Rescission Legal Procedures and Strategies for Mortgages

Oct 5, 2015

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THIS IS NOT A LEGAL OPINION UPON WHICH ANYONE SHOULD RELY. CONSULT A LAWYER WHO IS LICENSED IN THE JURISDICTION IN WHICH YOUR PROPERTY IS LOCATED.

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Homeowners are encountering the same resistance and frustration they did when I started pushing rescission that the nuclear option. Lawyers, too busy or not willing to do the research, analysis and thinking on the subject give a wrong incorrect advisory opinion and tell the homeowner that nothing has changed. They are right. The statute still says what it says. But they are wrong when they think they understand TILA rescission which is a specific statutory scheme for non-judicial cancellation of a loan that makes the note and mortgage void. They still can’t believe how simple it is. And they think the US Supreme Court was wrong in Jesinoski vs Countrywide. My answer is simple: Even if the unanimous decision of the Supreme Court in January was wrong, it is, according to our system of laws, still FINAL.

It all comes down to this: Patrick Giunta in Fort Lauderdale and several other lawyers (see Charles Marshall in California and the recent shows on the Neil Garfield Show), have all come to the same conclusions, after playing devil’s advocate against each other to sharpen the understanding of TILA Rescission (non-judicial cancellation of mortgage and note and loan contract). and I believe that the Federal Judge in most cases is going to be very narrow in the way he/she looks at your case. But in BKR we get more than one bite of the apple — the administrative proceeding and the adversary complaint we file to either enforce rescission or quiet title. We think that recording the rescission which is effective by operation of law, puts the homeowner on firmer footing.

And remember that the three duties imposed by TILA rescission are (a) return of the cancelled note, removal of the encumbrance from the property records, and PAYMENT TO THE BORROWER of all money ever paid by the borrower PLUS all money paid to any third party as compensation for origination of the loan. If the one year statute to enforce has expired, then two things are true: (1) you can’t sue to enforce the rescission but you scan still sue to quiet title and (2) the creditor can no longer ask for repayment of the debt. And by the way, if they ever DID come up with such a creditor (in reality or through fabrication) they could only ask for the principal due, without finance charges or fees).

The banks are in damage control and panic mode. They know we are right. But that has not stopped them from asserting claims, defenses and arguments that are completely unsupported by the law.

It seems to me and other lawyers whom I have studying this issue, that while we believe we are dead-on right, history is going to repeat itself — i.e., Judges are not going to want to enter a ruling that they perceive gives you a “free house.” We like to stay in the Federal system because it is going to be less difficult than the State system, and Bankruptcy is the only other venue.

On the first go-around, despite the clear language of the statute, thousands of Judges, state appellate courts and even Federal appellate courts decided that the TILA rescission statute SHOULD not mean what it says. And they literally wrote in provisions that were exactly contrary to the express wording of the statute. I endured considerable ridicule (2007-2015) when I said that rescission levels the playing field without a lawsuit and without any tender of money or property. I also endured ridicule when I said that the loans were all subject to false claims of securitization and that the investment banks had no idea who the creditors were in any one loan.

I was cast as a fringe conspiracy theorist when I suggested that the paperwork from the false “closings” were destroyed or lost. I had proof. I identified a system and infrastructure of falsifying and fabricating documents with forgeries, robo-signing and now Robo-witnesses. It didn’t matter and even today Judges are ruling as though that makes no difference — because they see their primary responsibility as one Judge in Sarasota said in open court was to “protect the banks.”

The Banks realize they have a devastating problem but they are coming up with vocabulary and arguments that the Judges want to hear about rescission. They are throwing everything including the kitchen sink at rescission. They could avoid that by showing a real creditor with standing and taking issue with the notice of rescission. But they can’t because they cannot come up with a real creditor for a number of reasons and they dare not because it would reveal deep defects in the claimed securitization process. It could literally destroy most of the big banks.

So in our judgment we are going to be confronted with resistance from the bench. The laws, rules and procedures for the TILA rescission could not be more clear — as the opinion written by Justice Scalia stated with dripping sarcasm. BUT the Judges and many lawyers believe that the statute was framed incorrectly and that Congress never anticipated the problems that we face today with these wild, convoluted claims of securitization. So they are basically taking the faith-based legal approach instead of the “nation of laws” approach provided in the Constitution. They are saying the US Supreme Court was wrong or didn’t mean what it said, just as they said before when hundreds of thousands of decisions came down requiring a lawsuit claiming fraud, and tender to property or money to even have standing to enforce rescission. The assumption, even by fervent advocates of the rights of homeowners, was that it just wasn’t possible that Congress meant to give homeowners that much power to cancel a loan contract, note and mortgage. They are wrong. That is exactly what Congress wanted to do.

Judges want to believe that argument that somehow homeowners are twisting the law around in order to get a free house. But if they get a free house it is only because the banks could not come up with a party who had standing to VACATE the rescission within the 20 day time limit.

Ultimately the issue will be decided through litigation. But there ARE some Federal judges who never made the mistake of the thousands of other judges who “interpreted” a statutes that was clear on its face and who recognized that there was no ambiguity to resolve.

It is ONLY in a situation where the Court determines that something is ambiguous that they can resolve the ambiguity through interpretation. The Supreme Court says that the statute is clear and unambiguous. it says it applies to all rescissions and makes no distinctions between disputed and undisputed rescissions. It says that the rescission is effective when mailed. And it provides a window for compliance of 20 days. Any “interpretation that there was more than 20 days to comply — or file suit during that time to vacate the rescission — would effectively change the plain meaning of the statute — that the rescission was effective when mailed.

So we strongly believe we are right but we strongly believe that we encounter a lot of resistance from bank lawyers and the bench. Lawyers must be prepared to move to strike any “motion” that attempts to skirt the issue of standing. There is no valid motion if the “standing” of the proponent of the motion was established on the basis of the note and mortgage which are now void, once the notice of rescission was mailed.

The banks don’t feel comfortable ignoring rescission anymore. But they are trying to get the Judge to “ignore” the rescission without asking for the Court to vacate the rescission. They know that requires a lawsuit and that in order to file a lawsuit the actual creditor would need to be presented because the note and mortgage are void and nobody can assert either standing nor a claim upon which relief could be granted on the basis of void instruments.

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