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RESCISSION UNDER TILA MORE VIABLE THAN WE THOUGHT

Editor’s Alert on TILA Rescission: Judges didn’t like the way the statute was worded, but the wording was very clear. “I rescind” is enough to clear the title of your property of any mortgage UNLESS WITHIN 20 DAYS the lender files a declaratory action contesting your right to rescission. To date, hundreds of thousands of people have sent letters saying, in one form or another, that they wish to rescind. Some held back under the mistaken belief that you had to give up the house to rescind. Just the reverse. TILA was written just for times like this and it has a lot of teeth. And an increasing number of Judges are applying the law just as it was written.

So the TILA audit and TILA rescission went out of favor for the last three years because Judges didn’t like the way it sounded — or the banks that put them on the bench didn’t like the way it worked. THE STATUTE SAYS that it is only AFTER the bank sends you the note back marked canceled, and only AFTER they record a satisfaction of mortgage that they are entitled to demand tender of payment on what is now an UNSECURED OBLIGATION.

So as if we didn’t already know it,, the Federal Government is in league with the banks. In this case the Federal Reserve is trying to change that statute by changing Reg Z to say that if you want to use the TILA rescission you FIRST PAY THE AMOUNT demanded, whether it is due or not and regardless of who is making the demand. How they expect to get this through is beyond my comprehension.

Any first year law student will tell you that only the legislating body — in this case the U.S. Congress — can change the law. It was Congress who passed the law as a protection for consumers/homeowners and it gave them real teeth if the dark Dexter passenger of the bankers went wild. That protection is the law and no agency of the Federal government can change the law by enacting a rule in conflict with the law.

Nonetheless, the Federal Reserve has announced it is going to exactly that, proving that this rescission remedy is indeed worrisome. It’s a real problem for all those rescission letters that canceled the mortgage by operation of law. Because none of the “lenders” and none of the pretender lenders filed declaratory actions. They just “rejected” the rescission by letters. By not filing the lawsuit in time, they were not allowed, by operation of law, to foreclose even if they were the proper lender or creditor. And by not producing the note and filing the satisfaction of mortgage they can’t enforce the note, even if the note is authentic and all legal. So many thousands of foreclosures were allowed to take place when the party doing the foreclosing no longer had any title even if they once really had title.

The only possible reason for this brazen design is to try to “fix” our corrupted title system in favor of the banks, since the Federal Reserve is clearly not a consumer agency. In fact, there is even a question about whether the FED has rule-making authority since its status as an agency of the federal government is obscured by its ownership — consisting of private banks.

The most important thing to know is that they wouldn’t be taking this big a chance unless THEY thought that this was so dangerous it had to be sterilized out of existence. If they think that then it is time to renew the efforts at rescission. That includes reclaiming houses that were allegedly sold at auction, and stopping all existing foreclosures. By the way, don’t let the statute of limitations stop you, if you just learned of the facts giving rise to rescission and did not have access to the information (because the agents of Wall Street withheld disclosure) then the statute doesn’t start to run until the day you DID know.

This law was intended to inhibit predatory and fraudulent lending practices. The law was passed fair and square. It’s been the law of the land for many years. It cannot be changed by the FED and it shouldn’t be changed at all.

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by Zach Carter, HUFFPOST

The Federal Reserve is pushing a new mortgage regulation that would effectively eliminate the most powerful federal remedy for predatory lending.

The regulation would severely limit a practice called “rescission,” used to strike down demonstrably-illegal or fraudulent loan contracts and void a bank’s ill-gotten gains from such predatory lending practices. When a mortgage borrower wins a rescission case in court, the bank loses the right to foreclose, and has to give up all profits from interest and fees on the loan. The borrower still has to repay the principal — the original amount of money extended by the bank — but can’t be kicked out of the house.

Under the Fed’s new proposal, however, borrowers would be required to pay off the balance of the loan before the bank loses its right to foreclose — that means borrowers could still lose their homes, even in cases where banks have broken the law.

Unsurprisingly, banks support the move, but consumer advocates say this would essentially make rescission worthless to borrowers.

“The … proposal would eviscerate the single most effective tool that homeowners have to stop foreclosures and avoid predatory loans,” reads a letter penned by Margot Saunders of the National Consumer Law Center and signed by 16 national public interest groups, along with 33 state housing and legal aid groups and 144 individual attorneys. “Passage of the proposed rule will considerably exacerbate foreclosure statistics in this nation.”

Six Democratic senators, led by Sherrod Brown of Ohio, also urged the Fed to reconsider its rule in a Monday letter. “In this time of record foreclosures and reports of systemic problems with the operations of the largest mortgage servicers, the proposed revisions are unfortunate and unnecessary,” the letter reads. “The mortgage market needs greater oversight and accountability to restore borrower confidence lost in the mortgage crisis. The proposed rules would undermine this goal.” The signatories included outgoing Senate Banking Chairman Chris Dodd (Conn.), incoming Chairman Tim Johnson (S.D.), and Sens. Jack Reed (R.I.), Daniel Akaka (Hawaii) and Jeff Merkley (Ore.).

The controversy comes as the U.S. mortgage market enters one of the bleakest years in its history. Foreclosures continue at a record pace, slowed only briefly by recent concerns that borrowers were being improperly evicted due to bank errors. At the end of September, nearly 1 million homes were in foreclosure, according to data collected by the foreclosure analyst RealtyTrac. According to the Center for Responsible Lending, 2.5 million homes were lost to foreclosure between January 2007 and the end of 2009, and another 5.7 million stand in “imminent” danger of foreclosure today.

“There are thousands of rescission cases in hundreds of courtrooms all across the country,” Center for Responsible Lending spokeswoman Kathleen Day said. “Rescission is a main tool for fighting foreclosures.”

The proposed change is part of a larger package of rules the Fed hopes to adopt, several of which appear designed to protect the public from shady financial hucksters. But while consumer groups are enthusiastic about some of the possible new regulations, they are so worried by the rescission changes that they are asking the Fed to withdraw the whole package. If winning a predatory lending case still means losing their home and owing hundreds of thousands of dollars to the bank that ruined them, they say, many consumers would prefer not to fight.

Dozens of other consumer advocacy organizations and concerned citizens have also sent the Fed comments on new rules. Many of the comments from individuals were more colorful than the letter penned by Saunders. All Fed regulations are open to public comment from anyone, but it is unusual to see a high volume of individuals weigh in on a technical consumer protection rule.

“I view this as nothing less than a criminal ploy to shove hard working Americans out of their homes and onto the streets,” wrote Ann Capotosto in an undated comment letter. “It is immoral and must be stopped.”

“Think of mankind for once, please,” requested Larissa Cavanaugh in a Dec. 4 letter.

“Have you lost your minds?” inquired Beth Findsen in another letter from Dec. 4. “In the depths of an unprecedented catastrophe for the middle class, related to the predatory loans and their rapacious securitization by the financial industry, resulting in millions of middle class Americans losing all of their wealth and their homes, you want to loosen TILA? Are you tone deaf? Have you lost your humanity entirely?”

A Fed representative did not immediately respond to a request for comment.

Tags: rescission, TILA, TILA rescission
Posted in bubble, Corruption, Eviction, securities fraud |