrated on foreclosure defense and has won many cases across the country. He is a good lawyer, which means that he understands how to get traction. So when he complains about Judges, people ought to sit up and take notice.

I think he has hit the nail on the head:

DISTURBING NEWS: CERTAIN JUDGES CLAIM THAT SUPREME COURT DECISIONS ARE NOT BINDING ON THEM
Posted on October 22, 2015

October 22, 2015

In recent months, we have been advised by homeowners in different states that certain Judges in those states have taken the position that decisions by either the Supreme Court of that state or decisions of the United States Supreme Court are not binding on them. Taking such a position violates the Judge’s duties as an officer of the Court, erodes confidence in the judiciary, and renders the public more suspicious of the court system than it already is.

A Judge is duty-bound to follow the “law of the land” whether they agree with it or not. A Judge cannot impose his or her own personal views as to whether the state or US Supreme Court made the correct decision on an issue: when a state Supreme Court or the US Supreme Court decides a specific legal issue, the law is established and Judges must follow it. State supreme courts (other than as so denominated in New York, as the “Supreme Court” is a lower level court in NY) and the US Supreme Court are the highest appellate courts, and their decisions establish “the law of the land”: a state Supreme Court decision establishes the law for that State, while the US Supreme Court establishes the law for the country.

In our experience, the overwhelming majority of Judges are fair, honest, considerate of the position of both sides, and take the law into account when rendering their decisions. The examples below are isolated, but the fact that two such examples have been recently brought to our attention is disturbing.

One of the cases which we were advised of concerned the use of Mr. Barnes’ successful appeal of the MERS issues in the Supreme Court of Montana, which by its decision established that MERS was not the “beneficiary” of a Deed of Trust despite claiming to be so. Although this decision was issued two years ago, the homeowner advised that when that decision was presented to a local Montana county Judge, the Judge took the position that he was not bound by the Supreme Court of Montana’s decision.

Another homeowner advised us that in a prior foreclosure-related hearing before a state court Judge that the Judge told the homeowner that he was not bound by decisions of the United States Supreme Court.

This contempt and disrespect for state Supreme Courts and the US Supreme Court is beyond disconcerting.  There is no reason why homeowners facing foreclosure should be treated adversely when a decision of a state or the US Supreme Court is in favor of them and presented to the Judge. “And Justice for All” means just that: it does not mean “except no justice for homeowners in foreclosure.”

Jeff Barnes, Esq.

see http://foreclosuredefensenationwide.com/?p=612

We see it in many cases involving rescission. It is isn’t that the Judge doesn’t understand. As pointed out by Justice Scalia in the Jesinoski decision the wording of the Federal statute on TILA Rescission could not be more clear and could not be less susceptible to judicial construction. In that unanimous decision of the US Supreme Court in January, 2015, the Court said that like it or not, notice of rescission is effective by operation of law when mailed and nothing else is required to make it effective. The court specifically said that common law rescission is different than the statutory rescission in the Truth in Lending Act.

In fact, the court was perplexed as to how or why any judge would have found otherwise. Thousands of Judges in hundreds of thousands of cases had refused to apply the plain wording of the TILA statute 15 USC 1635. Then came Jesinoski in which the Supreme court said there is no distinction between disputed and undisputed rescissions — they are both effective upon mailing by operation of law. That became the law of the land.

And yet, trial judges and even appellate court are again leaning toward NOT upholding the law and NOT forcing the banks to comply with statute. Many more are “reserving ruling” denying the homeowner remedies that are readily available through TILA Rescission. These courts don’t like TILA rescission. They don’t want to punish the banks for bad behavior. But that is what Congress wanted when they passed TILA 50 years ago.

As many Judges have said in their own written findings and opinions — if you don’t like the law then change it; don’t come to a court of law and expect a judge to change the law. Whether this will lead to some sort of discipline for Judges or simply make them vulnerable to being removed from the bench is unknown. What I do know is that when ordinary people come to realize that the foreclosure crisis could end now, thus stimulating our limping economy, they will likely vote accordingly.

Any Judge who refuses to follow the law as it is written and passed by a legislative body and signed into law by the executive branch (the {President or the Governor) has no right to be on the bench and should resign if his “moral compass” makes following the law so onerous that he or she cannot uphold the laws. In the absence of resignation, then momentum will likely rise and push the agenda of those people who want such judges removed involuntarily. Those Judges are acting against the most basic thrust of our society — that we are a nation of laws and not of men. We have a very well defined process of passing laws and that does not include any one person (on or off the bench) deciding on their own the way the law should read.

Clerks Illegally Bowing to Bank Pressure: Recording the Notice of Interest in Real Property with the Notice of Rescission attached.

For more information please call 954-495-9867 or 520-405-1688.

This is for general information only and contains my general opinions on the subject NOBODY should use this article as a substitute from advance from an attorney licensed in the jurisdiction in which the subject property is located.

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The Banks are at it again — using their political power to influence officers of State and County government into refusing to perform ministerial duties required by State statutes.
The Clerks are rejecting any filing of the notice of rescission but some are getting through. It is a good idea to send it in by mail rather than show up in person. It should be a Notice of Interest in Real Property. The letter should appear to be from either a lawyer or title agent. If it looks like a homeowner they will inspect it. If it looks like business as usual then they will ordinarily process it without any scrutiny.

A number of people are gearing up to sue the Clerk for a Writ of Mandamus in order to force the Clerk to accept the recording of the Notice of Interest in Real Property with the Notice of Rescission attached. Before suing, the matter should, in my opinion, be escalated briefly, at least, to the County attorney and give him/her a chance to correct the situation. Any document that is properly filled out with formalities that are required by statute MUST be recorded by the Clerk. The Clerk does not have discretion as to what documents they record and no discretion as to what documents that can’t record.

There is also the possibility of escalating to the Florida Attorney General and the US Attorney General

In the event that the attorneys general or County attorneys ignore or delay it, then the Petition for Writ of Mandamus is probably a viable option. Forms for Writ of Mandamus are online but nobody should do this unless they have an attorney licensed in the correct jurisdiction. The complaint should (my opinion) [comments invited]

  1.  Establish jurisdiction in the State or Federal Court (I would say Federal at first glance), to wit: that TILA Rescission is a Federal Law and that the Clerk is refusing to allow implementation of the rights of the borrower under Federal Law.
  2. The complaint should NOT ask the Court to enter an order that says that the rescission was effective — that is not the proper subject for an issue between the property owner and the clerk.
  3. Establish jurisdiction and description of the parties — the Clerk and the party seeking to record, their residence etc.
  4. The State Law requiring the Clerk to record documents should be quoted verbatim
  5. The allegation should be made that any party with an interest in the real property has the right to record such interest and that the Clerk has not been delegated or authorized to exercise discretion as to whether to accept a properly drafted and executed Notice of Interest in Real Property.
  6. The allegation should be made that the Petitioner is a person, sui juris, with an interest in the real property, to wit: the Petitioner owns the property described on Exhibit “A” legal description and street address).
  7. The allegation should be made that the Petitioner rescinded the mortgage (and note) at page ____ of OR Book _____, as per the notice of rescission attached as Exhibit “B”.
  8. The allegation should be made that the rescission is effective by operation of law, and does not require any judicial determination of whether the rescission was effective or not. 15 USC § 1635 et seq. [Maybe cite Jesinoski]
  9. The allegation should be made that the effect of the rescission is to void the mortgage (and note), by operation of law.
  10. The allegation should be made that under the TILA Rescission statutes, the creditor is required to file a release of the encumbrance, but has failed or refused to do so and has not attempted to vacate the rescission within the time window provided by law (20 days from receipt of the rescission).
  11. The allegation should be made that the said mortgage continues to create the illusion of an encumbrance in the chain of title, thus affecting (preventing) the ability of the Petitioner to sell or refinance the property.
  12. The allegation should be made that in the absence of recording the Notice of Interest in Real Property, with the Notice of rescission attached, the mortgage would remain on record with no document releasing the encumbrance as required by Federal law.
  13. The allegation should be made that the Petitioner properly executed, witnessed and notarized a Notice of Interest in Real Property dated the __ day of ___, 201_ and presented same on the ___ day of ____, 201_ to the Respondent for recording by the Respondent. (see attached Exhibit “C”)
  14. The allegation should be made that the Respondent unlawfully refused to accept the aforestated Notice of Interest in Real Property for recording without any right, justification or excuse.
  15. The allegation should be made that Petitioner was neither granted nor delegated any authority to exercise discretion in the recording of a properly executed, witnessed and notarized Interest in real property.
  16. The demand clause should be something like “Wherefore, Petitioner prays this Honorable Court will enter an order commanding the Clerk of _______ County to accept the Notice of Interest in Real Property with its exhibits and, upon payment of the required fees, record same in the Public Records of ____ County.”
  17. Make sure it is served correctly. Expect the banks to mount some challenge to the suit. But there is nothing that they can say that is legally controlling. All they can do is not like it. If they wanted to seek a court order vacating the rescission they should have done so within the 20 days.

