Hawaii Appellate Court: TILA Rescission is Effective

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see Hawaii TILA Rescission -smith

U. S. Bank lost another one. As expected the Appellate court was timid even though it was emphatic on certain points. Although the decision was issued it was not slated for publication (yet).

The situation in this case is the same as Jesinoski with a few other wrinkles. And fortunately the Appellate court decided that comments from some trial court judges notwithstanding, the U.S. Supreme Court CAN tell all other judges on every bench what to do. That is why SCOTUS exists — even if they are not right, they are final. What SCOTUS said in Jesinoski left no room for wiggling — and it is the law of the land.

So in this case the Court overturned virtually everything done by the trial judge and remanded the case for further proceedings consistent with the decision. The rescission was indeed effective without a lawsuit by operation of law leaving no loan contract, no note and no mortgage.

But the main reason I am writing about this decision is to point out some assumptions that are contained in the case and to point out the real argument, especially when the rescission is sent many years after the original paperwork was signed.

In the Hawaii case it is stated that the loan was indeed consummated as of a certain date. I don’t know if there was evidence to support that or if they just assumed it from the date of the paperwork. My point on these pages has been that attorneys from homeowners should admit nothing for the simple reason that none of what appears to be true is actually a valid assumption.

Do not assume that there has ever been consummation and for heavens sake don’t admit it. You are admitting to fact about which you know nothing — except for self-serving comments from parties who have been repeatedly sanctioned for lying, fabricating documents and forging documents. I understand your problem, to wit: if the originator never made the loan, then who did? And the answer should never and can never come from the borrower. It must always come from the lender which is why the Truth in Lending Act (TILA) exists.

Nothing can erase the fact that in nearly all originations the named party on the note and mortgage (or deed of trust) was not the lender in any manner, shape or form. Even when you see the name of one of the mega banks, they were almost always using money diverted from the REMIC trusts rather than FOR the REMIC trusts.

The reason this is important is simple. it’s the law. No lender can complete a deal without disclosure of the identity of the lender because the law of the land (TILA) requires the disclosure of the lender and it is virtually black letter law in common law precedent that a debtor must be presented with evidence of the identity of his creditor. This is not a matter for philosophical speculation as to what the law SHOULD be, it is well settled as to what is contained in TILA and several states have similar provisions in their statutes to prevent deceptive lending practices.

So the fact that money hit the account of the closing agent (usually hours, days or even weeks or months or years after the paperwork was signed) does NOT mean and one should never admit that the money came from the payee on the note.

No money=no  consideration. No consideration =no enforceable contract. No enforceable contract=note and mortgage void and invalid — unless some party comes along and pays for the bad paper — in which case the risk of loss shifts the maker on the note and mortgage BECAUSE THAT IS THE LAW. See UCC article 3 and article 9. If payment is involved then the paying party becomes a holder in due course in which case the maker must pay the holder in due course and then seek remedies against the parties originating the fake loans.

So the first rule of rescission analysis is whether there any actual consummation of a loan contract wherein the SAME PARTIES that exchanged an offer and acceptance of terms, also were parties to a financial transaction in which money exchanged hands. If the answer is no, then there is nothing to rescind because there is no enforceable contract, but it is possible that a notice of rescission might be a short cut to making it known to the world that the recorded mortgage is void.

If the answer is yes, then when was consummation completed? — given the fact that the money on a loan in the best of cases is not released to the closing agent until some time AFTER the time when the prospective borrower signs the closing documents.

My point is that these are questions of fact wherein only the party claiming to be lender or creditor or holder has the information or access to the information. So in order to proceed with collection or foreclosure they must plead and prove that a loan contract was consummated as of a certain date (and maybe time). Of course  if the borrower concedes or admits that the loan was consummated on a certain date, then the debtor is stuck with a date of consummation that most probably never happened.

The more basic point procedurally is that the moment of consummation is a question of fact that should be denied in almost all cases because either there was no consummation between the debtor and anyone in the chain relied upon by the party seeking to collect or foreclose, in which case the note and mortgage are void — or there was consummation in which case the loan contract, note and mortgage are void because the law says they are void. Justice Scalia could not have been more clear when he said that the statute makes no distinction between disputed and undisputed rescissions.All notices of rescission, whether right or wrong, are effective upon mailing. Period. Why? Because that is the law of the land.

And the court may not read in its own view of a statute that is clear on its face. Thus when a court chooses to ignore a rescission based upon the presumption that United States laws don’t apply in his courtroom, or because he thinks he knows who would win a case seeking to vacate the rescission and reinstate the mortgage and note, or because he thinks that the party seeking collection and foreclosure could still file a lawsuit which in all probability the alleged “holder” (nobody ever claims to have holder in due course status meaning they never paid for the paperwork), the court has accomplished the following: (a) by ignoring the rescission the court has permanently made title clouded and unmarketable (unless the court vacates the rescission), (b) by presuming that the party seeking collection and foreclosure has standing the challenge the rescission — without the note or mortgage, the court has turned substantive and procedural law on its head and (c) the court has overruled SCOTUS which in our system of government is not an option.

The over-riding point is that if anyone wants to challenge a late or otherwise “defective” rescission they must (a) have standing without using the note and mortgage (b) recite that the rescission is effective (c) allege that the rescission is wrongful and (d) pray that the court vacate the rescission and order reinstatement of the note and mortgage. And one more thing — they must file within 20 days of receipt of the notice. Why? Because it’s the law.

The fact that none of the parties seeking collection and foreclosure can conform to these simple requirements speaks volumes about  who they are and who they are not.

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