Modification or Refi? Which is it?

Just because a document bears a title doesn’t mean that it accurately describes the nature of the transaction. A modification of any agreement requires both sides to agree. Here again we have the identity of the creditor being changed — expressly eliminating any claim that the “servicer” is a legal representative of the creditor to whom the underlying debt is due. The original payee is out, the original owner of the debt is out, and a new set of characters/players enters the picture.

It is clear to me that the so-called modifications are in actuality new loans refinancing the old loans. A “modification” that provides for new terms, new provisions, new term of loan, new interest rate and new principal amount, together with a new Payee is not a modification. Hence TILA disclosure requirements must be met and such modifications start a new clock on when to send a TILA Rescission/Cancellation notice.

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The term “modification” admittedly is given broad meaning in modern jurisprudence. But like assignments, Pooling and Servicing  Agreements, and the other fabricated documents consistently proffered into evidence, the title doesn’t mean that the content is consistent with the title or that the content or the title is consistent with parole or extrinsic evidence.

In my opinion modifications are being used, in most cases, by strangers to the transaction to perfect their theft of the underlying debt and the paperwork such that the underlying debt will finally be merged into the note and the mortgage or deed of trust will actually secure performance of the terms of the new loan.

To be clear, I think that any lender can agree to modify one or more terms of an existing loan between the lender and the borrower.

But that is precisely the point, to wit: it is only the lender (i.e., owner of the underlying debt) who can modify the terms either directly or through an authorized agent.

Where the agency of the party claiming servicing rights is in doubt then custom and practice in the lending industry would be to require acknowledgment by the actual owner of the underlying debt — i.e., the party to whom the proceeds of payments on the loan are owed. — Just ask any banker including the TBTF banks. If you sought to borrow using such a “modified” loan, what would the prospective lender require?

So for example, here is a summary of my comments to a homeowner’s draft of a motion to recall mandate based upon their discovery of a copy of the rescission they had previously thought was lost.

1. The pleading is FAR too long.
2. I’m not sure the recall of the mandate is the right way to go. New evidence usually is the basis to vacate the final judgment or final order. But it seems to me (consult with appellate counsel) that a motion to recall the mandate is still proper since in essence you are saying the entire case should be dismissed now that you have found the original rescission/cancellation. Thus your citation to Rule 60 is probably correct.
3. Your point about the newly discovered evidence of an earlier rescission is buried. It should be up front.
4. 1. And a simple, short straightforward argument should be made that the new evidences of an earlier rescission/cancellation that the Appellant recalled but could not find. Now she has found it.
   2. Since TILA Rescission voids the note and mortgage by operation of law, there is no subject matter jurisdiction in any court if the foreclosing party is relying upon the void note and the void mortgage.
5. Your point about the mod being a new loan needs to be broken down and condensed:
6. 1. The modification changed
   2. 1. The Payee
      2. The interest rate
      3. The principal amount due
      4. The term of the loan
   3. Therefore despite being called a “modification” it was in fact a refinancing.
   4. 1. As a new loan it started the clock ticking on times for rescission
      2. Since they called it a modification (without any evidence that it was approved by the creditor to whom the underlying debt was owed) they evaded the Federal and State disclosure requirements
7. Hence by operation of law the 2009 rescission for a 2008 loan was within the 3 years proscribed by §1635 of TILA. Hence
8. 1. The note and mortgage are void
   2. The time for enforcement of the rescission is over but the loan has been canceled.
   3. Any remedy sought by a “creditor” has also long since expired.
   4. No court possesses subject matter jurisdiction
   5. The matter must be dismissed
   6. Dismissal with prejudice its warranted inasmuch as there are no remedies available to either side due to the expiration of rights under TILA and the statute of limitations
9. The previous argument that this was a “purchase money mortgage” is absurd. The refi was a new loan and obviously not a purchase money mortgage.
10. Don’t reargue the entire case. It will only irritate the court.

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