 

But more importantly it is none of their business — if the Clerk is mandated to record ANY document that fulfills statutory requirements, then the document gets recorded — just like the lis pendens in a foreclosure action — the issue of whether the lis pendens or the lawsuit were wrongfully filed is up to the parties and the courts to fight it out — it is NEVER up to the Clerk. Any argument to the contrary would require an administrative hearing apparatus that does not exist.

Lawyers for Banks: Ignore Rescission at Your Peril

I have received a copy of the comments made at a very recent seminar for lawyers who represent the servicers, trustees and the alleged trusts. While they fail to commit to writing the issues regarding standing to challenge a rescission, the rest of it is pretty much spot on. Their message is that ignoring or even rejecting the rescission by a letter is not a good idea and that anyone who does so, is acting at their own peril.

They also point out, as have others who have been writing on the subject for the last couple of weeks, that the rescission law, as it now stands, makes it perilous to trade in consumer loans, especially mortgage loans.

In short, the other side has come to the same conclusion that I came to in 2007. They don’t like it, but they understand what the TILA rescission statutes say about procedure, and that a unanimous Supreme Court in Jesinoski v Countrywide, essentially puts every mortgage loan “at risk” — an admission with enormous implications. They are not out of strategies to change things but they recognize they have an uphill battle.

The point about standing is, in my opinion, the most important by far. The TILA rescission is effective upon mailing by operation of law. It is a specific statutory remedy with its own procedures, although there is a cryptic provision in there that allows a judge to change the procedures. But in order to do anything about the rescission once it is effective, which means that the note and mortgage are void, the servicers et al must come up with a real creditor — without which they have nobody who has standing. This puts them on the grill. They have been fighting successfully to keep this information from the borrowers under claims of privacy and confidentiality.

Most lawyers are contesting these claims in a timid way. I ask the fundamental question: why not give the name of the real creditor who could show proof of payment and vault the claim to that of a holder in due course, instead of a holder or attorney in fact? I have represented banks in foreclosure actions. If these defenses were thrown at me I would be proactive — I’d show the creditor, show the proof of payment, and shut the borrower down on all of his defenses. Case over. But the truth is that there is no one party or even one single group that can be identified as the creditor, with or without the empty trusts whose names are used to create the illusion of negotiation of instruments under the UCC.

My sources and my understanding of what they did prevents them from even KNOWING the name of the creditor, which of course opens the door for the servicers to keep the money instead of passing it on to a defined creditor. How can this be? We know the homeowner got the benefit of money being put on the table. How hard can it be to determine whose money was put on the table?

The answer is simple even if it is incredible: they cannot identify the name of the creditor becasue (a) they don’t know and (b) because they have no way of figuring it out. At any one time the huge slush funds controlled by the Investment Banker acting as Master servicer for a nonexistent trust (no res), had money going in and out of it in thousands of ways per minute. At whatever the time was that funding traveled to the closing agent through a sham conduit, the banks simply don’t know which investors had money in that fund and what interest any of the investors had in a particular loan. It is like putting different fruits in a blender and setting it on puree. If someone now asks to have the banana that went into the blender, it is impossible to do.

THAT is the problem with standing in foreclosure actions and the same problem exists for challenging rescissions. But in rescission the issue is laid bare — they can’t rely on the void note and void mortgage for standing. They have to show the real transaction.

BIAS IN THE COURTS: UCC and TILA REVIEW

Our legal history has many examples of enormous errors committed by the Courts that were obvious to some but justified by many. The result is usually mayhem. The cause is a bias toward some underlying fact that was untrue at the time. Some examples include
  1.  the infamous Dred Scott decision where the Supreme Court ruled that a black man is not a person within the meaning of the constitution and therefore could not sue to protect his rights because he was not a citizen by virtue of the FACT that his ancestors had been brought to America as slaves. The underlying bias was considered axiomatically true: that “negroes” were fundamentally subhuman. It took a civil war that took 500,000 casualties and a constitutional amendment to change the results of that decision. We are still dealing with lingering thoughts about whether the color of one’s skin is in any way related to our status as humans, persons and citizens.
  2. the internment of Japanese Americans during World War II. The Supreme Court upheld that decision on the basis of national security. The underlying bias was considered axiomatically true: that people of Japanese descent would have loyalty to the Empire of Japan and not the United States. People of German descent were not interred, probably because they looked more like other Americans. As the war progressed and the military realized that people of Japanese descent were resources rather than enemies, the government came to realize that acknowledging these people as citizens with civil rights was more important than the perception of a nonexistent threat to national security. Americans of Japanese descent proved invaluable in the war effort against Japan.
  3. the Citizens United decision in which the Supreme Court gave the management of corporations a “Second vote” in the court of public opinion. The underlying bias was considered axiomatically true: that entities created on paper were no less important than the rights of real people as citizens. The additional underlying bias was that corporations are better than people.
  4. the hundreds of thousands of decisions from thousands of courts that relied on the fictitious power of the court to rewrite legislation that Judge(s) didn’t like. A current perfect example was reading common law (inferior, legally speaking) precedent to override express statutory procedures for the exercise and effect of statutory rescission under the Federal Truth in Lending Act. Over many years and many courts at the trial and appellate level the Judges didn’t like TILA rescission so they changed the wording of the statute to mean that common law procedures and principles apply — thus requiring the homeowner to file suit in order to make rescission effective, and requiring the tender of money or property to even have standing to rescind. This was contrary to the express provisions of the TILA rescission statute. Approximately 8 million+ people were displaced from their homes because of those decisions and the property records of thousands of counties have been forever debauched, likely requiring some legislative action to clear title on some 80+ million transactions involving tens of trillions of dollars. The underlying bias was considered axiomatically true: that the legislature could not have meant that individuals have as much power as big corporation and they should not have such power. Then the short Supreme Court decision from a unanimous court in Jesinoski v Countrywide made the correction, effectively overturning hundreds of thousands of incorrect decisions. A court may not interpret a statute that is clear on its face. A court may not MAKE the law.
  5. the millions of foreclosures that have been allowed on the premise that the “holder” of a note should get the same treatment as a “holder in due course.” More than 16 million people have been displaced from their homes as a result of an underlying bias that was and often remains axiomatically true: decisions in favor of homeowners would give them a free house and decisions that allow foreclosure protect legitimate creditors. Both “axioms” are as completely wrong as the decisions about TILA Rescission.
It is the last item that I address in this article. A holder in due course is allowed to both plead and prove only the elements of Article 3 of the UCC. Article 3 of the UCC states that a party who purchases negotiable paper in good faith without knowledge of the maker’s defenses and before the terms are breached is presumed to be entitled to relief upon making their prima facie case — which are the elements already listed here. Even if there were irregularities or even fraud at the time of the origination of the loan or at a later time but before the HDC purchased the paper, the HDC will get judgment for the relief demanded. A “holder” (on the other hand) comes in many flavors under Article 3 but they all have one thing in common: they are not holders in due course.
The fundamental error of the courts has been to treat the “holder” as a “holder in due course” at the time of trial. It is true that the holder may survive a motion to dismiss merely by alleging that it is a holder — but fundamental error is being committed at trial where the holder must prove its underlying prima facie case. It should be noted that the requirement of consideration is repeated in Article 9 where it states that a security instrument must be purchased by a successor not merely transferred. So regardless of whether one is proceeding under Article 3 or Article 9, no foreclosure can be allowed without paying real money to a party who actually owned the mortgage. The Courts universally have ignored these provisions under the bias that it is axiomatically true that the party seeking to enforce the paper is so sophisticated and trustworthy that their mere request for relief should result in the relief demanded. This bias is “supported” by an additional bias: that failure to enforce such documents would undermine the entire economy of the country — a policy decision that is not within the province of the courts. And deeper still the bias is that it is axiomatically true that the paper would not exist without the actual existence of monetary transactions for origination and transfer of the paper. These “axioms” are not true.
As a result, courts have regularly rubber-stamped the extreme equitable remedy of foreclosure in favor of a party who has no financial interest in the alleged paper, nor any risk of loss or actual loss. The foreclosures are part of a scheme to make money at the expense of the actual people who are losing money. If this was not true, there would have been thousands of instances in which the “holder” presented the money trail that supposedly was the foundation for the paper that was executed and delivered, destroyed or lost. They never do. If they did, the volume of litigated foreclosure cases would drop to a drizzle. And these parties fight successfully to avoid not only the burden of proof but even the ability of the homeowner to inquire (discovery) about the “transactions” about which the paper is referring — either at origination or in purported transfers. Backdating assignments and endorsements would be unnecessary. “Robo-signing” would also be unnecessary. And the constant flux of new servicer and new trustees would also be unnecessary. Many of these events consist of illegal acts that are routinely ignored by the courts for reasons of bias rather than judicial interpretation.
A holder in due course proves their prima facie case by
a) proffering a witness with personal knowledge
b) proffering testimony that allows the commercial paper to be admitted as evidence (the note). This evidence need only be to the effect that the witness, or his company, physically has possession of the original note and presents it in court.
c) proffering testimony and records showing that the paper (the note) was purchased for good and valuable consideration by the party seeking to enforce it. This means showing proof of payment for the paper like a wire transfer receipt or a cancelled check.
d) proffering testimony and records showing that the mortgage, which is not a negotiable instrument, was purchased withe the note.
e) proffering testimony and records that the transactions were real and in good faith
f) proffering testimony that the purchaser of the paper had no knowledge of the maker’s defenses
g) proffering testimony that no default existed at the time of purchase of the paper.
Because of bias, the Courts, just as they did with TILA rescission, have mostly committed fundamental error by allowing to alleged “holders” a lesser standard of proof than the party who is legitimately in a superior position of being a holder in due course. It starts with a correct decision denying the homeowner’s motion to dismiss but ends up in fundamental error when the court “forgets” that the enforcing party has a factual case to prove beyond mere possession of an instrument they say is the original note.
The holder, in contrast to the holder in due course, is not entitled to any such presumptions at trial, except that they hold with rights to enforce. They don’t hold with automatic rights to win the case however.
A holder proves its prima facie case by
a) proffering a witness with personal knowledge
b) proffering testimony and records that allow the commercial paper to be admitted as evidence (the note). This evidence need only be to the effect that the witness, or his company, physically has possession of the original note and presents it in court.
c) proffering testimony and evidence as to the chain of custody of the paper the party seeks to enforce.
d) proffering testimony and records together with proof of payment of the original transaction (a requirement generally ignored by the courts). This means proof that the original party in the “chain” relied upon by the party seeking to enforce actually funded the alleged “loan” with funds of its own or for which it is responsible (e.g., a real warehouse credit arrangements where the originator bears the risk of loss).
e) proffering testimony and records showing that the paper (note) was purchased for good and valuable consideration by the creditor on whose behalf the party is seeking to enforce it. This means showing proof of payment for the paper like a wire transfer receipt or a cancelled check.
f) proffering testimony and records showing that the mortgage was also purchased by the creditor for good and valuable consideration. This means showing proof of payment for the paper like a wire transfer receipt or a cancelled check.
g) proffering testimony and records that the transactions was real and in good faith
h) proffering testimony that no default existed at the time of purchase of the paper. Otherwise, it wouldn’t be commercial paper and the party seeking to enforce would need to allege and prove  its standing and its prima facie case without benefit of the note or mortgage.
It should be added here that the non-judicial foreclosure states essentially make it even easier for an unrelated party to force the sale of property. Those statutory procedures are wrongly applied leaving the burden of proof as to UCC rights to enforce squarely on the homeowner who in most cases is not even a “borrower” in the technical sense. Such states are allowing parties to obtain a forced sale of property in cases where they would not or should not prevail in a judicial foreclosure. The reason is simple: the procedure for realignment of the parties has been ignored. When a homeowner files an action against the “new trustee” (substituted by virtue of the self proclaimed and unverified status of a third party beneficiary under the note and mortgage), the homeowner is somehow seen as the party who must prove that the prima facie case is untrue (giving the holder the rights of a holder in due course); the homeowner is being required to defend a case that was never filed or alleged. Instead of immediately shifting the burden of proof to the only party that says it has the rights and paperwork to justify the forced sale. This is an unconstitutional aberration of the rights of due process. The analogy would be that a defendant accused of murder must prove he did not commit the crime before the State had any burden to accuse the defendant or put on evidence. Realignment of the parties would comply with the constitution without changing the non-judicial statutes. It would require the challenged party to prove it should be allowed to enforce the forced sale of the property. Any other interpretation requires the the homeowner to disprove a case not yet alleged, much less proven in a prima facie case.

