The strong antipathy that judges have for TILA Rescission has caused them to directly flout the provisions of a Federal statute and the the direct instruction from their boss — the Supreme Court of the Untied States (SCOTUS).
But there are several strategies than can be employed that will make it difficult for banks to use their wrongful foreclosures to their advantage and maybe even prevent them from getting the forced sale of the property in the first place.
REMEMBER: TILA Rescission is an EVENT. It is not a claim requiring adjudication in the courts.
The rescission is ALWAYS effective upon mailing and subject to being vacated or set aside by a court of competent jurisdiction upon the filing of timely claims by a party with legal standing — not the same parties who were using the note and mortgage unless they were also the actual creditor.
You can compare rescission to foreclosure. When the sale is complete and the deed is issued the event has happened. It is no longer a claim. Even if the sale can be voided because of a void assignment or whatever, the sale still has happened. It’s history and it is in the chain of title.
When rescission is dropped in the mail it is history. ANY decision that implies or states that rescission was not effective because of this or that is wrong. The rescission is always effective upon mailing even if it was wrongly sent. And the only person who can sue to vacate the rescission is a party with legal standing. Since the rescission IS effective the note and mortgage are void. That means they can’t use the note and mortgage to establish standing. THAT is jurisdictional!!
Until a final order or judgment vacating the rescission is entered by a court of competent jurisdiction the TILA rescission remains effective.
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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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If you record the rescission notice then it becomes part of the chain of title — a potential problem for the banks. If they sue to clear title you can attack them on standing. You don’t actually need to file any lawsuit at all. The banks know they can’t meet the standards for legal standing so they are not filing any lawsuits to remove the rescission notice from the chain of title. Instead, they are issuing title insurance that covers the rescission and people are taking it. Their successful strategy thus far is to bluff judges into a ruling that either ignores the rescission or directly conflicts with the rescission even though there rescission is effective by operation of law starting with the date it was mailed.
Since in most cases there was no consummation of a loan contract at the time of the “loan closing” the legal issue becomes whether you can adopt a strategy of saying that the loan contract was consummated at a later time — i.e., within 3 years. If that is the case all they can do is defend and then again become subject to attack on standing and without the ability of the banks to use the “loan documents” they will never be able to show an injured party. That strategy must be based on some sort of good faith statement of ultimate fact, even if weakly supported. You need enough to survive demurrer or motion to dismiss.
The author of the rescission notice MAY file a lawsuit seeking to enjoin the Defendants from using or filing documents relating to the rescinded note or rescinded mortgage (deed of trust). If you make it through a motion to dismiss or demurrer, the dark side will be forced to conjure or fabricate a party who has “legal standing” even to defend your lawsuit. The only valid defense would be that you sued the wrong parties. Anything else challenging the effectiveness of the rescission requires legal standing and should be struck from the defenses unless they allege that this party is going to suffer financial injury directly arising out of the rescission — an allegation that would open their books of record in an unprecedented manner.
In the absence of saying that consummation was less than 3 years ago, the statute’s provision stating that the right to rescind expires three years after rescission will be applied by nearly all judges. So they will presume that consummation was on the date of the closing documents and apply the three-year rule. That presumption is dangerous because it presumes that a loan occurred between the originator and the homeowner. In most cases, it didn’t.
If you never had a consummation, rescission does not apply — no consummation means no loan contract and no loan contract means there is nothing to rescind. But if you prevail on no consummation then you can apply for the cancelation of the deed of trust.
If the notice of rescission did occur within 3 years of the date set on the closing documents then the statute clearly applies — but judges are ignoring it or finding ways to allow violation of the statute and the SCOTUS decision. The Courts were slapped down by SCOTUS once (in Jesinoski) when the court stated directly that it was error to consider rescission a claim. It is an event, for which no lawsuit is required It looks to me like they need another slap from SCOTUS.
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