Back to the Future: RESCISSION

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There are several types of people who have registered their dismay about my recent articles on rescission. I wish to remind my audience that everything I have said today I said before — in 2008 in articles, my books and my seminars (the DVD’s of which are still available for sale). Back then and for a period of years afterwards almost everyone thought I was wrong, but they frequently sent in a notice of rescission anyway since it didn’t appear to do any harm. Those people are probably in the best position to get damages or even reclaim their homes.

The hidden explosive in the Jesinowski decision is that “securitization” of loans becomes a much more difficult process when the investors realize that the borrower has a definite right to send a notice of rescission that will cancel the note and mortgage, even if those instruments were valid. The Jesinowski decision from the US Supreme Court substantially increases risk and thus reduces the value of any mortgage backed security deriving its value from loans secured by homes. The option of TILA Rescission presents a risk element that may well eliminate the ability of stable managed funds to buy or even hold such securities.

And indeed it looked as though I was wrong and sticking to a fantasy while the rest of the world had it right — that a borrower can’t just cancel a loan except in the first three days afterwards. Judges, lawyers and even borrowers agreed that I must have it wrong because the banks are the ones with the power. HUNDREDS (maybe thousands) of court decisions disregarded, ignored or ruled against the effectiveness of a notice of rescission. Trial courts, appellate courts, state courts, Federal courts, bankruptcy courts all disagreed with me that the rescission didn’t require a lawsuit or even a lawyer and it didn’t require tender of anything.

My critics were quick to point out that this “theory” of mine was patently absurd. And they pulled out case after case on rescission which absolutely and conclusively proved that I was wrong. You can go back to the early blog posts about this and see for yourself. I predicted that a U.S. Supreme Court decision would overturn all the decisions and opinions that were written and rendered during the 2007-2014 period. I was right. And all the naysayers were wrong. I was right to read the plain wording of a very clear statute (TILA) and the regulations under Reg Z. This was not old-style rescission and it never was meant to be.

It is fascinating to see that the old arguments are popping up again despite a decision from a unanimous US Supreme Court that ordinarily can’t agree on anything. And it was the determination of the court that Justice Scalia should write the opinion apparently to avoid exactly what is happening — people are saying the Supreme Court is wrong. Even if that were true, the US Supreme Court is FINAL. The argument is over regardless of why or how people are covering the previous ridicule of TILA and TILA rescission. Toothless they called it.

No Judge, lawyer or borrower can overrule the US Supreme Court and there is no argument left to consider when their decision is unanimous.

Actions to either quiet title or enforce the rescission — getting back the canceled note, forcing the filing of a satisfaction of mortgage and getting back all the money they paid, SHOULD BE FILED in my opinion. Of course I must add that you should rely not on this article but on a lawyer who is licensed in the jurisdiction in which your property is located. But use a lawyer who understands the substance and procedure of TILA rescission and who is NOT confusing it with the rules governing other types of rescission.

This is the same argument that the banks used successfully in the past in non-judicial states. They said there was a specific statutory remedy for lenders to enable non-judicial foreclosures and to limit active cases in which the court system could absorb volumes of cases for judicial economy and did not deprive the borrower of due process because the borrower could bring the action to stop the sale. THIS is the same thing in reverse. There is a specific statutory remedy for borrowers to cancel the deal mostly fueled by the same intentions. And the idea that 20 days is too short for the lenders to stop their default in their duties to comply with TILA rescission is no argument at all. Basically it is clear from Scalia’s decision that if anyone doesn’t like this they should seek a change in the law — from the legislature, not the bench and certainly not just in their own head.

So for those serious minded people who are having trouble wrapping their minds around rescission as a nuclear option my only answer is go back and read it again. For those who are hired by the banks to poke fun at anyone who is promoting rescission as a quick available remedy, my answer is that I have been poked for 8 years and it turned out that I was right and your employers, the banks, are screwed.

If you have already sent a notice of rescission you need to speak with a lawyer because you most likely have rights and substantial upside potential. If you have not sent a notice of rescission, I see nothing to prevent you from doing so, although IF the “lender” or “creditor” has standing and brings up things like the statute of limitations within the 20 day period, you might lose. But in order for them to have standing they would have to prove the debt without using the now void note and mortgage. And THAT is why we have not heard about any lawsuits being filed within 20 days of rescission.

And finally, if you don’t like or agree with what I am saying for ANY reason, then forget about it. Let others get damages and recapture their homes.

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