Recording the Rescission

Livinglies Team Services: see GTC HONORS Services, Books and Products

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For more information please email us at gtchonors.llblog@gmail.com or call us at 954-495-9867 or 520-405-1688

This is not legal advice on your case. Consult a lawyer who is licensed in the jurisdiction in which the transaction and /or property is located.

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LAWYERS AND JUDGES TAKE NOTE: “Section 1635(a) nowhere suggests a distinction between disputed and undisputed rescissions, much less that a lawsuit would be required for the latter.” Justice Scalia, Jesinoski v Countrywide. [EDITOR’S NOTE: The only possible meaning to this is that the homeowner can use a letter and then, if it is disputed, it must BE BROUGHT to A COURT OF COMPETENT JURISDICTION to vacate the rescission. An order that denies a motion to dismiss for lack of jurisdiction based upon the fact that the rescission was sent does nothing to change the fact that the rescission was effective as of the date it was mailed and still is effective by operation of law. The only way it can be removed is with another operation of law that is properly brought by the real party in interest. An order vacating the rescission without any pleading requesting that relief does absolutely nothing except assure that the judge’s order will be reversed. And if the rescission is recorded before the foreclosure judgment (judicial states) or sale (nonjudicial states) the judgment and sale are void respectively.]
 Every state has its own forms and requirements and fees for filing anything in the public records. It is wise to record any rescission that was sent regardless of the timing, in my opinion, but that would be subject to advice from a lawyer in your jurisdiction. Litigation is expected on numerous issues after the nonjudicial cancellation of the loan contract, note and mortgage. Here are some of the issues that might be presented when the rescission is sent and/or recorded:
  1. Since the rescission is effective upon mailing, the loan contract, note, and mortgage are void (not voidable). This means in states whose recording statutes are either “notice” or “hybrid”, anything that transpired after that in which the note or mortgage were used for collection, enforcement or foreclosure are also void. Title would then stay with the homeowner if the homeowner does not know that he/she still has title. Any deed issued in foreclosure would accordingly be a wild deed.
  2. If the state recording statutes are purely “race” then if the notice of rescission was not recorded before the foreclosure, the foreclosure sale and deed might well be binding even if it was “fraudulent” or otherwise wrong or illegal.
  3. State statutes of limitation might effect (limit) the ability to collect damages for trespass or wrongful foreclosure, breach of contract or other common law or statutory remedies. The FDCPA might help depending upon how long it has been since the notice of rescission was sent.
  4. If the notice of rescission is sent and recorded before the foreclosure judgment in judicial states or before the sale in nonjudicial states, then in all states it would appear that the the loan contract, note and mortgage were rendered void at the moment of mailing, by operation of law, which is the same thing as a judge’s order declaring the note and mortgage void.
  5. There is no provision in the TILA rescission statutes that allows any lender, creditor or servicer to contest the rescission with a letter. That power is only given to the borrower. Their subsequent action in proceeding to foreclosure “judgment” should be subject to being vacated because they were obtaining relief based upon a void instrument — the mortgage (and the note).
  6. In a strictly “notice” state, as long as they knew about the rescission the foreclosure is automatically wrongful and actionable, in my opinion. “Notice” might need to include a third party purchaser, who often does know of the existence of the borrower’s defenses and does know about the rescission. The issue here is that at the time of the rescission it was widely and wrongly believed that a lawsuit was necessary to make the rescission effective (i.e., the borrower had to plead and prove a case for rescission under common law rules). TILA rescission is exactly the opposite. So everyone, including appellate courts (other than the Supreme Court of the United States) was proceeding under the wrong assumption.
  7. The action following rescission should not be to establish the effectiveness of the rescission. That is already complete by operation of law.
  8. The action could be enforcement of the rescission if filed within one year of the date of mailing of the rescission. At the end of that period, the borrower is barred from filing an enforcement action and the “lender” assuming they have done nothing, is barred from claiming the debt.
  9. After the expiration of one year from date of mailing of the notice of rescission, the action would be simply for quiet title and perhaps trespass (see above). This action could be brought during the one year period either in lieu of enforcement or with enforcement. An action for injunction preventing the banks, servicers or trustees from attempting to use the void note and mortgage might also be advisable.
  10. If an action for enforcement is brought during the one year period it is important not to plead as though the rescission might not be effective. it is a fact. See Jesinoski. The relief sought is NOT to have a declaration from the court that the rescission was valid. The pleading must assume that it is already legally binding as per 15 USC 1635 et seq and that the only issues remaining are the duties of the “lender” who should not be described as a lender but only someone who has asserted the rights of a lender, holder, mortgagee, beneficiary or servicer or trustee.
  11. An attack on standing is appropriate at every step when the “servicer” or Lender” seeks to challenge the rescission without filing an actual lawsuit or pleading. The banking side of the equation has NOT been granted the power to contest with anything other than some other recognized “operation of law.” The only such exercise would be a lawsuit seeking to vacate the rescission on the grounds that it was wrongful or deficient in some way.
  12. STANDING: This is where most cases will be won or lost. Since the note and mortgage were rendered VOID as of the date of mailing, the party seeking to vacate the rescission would need to plead that they are injured by the rescission, to wit: they are going to lose the ability to enforce a legally binding debt. And they would need to establish standing WITHOUT the note and mortgage, which are void (see above).
  13. Thus the pleader would need to establish themselves as a party who either funded the loan and is still the creditor, or who has purchased the loan from someone who owned the loan because they funded it. This we believe is going to be impossible for the lenders because their money trail leads straight to investors whose money was used improperly and whose money was never paid to the trust that issued the mortgage backed securities. The investors were left out in the cold without a mortgage backed security issued by any entity that had mortgages, without a note and without a mortgage. That leaves them with empty promises from the “Servicer” and no enforcement mechanism to collect from either the borrower or the investment bank. None of that is the fault of the borrower.

