TILA RESCISSION MAKING COMEBACK AND BANKS ARE FIGHTING TOOTH AND NAIL

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IT’S TIME TO RENEW RESCISSION AS THE REMEDY — IT’S THE LAW

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SEE Rescission of Closed-End Mortgage Loan Transactions

TILA RESCISSION has come to nothing — until now. The Federal Law is clear. “I hereby rescind” is enough to cancel the contract. After that the contract  is over, there is no arbitration clause, and there is no security interest. The “lender” must send the note back cancelled and if they have filed or recorded a security interest, like a mortgage, they must release it by filing a release and reconveyance or a satisfaction of mortgage.

And please don’t forget that TILA is not the only source of legal support for rescission. Any common law or statutory fraud (Federal or State) fraud or even misunderstanding or frustration of purpose could be grounds for rescission including but not limited to fraud in the execution, fraud in the inducement and fraudulent conveyances.

The rescission doesn’t mean you get to keep the money — it just means that the lender doesn’t have the house as collateral and that whatever you owe the lender, must still be paid. There is a conflict of authority as to how you tender payment and when, but you must tender payment — at the latest, after the “lender” complies with the statute. That means the “LENDER” must immediately cancel all documents or file a declaratory action in court naming you as a defendant stating why you should not be permitted to rescind.

There is a time limit (IT WAS 20 DAYS BUT IT MIGHT BE SHORTER UNDER DODD-FRANK) on filing the declaratory action and if they fail to file, then procedurally the matter is concluded. It is sort of like a statute of limitations.

You owe the net amount of principal due to the creditor — you owe that money, less any damages you are entitled to receive, and they can get a judgment or otherwise demand a payment schedule. A Judgment can be converted to a judgment lien which would again put them in the position of a secured creditor but not with the same rights as a “lender.” Despite some recent rulings indicating that the borrower must tender the entire amount loaned in order to have an effective rescission, that is not what the statute says and is not what many other courts have ruled. A payment plan has been sufficient in many cases.

Note that I said “net amount due to the creditor.” It is entirely possible that the net amount is zero or some other figure. They may even owe you money. That might be because of your own payments or the payments proceeds from third party servicer, insurance or credit enhancement proceeds that were paid and remain unaccounted for. This alone is reason enough to defend the claim for immediate tender. If you don’t have the full accounting of all money in and out of the pool and on behalf of the pool claiming ownership of the loan, then you can’t very well tender, can you? And to whom would you tender without complete disclosure which is why you are rescinding (violation of disclosure requirements)?

Rescission does not mean you “give back the house.” You never got the house from the “lender” — you got money from the “lender.” You got the house from the seller of the house. That deal is done (if you got clear title). Cancelling the contract therefore means that you have cancelled the lien and that you will pay the money.  Or, as some courts have indicated you COULD offer the house as payment in full, if that is what you wanted to do. That would be your tender. It was the “lender” who produced the “appraisal” that got you into this mess, therefore they should be stuck with it. This has not been decided by the courts.

BOTTOM LINE: THE ONE FEDERAL STATUTE WITH REAL TEETH BUT WHICH JUDGES HAVE MISUNDERSTOOD AND MISAPPLIED IS THE TRUTH IN LENDING ACT. THAT FEDERAL STATUTE APPLIES TO MANY BUT NOT ALL HOME LOANS. IF IT APPLIES, THEN THE RIGHT OF RESCISSION APPLIES FOR HOWEVER LONG IT TAKES THEM TO GIVE YOU THE DISCLOSURE YOU SHOULD HAVE HAD AT THE CLOSING. SO THE ONE YEAR STATUTE, THE THREE DAY STATUTE, AND THE THREE YEAR STATUTE ARE NO BAR TO RESCISSION IF YOU STILL DON’T KNOW WHO THE IDENTITY OF THE REAL CREDITOR AT THE TIME OF CLOSING. JUDGES ARE STARTING TO REVISIT RESCISSION WITH A FRESH LOOK AT THE LAW AND FACTS.

CHECK WITH COMPETENT LEGAL COUNSEL LICENSED IN THE JURISDICTION IN WHICH YOUR PROPERTY IS LOCATED BEFORE TAKING ANY ACTION OR MAKING ANY DECISION BASED UPON THIS ARTICLE.

Tags: bankruptcy, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND
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