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TILA RESCISSION — Filling in the Gaps

Posted by Neil Garfield | February 1, 2018

Lawyers for homeowners are probably contributing to the confusion that the banks bring to the table. And Judges, despite the clear evidence in the public domain that the banks committed millions of illegal acts, nevertheless take the word of banks over the word of a homeowner.

I think that lawyers for homeowners are adding to the confusion when they file lawsuits seeking a declaration that the TILA rescission is or was effective. That lawsuit clearly says that they are asking the judge to decide if the rescission was effective when in fact the law of the land says quite clearly (according to SCOTUS in Jesinoski) that the rescission is already effective. The statute and SCOTUS says that the rescission already happened when it was mailed or delivered. Asking the court to ratify that is taking a step backwards.

Just filing the lawsuit for declaratory judgment might be enough to swing the TILA rescission into a common law rescission where the burden of proof is squarely on the homeowner instead of the other way around. The homeowner might be abandoning the TILA rescission.

But of course even if the homeowner did abandon the TILA rescission that does not remove the rescission, especially if it is recorded in the county records. Following the statute that says the cancellation of the loan contract is effective by operation of law, it is impossible for anyone, even the homeowner, to back off from the rescission except by agreement with the actual owner of the debt.

Theoretically such declaratory actions should be dismissed because the rescission is already an incontestable fact (unless delivery is an issue). But judges take such actions as an invitation to interpret the situation and rule on it. That is where so many “bad” decisions come from.

There is a lawsuit to enforce the statutory duties under the TILA rescission. But it is clear that lawsuit won’t produce a favorable result in today’s judicial climate. Tactically, I think it is better to wait the out the one year statute of limitations and take the position that there is no balance due because it is time-barred, there is no note and there is no mortgage or deed of trust. Of course I could be dead wrong. SCOTUS might reverse itself or carve out exceptions etc. But the Jesinoski decision was dripping with sarcasm as it slapped the hands of all judges in the land for “interpreting” a statute that was not subject to interpretation because the statute was clear and unambiguous.

If foreclosure is on the horizon then an action for injunctive relief and supplemental relief would be in order but it is unlikely to get traction because the judges are still “interpreting” the statute. It is therefore better to raise the defense, make sure the rescission is recorded, and run the clock until the next SCOTUS decision.

The bottom line is that TILA rescission is the ultra powerful remedy that has everyone scared to death. But it won’t be applied until SCOTUS, once and for all, explicitly states that judges are exceeding their authority by imposing restrictions that are not present in the statute. Under no circumstances should the lawyer for a homeowner get sucked into an argument about whether the rescission was effective. The sole position should be that rescission has already occurred and that if anyone doesn’t like it they should have brought a lawsuit to vacate it.

The issues of whether the notice of rescission was sent beyond 3 years from consummation, whether the loan was a purchase money mortgage loan, etc. should not arise until and unless a party with standing files a pleading seeking relief from the TILA rescission. The answer to such questions should always be the same — the rescission already happened. Nobody has alleged standing to contest it, thus the questions refer to questions of fact that could arise in a separate action, if a party with standing brought the action. That automatically excludes the present foreclosing parties unless they wish to plead and prove that they own the debt — without use of the void note or void mortgage.

Under no circumstances should a notice of TILA rescission be framed as a claim. It is an event that already occurred in the past. The only proof required from the homeowner is whether the notice of rescission was sent and when. That is the event that starts the clock ticking on all other remedies for borrower or lender. TILA rescission converts a contractual claim for money due into a statutory claim for money due. In order to bring that claim the owner of the debt must first comply with the three duties in the TILA rescission statute.

 

 

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