The Florida Statute below shows the intent of recording such notices. Using the form that is already approved by statute makes recording a lot easier:

712.05 Effect of filing notice.

(1) A person claiming an interest in land or a homeowners’ association desiring to preserve a covenant or restriction may preserve and protect the same from extinguishment by the operation of this act by filing for record, during the 30-year period immediately following the effective date of the root of title, a written notice in accordance with this chapter. Such notice preserves such claim of right or such covenant or restriction or portion of such covenant or restriction for up to 30 years after filing the notice unless the notice is filed again as required in this chapter. A person’s disability or lack of knowledge of any kind may not delay the commencement of or suspend the running of the 30-year period. Such notice may be filed for record by the claimant or by any other person acting on behalf of a claimant who is:

(a) Under a disability;
(b) Unable to assert a claim on his or her behalf; or
(c) One of a class, but whose identity cannot be established or is uncertain at the time of filing such notice of claim for record.

Such notice may be filed by a homeowners’ association only if the preservation of such covenant or restriction or portion of such covenant or restriction is approved by at least two-thirds of the members of the board of directors of an incorporated homeowners’ association at a meeting for which a notice, stating the meeting’s time and place and containing the statement of marketable title action described in s. 712.06(1)(b), was mailed or hand delivered to members of the homeowners’ association at least 7 days before such meeting. The homeowners’ association or clerk of the circuit court is not required to provide additional notice pursuant to s. 712.06(3). The preceding sentence is intended to clarify existing law.

(2) It shall not be necessary for the owner of the marketable record title, as herein defined, to file a notice to protect his or her marketable record title.
History.s. 5, ch. 63-133; s. 798, ch. 97-102; s. 3, ch. 97-202; s. 1, ch. 2003-79; s. 7, ch. 2014-133.

Bank Lawyer’s Seminar: Rescission Changes Everything

QUOTE FROM SEMINAR: “The bottom Line: Until 3 years have elapsed, a mortgage is only as secure as the lender’s proof of compliance with TILA.”

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For more information please call 954-495-9867 or 520-405-1688

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see tila-right-of-recission-041415

From one of my readers, I received the Power Point Presentation given by a law firm representing the banks. It confirms everything I have been saying. It also offers a glimpse of some of the ways they will try to wiggle out of it. Suffice it to say that in addition to losing far more cases than what has been previously been reported, the banks are now stuck with a problem that they can’t fix, to wit: when they try to “securitize” a pool of new loans they cannot say that the deal is done because the borrower could assert a right to rescind triggering a nightmare of problems for all the parties starting with origination. The appetite for mortgage backed securities is almost certainly going to decline or vanish completely.

Key points from seminar: (You would think I was the presenter!)

  1. Mailing the notice is sufficient to cancel the loan, note and mortgage.
  2. No tender of money or property is required
  3. It is risky for lender to ignore notice of rescission
  4. Rescission is really a borrower’s remorse remedy
  5. Bringing suit immediately is the only way to end the issue — but only if you have absolute proof of the loan and the disclosures conforming to TILA. [Editor’s note: any failure to disclose compensation off the books of the “closing” would probably be evidence of non-disclosure on multiple levels]
  6. AFTER the lender has complied with 1635(b) (termination of security interest), after the lender has returned the canceled note and after the lender has complied with 12 CFR 1026.23(d)(2) (Return of any money or property that has been given to anyone) THEN the borrower must tender [Editor’s Note: This imposes a requirement that will put the trusts in immediate conflict with the investors and the facts. In order to “return” the money to borrower somebody has to pay it. The servicers, the banks sand the trusts don’t have any investment in these loans. They have been getting a free ride for years. They can’t go to the investors for the money and ask them so they can only advance the funds and hope they will get it back or just steal it from investors, which looks eerily like the start of mortgage securitizations]
  7. According to TILA the lien is void upon mailing of the notice.
  8. Banks better do their homework and identify all the loans that are not supported by TILA disclosures. [Editor’s note: My observation is that this is approximately 90%-96% of all alleged mortgage loans. As I said in 2007-2008: In my opinion the vast majority of all loans produced void notes and mortgages or were subject to rescission which results in the same thing — cancellation of the note, cancellation of the encumbrance, and disgorgement of all money paid.]

TILA Rescission in a Nutshell

For more information please call 954-495-9867 or 520-405-1688

NOTE: There are strategic nuances here on when to do what. That is included in our rescission package. Some things are better left unsaid in a public forum. This is not an opinion of law upon which you should rely. You should find an attorney who has studied this issue carefully and then rely on their advice.

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On the one hand you have a bunch of lawyers and judges who have studied the remedy of TILA rescission and all of them have come up with a unanimous conclusion: the deal is canceled when a notice of rescission is put in the mail.
On the other hand you have a bunch of judges and lawyers who have not studied the situation and who have arrived at the mistaken conclusion that they may reinterpret the TILA rescission anyway they want and that the rules of common law rescission will be applied.
Who is right? Answer: group #1. How do I know? Because the Supreme Court in the Jesinoski decision has already ruled and there is no higher place to go. The ruling from the US Supreme Court was unanimous which in our highly polarized world is as unusual as the TILA rescission remedy which they affirmed. The Supreme Court is not always right, but it is always final — their ruling is the law of the land. People can differ on whether they were right or wrong in Jesinoski — but either way there is nothing anyone can do about it. Only Congress can change the law.

TILA Rescission is a strategy that should considered in virtually all consumer loan cases. This might involve an enforcement action in Federal Court or State Court. The sooner you send the rescission the sooner the 20 days will expire. It is ONLY after the 20 days that you can take the position that they are in violation of statute and that they have waived any objection to the rescission — unless they file a lawsuit against you seeking to vacate the rescission, which IS effective by operation of law, the moment you drop it in the mailbox.

There are three TILA RESCISSION duties that arise for every lender and one remedy to get out of it. The three duties are (a) return of canceled note (b) filing any papers necessary to remove the mortgage encumbrance from the homeowner’s chain of title and (c) return of all money ever paid by the borrower or to anyone in relation to the loan whether it be for fees, interest, principal or other compensation. If they want to stop these duties from being applied against any of the people in the chain that made allegations of ownership, balance, servicing or default, they must file suit, as a creditor, within 20 days from the date of the notice and get an order within that time that vacates the rescission.

The creditor has 20 days in which to comply. If they don’t comply ( or sue and get a court order) there are the following consequences: (a) they are in violation of statute, subject to an enforcement suit on their duties under rescission (b) they have waived any objection to the rescission that should have been brought as their own lawsuit within the 20 days and (c) if they continue to stonewall their obligations for one year, the creditor (if there is one) waives any right to demand any payment on the rescinded loan — the debt is extinguished along with the previously extinguished note and mortgage. Standing for the lawsuit can only be by way of allegations that they are the true creditor and cannot be based upon the void note and void mortgage because you can’t use a void instrument as the basis for any claim.

Note that the suit to enforce the rescission is NOT a suit to make the rescission effective by operation of law. The cancellation of the note and mortgage has already happened as the Jesinoski decision made abundantly clear. The note and mortgage are void as of the date of mailing of the notice of rescission.

This is a very unusual remedy for borrowers that both judges and lawyers have been misinterpreting for years. The idea that a borrower, on their own, could end a loan involving hundreds of thousands of dollars with a simple letter is NOT what the Judges or lawyers think is the right approach. It doesn’t matter what they think. Congress passed this law and it was signed into law by the President 50 years ago.

The Courts cannot reinterpret it to mean something else without violation of separation of powers between the judiciary and the legislative branches of government.What matters is that It was not until the Jesinoski decision that thousands of Judges and tens of thousands of lawyers were told that they were wrong for the last 15 years. The loan is cancelled by the mailing of the notice of rescission.

TILA Rescission is a specific statutory scheme that is different from common law rescission. What the Judges and lawyers failed to perceive when they started messing around with the interpretation of a perfectly clear statute is that if their approach was upheld, the entire system of nonjudicial foreclosure would be subject to the same reinterpretation. And for those of you who recall in nonjudicial states, the challenges to nonjudicial foreclosures were met by the banks arguing that the courts have no business interpreting a specific statutory scheme that is very clear on its face and can only be overturned if it is deemed unconstitutional on its face or in its application. The banks won, which means borrowers win on the issue of rescission.

