Rescission Confusion Persists

Jun 10, 2015

For more information on common law rescission, TILA Rescission and foreclosure defenses please call 954-495-9867 or 520-405-1688

THIS IS NOT A LEGAL OPINION ON ANY ONE PARTICULAR CASE. GET A LAWYER, BUT INSIST THAT HE OR SHE DO THOROUGH ANALYSIS BEFORE HE OR SHE GIVES AN OPINION.

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THERE IS NOTHING CONTINGENT ABOUT TILA RESCISSION

“EFFECTIVE” MEANS GAME OVER, IT’S DONE

Confusion reigns only because those who are questioning me are not doing their homework and not reading the statute, and not reading Reg Z and not reading the Jesinoski decision. So let me be clear — there are dozens of lawyers who agree with what I am about to tell you. Our rescission package does look at the content and the addressees of the notice of rescission, but 99% of it is about what happens after the notice of rescission is sent. The problem is that most lawyers are starting in the middle or the end and assuming that they have properly analyzed the issue. They haven’t.

So here are some simple statements that might help you:

If you are asking about the statute of limitations, whether the loan was a purchase money mortgage, and mixing up foreclosure defenses (no loan contract) with rescission, you are already in the wrong place.
The starting point is the notice of rescission and the fact that it IS effective upon mailing. The less the notice says about the reason the better. The less the lawyer says when he seeks to enforce it, the better. All that needs to be known is that the rescission was sent and is legally effective by operation of law and as expressly stated and ruled upon Congress in TILA, by the Federal Reserve in Reg Z, and by the US Supreme Court in Jesinowski.
So there is nothing to STOP a borrower from sending a notice of cancellation or a notice of rescission. In fact, the statute was drafted such that a lawyer is NOT necessary to send the notice of rescission and a lawsuit to MAKE THE RESCISSION EFFECTIVE is neither necessary nor prudent. (Remember a lawsuit seeking court approval of rescission is far different than the later action for seeking ENFORCEMENT of the rescission).
Once the notice of rescission is sent, it is subject to the very specific statutory rescission scheme, which is to say that the loan deal is canceled and the “lender” or “creditor” is now under a statutory duty to (a) return the canceled note (b) file a satisfaction of mortgage (Judicial State) or a release and reconveyance (non-judicial) and (c) disgorge all money paid starting with the alleged origination of the loan and continuing through all the monthly payments.
If the so-called lender has not complied with the statute within twenty (20) days they waive their defenses and are in violation of their statutory duties. Any other interpretation would mean that the rescission is NOT effective when filed, which is the exact opposite of what is expressly stated in TILA statutes, in Reg Z and the Jesinowski decision.
If the “borrower” falls to take action to ENFORCE THE RESCISSION within 1 year from the date of the notice, then the borrower waives his right to disgorgement of all that money but he is still entitled to quiet title because the mortgage and note are void.
BUT SINCE THE “LENDER” FAILED TO COMPLY WITH STATUTE, THE LENDER GIVES UP ITS RIGHT TO MAKE A CLAIM FOR THE MONEY THEY ALLEGE WAS LOANED TO BORROWER. GAME OVER. I.e., in this scenario the debt not only becomes unsecured, it is eradicated starting with the rescission notice and ending with the failure of the lender to comply with the statute within the time periods prescribed by TILA.

NOTE: PEOPLE ARE STILL CONFUSED. They think the first question is whether they CAN send the notice of rescission. The answer is almost always YES. If the mortgage and note still exist, the BORROWER can send a notice of rescission and the notice of rescission acts the same as a court order nullifying the mortgage and note — but not the debt. The question is what happens after that. And that is what our rescission package gives them — answers to their most likely questions. Lawyers use it, borrowers use it and investors are looking at using our work and the work of at least 20 other attorneys who are convinced. HOMEOWNERS: By all means get the rescission package — but I strongly advise using it WITH the advice and representation from competent legal counsel licensed in the jurisdiction in which your property is located.

The mistake most lawyers, some judges and most borrowers are making is that they are starting in the middle instead of starting at the beginning:

1. Does the note and mortgage exist? If there has been a sale or judgment the note and mortgage might be merged into the certificate of title or the judgment. So any notice of rescission sent after judgment or sale will probably not be effective unless the judgment or sale is vacated.

2. Nothing can stop the borrower from sending a notice of rescission.

3. The defenses of statute of limitations and other factors are factual issues that must be raised by the banks. It is true that some of those attacks on the rescission might have merit — but that is no reason not to send the notice of rescission. If the banks don’t file a lawsuit challenging the rescission and seeking to have the rescission vacated (and do it within 20 days) there is no defense to the rescission.

4. So it is only if the bank files the lawsuit within 20 days that the issues on statute of limitations and other things are relevant. Those issues are not relevant when the notice of rescission is sent, unless you can reasonably expect that the bank will file the lawsuit, satisfy standing (without the void note or void mortgage) and prove that the rescission should not have been sent. Thus far no bank has ever filed that lawsuit challenging the rescission. And there are lots of reasons for that.

5. The mistake the lawyers are making is that they are assuming a loss on the issue of statute of limitations when (a) that is not necessarily true and more importantly (b) it doesn’t matter whether the borrower might lose if the bank filed the lawsuit because the banks are not filing the lawsuit.

6. The banks will defend an action filed by the borrower to either enforce the rescission or to get quiet title upon the basis that the rescission was not effective because of the statute of limitations and other factors. But they missed their chance to use those “defenses” when they failed to file the the lawsuit challenging the rescission within 20 days.

Thus there is no DEFENSE technically speaking. The rescission is effective. It is a done deal when mailed. The note and mortgage are void. The loan contract is canceled. It is not common law rescission where the borrower must show a reason or prove a reason. If the bank does nothing within the 20 days it is in violation of statute. If the violation of statute occurred 10 years ago, the homeowner probably only has a claim to quiet title which should be administratively granted based upon the rescission that was effective when mailed.

There are nuances to all this which is why we have offered a rescission package. But the basics are as I have outlined them above. If you don’t believe it, then you can also pretend that electricity doesn’t exist. No judge is going to like this. They mostly start out disliking TILA because they see it as a tool for freeloaders. But the Judge doesn’t need to like it; the duties of the judge are clear and the US Supreme Court has spoken. Justice Scalia has made it crystal clear that ANY attempt by ANY judge or any appellate court to interpret the statute is wrong and unconstitutional violating separation of powers. No court has the right to interpret a statute that is unambiguous. If the Judge or anyone else doesn’t like the TILA statutes they can lobby Congress to change it. But no ex post facto law will effect all the notices of rescission that have been sent or will be sent until that day comes — and no Judge can overrule the US Supreme Court.

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