The January ruling from a unanimous Supreme Court was unusual unto itself. The opinion written by Justice Scalia was terse and caustic — showing the court’s irritation at having to remind judges and lawyers that there is a basic rule of law that says that the court may not “interpret” a statute that is unambiguous. This statute is clear as it could be. So even if a Judge doesn’t like it or doesn’t believe it should be the law, or doesn’t like the result, the Judge has no choice but to follow the rule of law set forth in TILA, in Reg Z and in the Supreme Court decision issued in January. The only way this can change is if Congress passes a new law.

The key to your rescission strategy is going to be the answer to this question: under what circumstances is the effective date of the rescission delayed or contingent? The answer is none. That answer follows from the fact that the rescission IS effective on the date of mailing BY OPERATION OF LAW. So the issue has already been decided by Congress, the Federal Reserve (reg Z) and the US Supreme Court. Like any order or act that is effective by operation of law, rescission may be vacated — but not ignored. And like other orders or actions that are effective by operation of law, there are limits on the ability to sue for temporary or permanent injunction.
And THE bank or alleged servicer writing a letter to YOU saying that you have no right to rescind means nothing except that they received the notice — just like when you write a letter to them asking them to please not foreclose because you have in fact made all your payments. The banks and servicers ignore those letters and get foreclosure judgments and sale of the property no matter how many letters you write. If you don’t challenge them IN COURT it means nothing.

Once the 20 days has expired you need to consider whether to hire counsel to prosecute the enforcement of the rescission. Those allegations consist of reference to the note and mortgage, the fact that you did rescind the transaction and that the loan contract is canceled and then the fact that the creditors are in default of their obligations under TILA. The upside is that it should result in cancelling the foreclosure case because the mortgage and note will then be void by operation of law. The Court lacks jurisdiction to enter a judgment of foreclosure on a mortgage that is void at the time the court hears the case. The downside is that if you win the enforcement action it is going to result, if they comply, in them sending the canceled note, filing the satisfaction of mortgage and giving you the money that was paid. But THEN the creditor may, for the first time, demand payment on the old loan. [see our rescission package on further details and strategies on this]

Rescission enforcement actions are the next really big thing

For more information on rescission, our rescission package or any other topic, please call 954-495-9867 nor 520-405-1688.
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Rescission enforcement actions are the next really big thing. Its effect is to immediately unencumber the property from any claims of lien or mortgage and any claim on the note which is void and must be returned marked “cancelled”. If the parties collecting or enforcing the loans really have a right to do so they may demonstrate that in court by filing a lawsuit to set aside the rescission based upon any factual grounds they wish to raise, applying the rules of the TILA statutory scheme for rescission. But if they don’t do that within 20 days they waive their defenses. AND if they don’t comply with TILA by returning the canceled note, filing a satisfaction of mortgage and returning all money paid by borrower, then they are barred from making even an unsecured claim for “damages.”
The action to enforce rescission would essentially consist of an allegation that the notice was sent, it has been more than 20 days since the notice was sent, and therefore the parties claiming to be creditors owe (1) return of canceled note, (2) filing a satisfaction of mortgage and (3) return of all money paid by borrower since the inception of the alleged loan contract. We will refuse to get into an argument about whether the rescission should have been sent. THAT is something that the parties would have had to allege in a lawsuit against the borrower(s) to set the rescission aside.

According to TILA, Reg Z and the US Supreme Court (Jesinowski decision) the rescission IS effective (by operation of law) the moment it is put in US Mail. The borrower does not have to be right to send it. THAT issue is left to the banks and servicers to allege in a lawsuit to vacate the rescission. And they must do so within 20 days. All issues that are confusing everyone — statute of limitations, purchase money first mortgage, etc. are questions of fact that need to be raised by the other side. They cannot do so after 20 days. We would move to strike those defenses when raised in our lawsuit to enforce rescission.

There are dozens of lawyers across the country that agree with my interpretation of the TILA rescission statutes and who are filing these rescission enforcement actions. In some cases, Ocwen has agreed that the rescission is effective and even agreed that the original payee was not the lender. That is an interesting juxtaposition of theories. Because if there was no funding by the payee on the note (“lender”) then there is no loan contract. If there is no loan contract, there is nothing to rescind. But the rescission under TILA might still apply as to the note and mortgage and the right to obtain disgorgement of money paid by borrower might be partially blocked by the standard statute of limitations governing contract disputes or the statute regarding tort actions.

It sounds weird, I know. But the fact is that Congress specifically decided that the act of the borrower in sending a notice of rescission cancels the loan and Reg Z (Federal Reserve) says that by operation of law that means the note and mortgage become void as of the date of mailing of the notice of rescission. Void means void, not voidable. It means that the the note and mortgage no longer exist and that is final. So even if the “lender” tries to bring a lawsuit to set aside the rescission they would need to establish standing presumably without the note and mortgage which can no longer be used because they are void. Standing could only be established by alleging that the pleading party is suffering actual damages — which is not really possible if they never paid anything for the loan and even if they did, is also not possible since they still could bring a claim against the borrower (unsecured) for the money that is due as the balance of the loan.

Congress specifically provided this method so that the old “lender” could not block the ability of the borrower to get another loan from a different (and presumably real) lender which would have first priority and would enable the borrower to either pay the old lender or not (if the old lender had not complied with TILA as to its duties in the event of rescission).

It was the specific intent to prevent the old “lender” from stonewalling and thus trap the borrower into a deal he or she didn’t want. And THAT is why the rule is that the note and mortgage are VOID by operation of law regardless of whether or not the “lender” returns the cancels note, satisfies the mortgage or pays the money to disgorge all funds paid by borrower starting with the origination fees, cost of closing and all interest and principal paid up to the date of the rescission.

NOTE: THE RESCISSION IS PROBABLY VOID IF THERE IS NO LOAN CONTRACT LEFT IN EXISTENCE WHEN THE NOTICE IS SENT. IF THERE IS NO CONTRACT THEN THERE IS NOTHING TO RESCIND. THUS I CONCLUDE THAT IF THE SALE HAS OCCURRED, THE NOTE AND MORTGAGE DON’T EXIST ANYMORE AND RESCISSION MIGHT NOT BE POSSIBLE. IF JUDGMENT HAS BEEN ENTERED, THE ISSUE IS LESS CLEAR BECAUSE THE RIGHT TO REDEEM STILL EXISTS.

NOTE: THIS IS NOT A LEGAL OPINION ON ANY SPECIFIC CASE. READERS SHOULD CONSULT WITH A QUALIFIED ATTORNEY WHO IS LICENSED IN THEIR JURISDICTION.

Statute of LImitations Running on Bank Officers Who Perpetrated Mortage Crisis

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see http://www.courant.com/opinion/letters/hc-go-after-mortgage-fraud-perps-20150427-story.html

It appears that the statute of limitations might be running out this year on any claim against the officers of the banks that created the fraudulent securitization process. Eric Holder, outgoing Attorney general, made an unusual comment a few months back where he said that private suits should be brought against such officers. The obvious question is why didn’t he bring further action against these individuals and the only possible answer I can think of is that it was because of an agreement not to prosecute while these officers and their banks “cooperated” in resolving the mortgage crisis and the downturn of the US economy.

People keep asking me what the essential elements of the fraud were and how homeowners can use it. That question involves a degree of complexity that is not easily addressed here but I will try to do so in a few articles.

The first point of reference is that the investment banks sold mortgage backed securities to investors under numerous false premises. The broker dealers sold shares or interests in REMIC Trusts that existed only on paper and were registered nowhere. This opened up the possibility for the unthinkable: an IPO (initial public offering) of securities of an “entity” that would not complain if they never received the proceeds of the sale. And in fact, as I have been advised by accountants and other people who were privy to the inner workings of the Securitization fail (See Adam Levitin) the money from the offering was never turned over to the Trustee of the “Trust” which only existed on paper by virtue of words written by the broker dealers themselves. They created a non existent entity that had no business and sold securities issued by that entity without turning over the proceeds of sale to the entity whose securities had been sold. It was the perfect plan.

Normally if a broker dealer sold securities in an IPO the management and shareholders would have been screaming “fraud” as soon as they learned their “company” was not receiving the proceeds of sale. Here in the case of REMIC Trusts, there was no management because the Trustee had no duties and was prohibited from pretending that it did have any duties. And here in the case of REMIC Trusts, there were no shareholders to complain because they were contractually bound (they thought) to not interfere with or even ask questions about the workings of the Trust. And of course when Clinton signed the law back in 1998 these securities were deregulated and redefined as private contracts and NOT securities, so the SEC couldn’t get involved either.

It was the perfect hoax. brokers and dealers got to sell these “non-securities” and keep the proceeds themselves and even register ownership of interests in the Trust in the name of the same broker dealer who sold it to pension funds and other investors. Back in 2007-2008 the banks were claiming that there were no trusts involved because they knew that was true. But then they got more brazen, especially when they realized that this was an admission of fraud and theft from investors.

Now we have hundreds of thousands of foreclosures in which a REMIC Trust is named as the foreclosing party when it never operated even for a second. It never had any money, it never received any income and it never had any expenses. So it stands to reason that none of the loans claimed to be owned by the Trusts could ever have been purchased by entities that had no assets, no money, no management, and no operations. We have made a big deal about the cutoff date for entry of a particular loan into the loan pool owned by the trust. But the real facts are that there was no loan pool except on paper in self-serving fabricated documents created by the broker dealers.

Investors thought they were giving money to fund a Trust. The Trust was never funded. So the money from investors was used in any way the broker dealer wanted. The investors thought they were getting an ownership interest in a valid note and mortgage. They never got that because their “Trust” did not acquire the loans. But their money was used, in part, to fund loans that were put on a fast track automated underwriting platform so nobody in the position of underwriter could be disciplined or jailed for writing loans that were too rigged to succeed. Then the broker dealers, knowing that the mortgage bonds were worthless bet that the value of the bonds would decrease, which of course was a foregone conclusion. And the bonds and the underlying loans were insured in the name of the broker dealer so the investors are left standing out in the wind with nothing to show for their investment — an interest in a worthless unfunded trust, and no direct claim for the repayment of loans that were funded with their money.

The reason why the foreclosing parties need a foreclosure sale is to create the appearance that the original loan was a valid loan contract (it wasn’t because no consideration actually flowed from the “lender” to the “borrower” and because the loan was table funded, which as a pattern is described in Reg Z as “predatory per se”). By getting foreclosures in the name of the Trust they have a Judge’s stamp of approval that the Trust was either the lender or the successor to the lender and that makes it difficult for anyone to say otherwise. And THAT is why TILA was passed with the rescission option.

So through a series of conduits and sham entities, the Wall Street investment banks lied to the investors and lied to the borrowers about who was in the deal and who was making money off the deal and how much. They lied to the investors, lied to the public, lied to regulatory agencies and lied to borrowers about the quality of the loan products they were selling which could not succeed and in which the broker dealers had a direct interest in making sure that the loans did not succeed. That was the whole reason why the Truth In Lending Act and Reg Z came into existence back in the 1960’s. Holder’s comments are a clue to what private lawyers should do and how much money there is in these cases against the leaders of the those investment banks. Both borrowers and lawyers should be taking a close look at how they get even for the fraud perpetrated upon the American consumer and the American taxpayer.

It is obvious that someone had to be making a lot of money in order to spend hundreds of millions of dollars advertising and promoting 2% loans. There is no profit there unless someone is stealing the money and tricking borrowers into signing loan papers that instantly clouded their title and created two potential liabilities — one to the payee on the note who never had any economic interest in the deal and one to the investors whose money was used to fund the loan. Most investors still don’t realize what happened to their money and many are still getting payments as though the Trust was real — but they are not getting payments or reports from the REMIC Trust.

And most borrowers don’t realize that their identity was stolen, that their loan was cloned, and that each version of their loan that was sold netted another 100% profit to the investment banks, who also sold the bonds to the Federal Reserve after they had already sold the same bonds to investors. Thus the investment banks screwed the investors, screwed the borrowers and screwed the taxpayers while their plan resulted in a cataclysmic failure of the economies around the world. Investors mostly don’t realize that they are never going to see the money they were promised and that the banks are keeping the investors’ money as if it belonged to the bank. Most investors also don’t realize that the investment banks were their servant and that all that money the bank made really belongs to the investor, thus zeroing out the liability of the borrower but creating an enormous profit to the investors. Most borrowers don’t realize that they certainly don’t owe money to any of the foreclosing parties, but that they might have some remote liability to the clueless investors whose money was used to fund this circus.

Rescission Summary As I see It

If you read my blog for the last 3 weeks or so you should get a good idea of where I am coming from on this. If you still have questions or need assistance call me at 954-495-9867 or 520-405-1688. The basic thrust of my argument is that

  1. BOTH Congress and US Supreme Court agree that there is nothing left for the borrower to do other than dropping notice of rescission in the mail. It is EFFECTIVE BY OPERATION OF LAW at the point of mailing. The whole point is that you don’t need to be or have a lawyer in order to cancel the loan contract, the note and the mortgage (deed of trust) with the same force as if a Judge ordered it. No lawsuit, no proof is required from the borrower. No tender is required as it would be in common law rescission. The money for payoff of the old debt is presumed to come from a new lender that approves a 1st Mortgage loan without fear that they will lose their priority position.
  2. Lender(s) must comply within 20 days — return canceled note, satisfy mortgage, and return money to borrower.
  3. Lenders MUST file a lawsuit challenging the rescission within 20 days or their defenses are waived. Any other interpretation would make the rescission contingent, which is the opposite of what TILA and Scalia say is the case.
  4. Therefore a lawsuit by borrower to enforce the rescission need only prove mailing.
  5. Any attempt to bring up statute of limitations or other defenses are barred by 20 day window.
  6. The clear reason for this unusual statutory scheme is to allow borrower to cancel the old transaction and replace with a new loan. This can only happen if the rescission is ABSOLUTE. It can be declared void or irregular or barred or anything else ONLY within the 20 day window. If the 20 day window was not final (like counting the days for filing notice of appeal appeal, motion for re-hearing, etc.) then no new lender or bank would fund a loan that could be later knocked out of first priority position in the chain of title because the rescission was found to be faulty in some way. This is the opposite of what TILA and Scalia say.
  7. The content of the rescission notice should be short — I hereby cancel/rescind the loan referenced above. You merely reference the loan number, recording information etc. at which point the note and mortgage become VOID by operation of law.
  8. BY OPERATION OF LAW means that the only way it can be avoided is by getting a court order.
  9. If any court were to allow “defense” in a rescission enforcement action AFTER the 20 day window the goal of allowing the borrower to get another loan to pay off the old lender(s) would be impossible.
  10. Hence the ONLY possible logical conclusion is that they MUST file the action within 20 days or lose the opportunity to challenge the rescission. And any possible defenses are waived if not filed during that period of time. That action by the “lender” or “creditor” must be an equitable action to set aside the rescission, which is already “effective” by operation of law.

The worst case scenario would be that rescission is the most effective discovery tool available. If the lender(s) file the 20 day action they would need to establish their positions as creditors WITHOUT the note and mortgage (which are ALREADY VOID). This would require proof of payment and proof of economic interest and proof of ownership and balance. Any failure to plead these things would fail to establish standing. The attempt to use the note and mortgage as proof or the basis of pleading should be dismissed easily. The note and mortgage are void by operation of law by the time the bank or servicer files its action.

In all probability the only parties who actually have an interest in the debt are clueless investors who by contract have waived their right to enforce or participate in the collection process. The problem THEY have is they gave their money to a securities broker. They can neither show nor even allege that they know what happened to their money after they gave it to the broker.

The important thing about TILA Rescission is that it is a virtual certainty that the borrower will be required to file an enforcement action. In that action they should not allow themselves to get sucked into an argument over whether the rescission was correct, fair, barred by limitations or anything else, all of which should have been raised within the 20 day window. AND that recognition is the reason why we have been inundated to prepare pre-litigation packages, analysis and reports to assist lawyers in filing actions to enforce rescissions, whether filed today or ten years ago.

Caveat: I have no doubt that attempts will be made to change the law. The Supreme Court has made changing the law impossible by a ruling from the bench, That means state legislatures and Congress are going to be under intense pressure to change this law or the effect of it. But as it stands now, I don’t think any other analysis covers all the bases like the one expressed here.

Rescission Letter is Equivalent to Court Order Under TILA

For further information or assistance please call 954-495-9867 or 520-405-1688.

We are starting a new pilot offering for those who are close readers of the blog. Call one of the numbers above and ask about our package of services relating to rescission either with respect to rescission letters previously sent or rescission letters that are being considered by borrowers. This is not an offer of legal services or legal representation. Nothing we provide — templates, analyses or memorandums — should be used as a substitute for competent legal advice from an attorney licensed in the jurisdiction in which your property is located.

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I am hearing reports that Judges are entering rulings based upon the “note holder” and other spurious premises in connection with the application of the rescission rules under the Truth in Lending Act (TILA). It is obvious that the Judges still don’t get it or don’t want to, both of which are perfectly understandable because the rules under TILA are VERY different from the the rules governing common law rescission.
Any ruling predicated on the note or mortgage after rescission is wrong unless it recognizes that there is no note or mortgage anymore. They became void by operation of law (i.e., the same as if a court order was entered) the moment the notice of rescission was dropped in the mail. The issue of when or whether the rescission is effective is OVER by operation of law. It’s done. Stick a fork in it.
There is no burden of proof for the borrower to make the rescission effective. And if the Borrower does sue to enforce compliance with TILA that is an enforcement action, the same as one would seek to enforce a judgment or order that has already been entered. At that point, unless the servicer or bank had filed a lawsuit challenging the rescission as a creditor (because the note and mortgage no longer exist) WITHIN THE 20 DAY WINDOW measured from the date of notice, the creditor has no right or standing to challenge the rescission itself or whether it should be considered effective.
ATTORNEY PRACTICE HINT: I think it is very important to say something to the effect “Judge, I understand your thinking on this and hundreds, perhaps thousands of judges agreed with you — until the US Supreme Court said otherwise a few weeks ago. This is not common law rescission. The note and mortgage cease to exist when the notice of rescission is dropped in the mail.”
The only way for an alleged lender or creditor to prevent an enforcement order being entered against them is to file a lawsuit contesting the notice of rescission within 20 days of the notice and to ask for an injunction. But in order to do that they would have to say that they are in fact the creditor — i.e., prove the actual debt due without the note and without the mortgage — because the note and mortgage ceased to exist by operation of law.
When that borrower drops the notice into a mailbox it is the same thing as a Judge entering an order. There is nothing left for the borrower to do and nothing left that the borrower can do to make the rescission effective. Most courts held that the borrower had to file a lawsuit or tender payment or both before the notice of rescission could be effective.
The unanimous decision of the Supreme Court in Jesinowski was that all those judges were wrong. And of course this court lacks jurisdiction or authority under the US Constitution to countermand a Supreme Court decision. There is no requirement of a lawsuit —the rescission is effective upon notice and notice is effective when it is dropped into a mailbox. There is no requirement of tender either.
The borrower may be obligated on the debt (after deductions for unpaid amounts from the creditor) but ONLY AFTER the creditor has complied with the three elements of mandatory compliance — return of the canceled note, satisfaction of the mortgage in the county records, and return of all money paid by borrower starting with the origination of the loan and continuing up to the date of rescission. Assuming a creditor has complied with TILA and now wishes to collect on the debt, THEN the creditor steps forward alleges the debt by showing proof of payment, not self-serving documents like assignments and endorsements. And if the creditor proves the debt, the debt is unsecured.
The purpose of TILA rescission was intentionally to provide consumers with a quick easy remedy that didn’t require a lawyer to cancel the loan. The Supreme Court ruling is that the statute means what it says. And the statute  says that the note and mortgage are immediately nullified by operation of law (same as a court order) when dropped in the mailbox.
And the reason for that is the whole reason behind the Truth in Lending Act — to level the playing field between tricky sophisticated banks and unsophisticated borrowers who didn’t and don’t receive the information they needed to choose lenders or make a decision about which loan they would choose to take from which lender.
It was recognized by the framers of this law that in order for the old lender to get paid (assuming they could prove the debt without the note or the mortgage which no longer exist) the existing note (even if still held by anyone) and the existing mortgage of record (even if recorded in the county records) MUST be void in order for the borrower to get a new loan to pay off the old debt. Otherwise it would be impossible fro the borrower to go out and get a substitute loan. 
And since it was obvious that the banks would ordinarily stonewall the rescission if they had the chance, Congress gave them no chance to stonewall. And that is why they made it such that the rescission becomes legally effective, voiding the note and mortgage the moment it is dropped into a mailbox.
The only way out for the banks is (1) after full compliance with the requirements of TILA (return of note, satisfaction of mortgage and disgorgement of all money received and paid in connection with the loan) to either ask for payment of the debt (once they prove it) or (2) to file an action in Court within 20 days of the notice alleging that they are the creditor (but they can’t rely on the now nonexistent note and mortgage) and alleging that the rescission should be set aside.
The lawsuit by the bank is akin to a motion to set aside judgment. That is where Judges are making errors and continuing to issue rulings that are wrong. The rescission is already effective if it was sent. There is NOTHING left for the borrower to do to make that rescission effective. Hence even if the lender wants to challenge whether the rescission was sent, they would have to do so in their own lawsuit brought within the 20 day window.
Comments invited.

TILA (NON-JUDICIAL AND JUDICIAL) Rescission Gets Clearer in Most Respects

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It is becoming crystal clear that with help from a competent attorney the options under the TILA rescission process are (a) different from common law rescission and (b) very effective against “lenders” who can no longer hide behind “presumptions”. LIKE THE PRESUMPTIONS THAT HAVE BEEN STRICTLY APPLIED AGAINST HOMEOWNERS, BUT WHICH ARE REBUTTABLE, TILA RESCISSION IS STRICTLY APPLIED AGAINST “LENDERS.” Just as presumptions force the borrower to take the burden of proof on basic facts in the pretender lender’s case, TILA rescission forces the “lender” to take the burden of proof in the borrower’s loan, establishing that there was no basis for rescission. This article covers the law regarding those legal presumptions AND the effects and mechanics of a TILA rescission.

Amongst the things that are clear now is the plain fact that rescission is a private statutory remedy requiring only a letter to give notice of exercising the TILA right of rescission. If a homeowner wants to file suit to enforce the rescission, there is a one year statute of limitations to collect damages or get any requiring the “lender” to comply. But the effective date of rescission remains the same even if the one year statute has passed. In plain language that means that by operation of law you don’t have a mortgage encumbrance on your property if more than 20 days has passed since the rescission was effective (the day you dropped it in a mailbox).

But if you are looking to recover the financial damages provided by TILA (disgorgement of payments etc.) then you need to file suit within one year of the rescission. If you want to clear title with a quiet title action my opinion is that the one year statute of limitations does not apply — because the act provides that the mortgage and note are void by operation of law. Thus the title issue is cleared as of the date of rescission. As argued by the ACLU and as stated by a unanimous Supreme Court the rescission is effective upon notice. There is no requirement of notice AND a lawsuit. So the suit to clear or quiet title is merely based on removing the mortgage from your chain of title because it is (and has been) void since the day of rescission.

I cannot emphasize enough the importance or reading the ACLU brief below. Too many judges and lawyers have become confused over the various provisions of TILA. A lawsuit based upon rescission to to enforce the rights due to the borrower because the rescission is already effective. The lawsuit is NOT the exercise of the right of TILA rescission. The letter declaring the rescission is the exercise of the right of TILA rescission. This is far different from common law rescission.

FOR REBUTTING PRESUMPTIONS See Franklin Decision

FOR ADMISSIONS REGARDING FABRICATION OF DOCUMENTS THUS REBUTTING PRESUMPTIONS See Wells Fargo Foreclosure_attorney_procedure_manual-1

FOR THOROUGH ANALYSIS AND HISTORY OF TILA RESCISSION SEE jesinoski_v._countrywide_home_loans_aclu_amicus_brief

And see this explanation which is almost entirely accurate —

Read this excerpt from the CFPB Amicus Brief (Rosenfeld v. HSBC):
” If the court finds the consumer was entitled to rescind, it will order the procedures specified by 1635 and Reg. Z, or modify them as the case requires…Accordingly, if the court finds the consumer rescinded the transaction because she properly exercised a valid right to rescind under 1635, the lender must be ordered [by the court] to honor the rescission, even if the underlying right to rescind has expired.”
 
I needn’t go further…this is the CFPB talking…and they are the sole authority to promulgate the rules of rescission by Congress. They (the lender) must act within 20 days, regardless of the consumer’s perception of whether or not the rescission is timely. It would be up to a court to determine the exercise of the right…but the lender must be ordered by the court to follow the rules of rescission under TILA and the attendant time frames contemplated therein.
The rescission process is private, leaving the consumer and lender to working out the logistics of a given rescission.” McKenna, 475 F.3d at 421; accord Belini, 412 F.3d at 25. Otherwise, to leave the creditors in charge of determining timing, the creditors would no doubt stonewall until the time ran after receipt of the notice of rescission. Thus, even valid rescissions would result in creditors claiming that the time to file suit had run out and the statute is then moot. Congress recognized that TILA rescission is necessarily effected by notice and any subsequent litigation must be accomplished within restrictions set against the creditors…not the consumers. This is non-judicial action at its finest. Just like the non-judicial act of foreclosure (in such forums). 
Consummation is a question of fact that would be determined after the creditor performed its required obligations under 1635 (b)…unless suit is brought within 20 days of the notice of rescission…as is required.
“Everyone is a genius, but if one passes judgment on a fish trying to climb a tree, and then continues to tell him that he is stupid, the fish, and everyone else, will believe that, even though his genius has never been discovered.” Albert Einstein.

Rescission: Equitable Tolling Extends Statute of Limitations

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Important Message: This blog should NEVER be used as a substitute for competent legal advice from an attorney licensed in the jurisdiction in which your property is located.

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see http://openjurist.org/784/f2d/910/king-v-state-of-california-d-m

The most popular question I get here on the blog and on my radio show is what happens when the three year statute has run? The answers are many. First is the question of whether it ever started running. If the transaction was not actually consummated with anyone in the chain of parties claiming rights to collect or enforce the loan it would be my opinion that the three day right of rescission has not begun to run. That would be a remedy to an event in which the note and mortgage (or deed of trust) has been signed and delivered but the loan was never funded by the originator any creditor in the chain of “ownership.” The benefit of the three day rescission is that you don’t need a reason to do it. But in order to do that you need to be careful that you are not stating that there was a closing because that would be consummation and therefore the right to rescind unconditionally ran three days after that “Closing.”

Second is the three year statute of limitations. The same reasoning applies.  But it also raises the question of non-disclosure and withholding information. The rather obvious delays in prosecuting foreclosures on alleged “defaults” are clearly a Bank strategy for letting the 3 year statute run out and then claim the homeowner cannot rescind because the closing was more than 3 years ago. That is where the doctrine of equitable tolling comes into play. A party who violates TILA and fails to disclose material facts and continues to hide them from the borrower should not be permitted to benefit from continuing the violation beyond the apparent statute of limitations. People keep asking why the banks wait so long to prosecute foreclosures. The answer is that it is because they have no right to do so and they are running out the apparent statute of limitations on rescission and TILA disclosure actions.

Third is a procedural issue. According to TILA the “lender” who receives such a notice of rescission is (1) obligated to send it to the “real” lender and (2) must file a declaratory action against the borrower within 20 days in order to avoid the rescission. If they don’t file the 20 day action, they waive the objections they could have raised. So far I have not heard of one case in which such an action has been filed. I think the reason for that is that nobody can file an action in which they establish standing. Such a party would be obliged to allege that they are the “lender” or “creditor” as defined by TILA. That means they either loaned the money or bought the loan for “valuable consideration” just like it says in Article 9 of the UCC. Then they would have to prove that allegation before any burden shifted to the borrower to answer or file affirmative defenses against the action filed by this putative “lender.”

CAVEAT: The doctrine of equitable tolling is remedial as is the statute, but it is fairly strictly construed. I’m am quite confident that the best we will get from the courts is that the 3 day and 3 year rules and other limitations in TILA starts running the moment you knew or should have known the facts that had been withheld from you at “closing.” The fact that you are not a lawyer and did not realize the significance of this will not allow you to delay the start of the statute running after the date of discovery of the facts, whether you understood them or not.  But this is a two-edged sword. The current practice of objecting to any QWR, DVL or discovery question without answering the truth about the claimed chain of ownership or servicers on the loan corroborates the borrowers allegation that the parties are continuing to withhold this information. So a well-framed TILA defense might serve as the basis for enforcing your rights of discovery and rights to answers on your Qualified Written Request or Debt Validation Letter.

Additional Caveat: The doctrine of equitable tolling has been applied with respect to the one year statute of limitations on TILA disclosures but it remains open as to whether it would be otherwise applied. From the 9th Circuit —

“Section 1640(e) provides that “[a]ny action under this section may be brought within one year from the date of the occurrance of the violation.” We have not yet determined when a violation occurs so as to commence the one-year statutory period. See Katz v. Bank of California, 640 F.2d 1024, 1025 (9th Cir.), cert. denied, 454 U.S. 860, 102 S.Ct. 314, 70 L.Ed.2d 157 (1981). Three theories have been used by other circuits to determine when the statutory period commences: (1) when the credit contract is executed; (2) when the disclosures are actually made (a “continuing violation” theory); (3) when the contract is executed, subject to the doctrines of equitable tolling and fraudulent concealment (limitations period runs from the date on which the borrower discovers or should reasonably have discovered the violation). See Postow v. OBA Federal S & L Ass’n, 627 F.2d 1370, 1379 (D.C.Cir.1980) (adopting “continuing violation” theory in some situations); Wachtel v. West, 476 F.2d 1062, 1066-67 (6th Cir.), cert. denied, 414 U.S. 874, 94 S.Ct. 161, 38 L.Ed.2d 114 (1973) (rejecting “continuing violation” theory, statutory period commences upon execution of loan contract); Stevens v. Rock Springs National Bank, 497 F.2d 307, 310 (10th Cir.1974) (rejecting “continuing violation” theory); Jones v. TransOhio Savings Ass’n., 747 F.2d 1037, 1043 (6th Cir.1984) (applying equitable tolling and fraudulent concealment).”

Hats off to James Macklin who sent me this email:

Hang on to your hats fella’s…in Sargis’ ruling … back in 2012…he confirms the equitable tolling principles of TILA as I had argued…just saw this again while reviewing…to wit:
“The Ninth Circuit applies equitable tolling to TILA’s … statute of limitations (King v. California, 784 F.2d 910, 914 (9th Cir. 1986).
“Equitable Tolling is applied to effectuate the congressional intent of TILA.”, Id.
Courts have construed TILA as a remedial statute, interpreting it liberally for the consumer.” (Id. Citing Riggs v. Gov’t Emps. Fin. Corp., 623 F.2d 68, 70-71 (9th Cir. 1980).
 Specifically the 9th Circuit held: “[T]he limitations period in section 1640(e) runs from the date of consummation of the transaction but that the doctrine of equitable tolling may, in appropriate circumstances, suspend the limitations period until the borrower discovers or had the reasonable to discover the fraud or non-disclosures that form the basis of the TILA action.” 
Gentlemen…I give you proof positive that the statute tolls and the fact that the term “consummation” is also subject to broad interpretation as we know…the loan could not have consummated if what we allege is found to be true… However, the non-disclosures language used by the 9th Circuit gives rise to possible myriad rescissions upon discovery of those non-disclosures…
James L. Macklin, Managing Director
Secure Document Research(Paralegal Services/Legal Project Management)

Reverse Redlining: Targeting the Poor and the Unsophisticated for High Risk Mortgages

For further information please call 954-495-9867 or 520-405-1688

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see https://www.aclu.org/sites/default/files/assets/aclumfy_mortgage_report.pdf

At this point it is clear that the banks actually targeted people of color and other demographics where the likelihood of “default” on a loan was extraordinarily high. The ACLU in its latest report on the mortgage crisis proves this to any remaining doubters. This report also shows that these disadvantaged groups are the least likely to get a modification or other settlement or assistance of the various mortgage issues that we all know now were pandemic throughout the period of 1996-present.

But what they are missing is an answer to the REAL question: Why would anyone target a demographic where “defaults” could be claimed in much higher proportion to the history in the general population? Why did they want the loans to fail, because “failure” of the loan was a basic assumption to anyone who understands the various iterations of highly complex and sophisticated loan products — a number which climbed from 5 in the 1970’s to 450 in 2008. Imagine that 450 different loan options offered to the poor, the people who don’t speak or understand English very well and the people who are poor enough that eventually when payments reset they will not pay and they won’t be able to fight for their house. The tragedy here, let me remind everyone, is that most of these were refinancing of existing home ownership — that’s right, most of the homes were in the family for generations.

The Banks targeted homes where the home values were low. Then they drove the prices up to many items the actual value by filling the bathtub with money and selling “payments” instead of principal or interest rate. They offered teaser payments that the homeowner could afford — but which changed to a monthly payment that was higher (sometimes a multiple) than the entire household income. Somehow the Banks have convinced courts to think that the disclosures were sufficient. They were not. And in my opinion if the courts would scrutinize these so-called loans the way they did before securitization none of the loans would survive any fair interpretation of disclosures required under Federal laws (TILA) and state laws, including common law.

Banks do economic analysis every day employing thousands of analysts. Those analysts knew that the prices were being driven above the value of the property, knew that the endgame was the drop of prices to resume relationship with values, and thus knew — because they rigged the game — that if they bet the mortgages would fail, they would make a lot of money. The trick was to lose somebody else’s money not their own. and that is what they did.

If the ACLU wants to do something that produces actual results, they should analyze the economics of the alleged securitization of these loans. What they will find is a note that cannot be enforced and a mortgage that was void from the start. They will find fraud with aggravating circumstances. the banks needed really “bad” loans in order to accomplish their goals. By using investor funds instead of their own, they could claim ownership of the loans when they reported their assets and liabilities to regulatory authorities; but they would assign the losses to investors, borrowers, insurers, guarantors, FDIC loss sharing, and credit default swap counterparties and take the proceeds for themselves — even though they had no losses.

The ACLU should bring actions on behalf of the demographics hit hardest by this Ponzi scheme. They should state the obvious — that the true source of funds had no idea how their money was being used, the banks that did know were intentionally creating bloated loan documents based upon fraudulent appraisals, and the real creditors were deprived of any protection for their investment while the borrowers were signing documents that recited fraudulent information as to the identity of the lender and the real cost of the loan.

The attack on enforceability of the mortgages is easiest simply because it is now fairly easy to show unclean hands. Where a loan is statutorily defined as “predatory per se” it is hard to argue for the banks that it isn’t subject to “unclean hands per se” and therefore cannot be enforced because it is against public policy.

In a court where rules of equity are applied, there is no enforcement of a deal that was, from the start, violation of Federal and State law, was “predatory per se” (Regulation Z) and was part of a fraudulent scheme. This scheme only works for the banks if the loan is secured by a mortgage on the property. That mortgage is mostly unenforceable and probably void, ab initio. True creditors can prove they lost money on the deal have an opportunity to sue and collect on money due them — (1)  from the borrower up to perhaps the amount that should have been the principal, and (2) from the banks for the rest of the money that was skimmed off the top. The amount skimmed in many cases especially in the disadvantaged demographics, was frequently more than the loan itself.

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