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Rescission Litigation: 3 days from when? 3 years from when?

livinglies.wordpress.com | July 3, 2015

By Neil Garfield

This wraps things up for the week, and a reminder that there is no show tonight.

I think the following rules should be applied to the letter of rescission. Remember that Congress explicitly stated that borrowers have the right to effectuate rescission with a mere letter. Congress did not state that the lenders could reject the rescission with a letter. They MUST file a legal action alleging whatever defects they wish to assert. Since the rescission is effective by operation of law it is ONLY through operation of law that the rescission could be vacated.

1. Don’t refer to the date of origination. You don’t know when your liability, if any, arose. You only know when you signed papers. Consummation of the loan commences the moment your liability arises and that is a question of fact for the alleged “lender” to allege and prove IF THEY WANT TO. The alleged lender has the option of accepting the rescission and all the reasons they could have attacked the rescission are voluntarily waived. If they don’t get an order vacating the rescission within 20 days of receipt, they have involuntarily accepted the terms of rescission in the TILA statute. Congress explicitly cut off any right of a lender to stonewall the rescission.

2. Don’t offer any reasons for the rescission. You might be putting those reasons in dispute yourself thus raising the question about whether the rescission was proper or warranted.

3. Send it to everyone who was ever claiming a right to collect, own or service the loan.

4. To make sure that they know you are traveling under TILA, you can add that they have 20 days in which to comply with Federal statutes.

5. The Beach v Ocwen decision (1997, Supreme Court) can be used for the borrower since the “lender” was not challenged as to standing to contest the rescission, the 3 years was admitted to have run and the alleged “lender” DID file papers in court to get relief from the rescission, which the court gave them. No allegation appears to have been made as to the running of 20 days and perhaps Great Western actually filed their contest of the rescission within 20 days. Both the State and Federal Court have jurisdiction over TILA federal Questions. But it is important to note that Beach says that the 3 years is not a statute of limitations, it is statute of expiration. So the question becomes whether the lender wishes to use that defense, whether the time has run from “Consummation” and whether consummation has actually occurred between the parties who who arguing about it and if so when that point in time was that consummation occurred between the parties identified as borrower and lender.

6. The question of whether the alleged lender has standing, or has good grounds to vacate the rescission are all factual questions that must be alleged in a pleading or complaint and proven at trial or final hearing, with the burden squarely on the party attacking the rescission.

7. The basic thrust is that the rescission is effective by operation of law by mailing a letter from the borrower(s). The ability to counter that by letter from the lender is not in the statute and therefore not available. They must file something in court.

8. During the 20 days running from the date of receipt of the notice the “lender” has the option of accepting the rescission. If they wish to get relief from the rescission, they must file a lawsuit or raise their objections in a pleading in a court of competent jurisdiction — and possibly ask for immediate relief within the 20 days in order not to be in violation of TILA statutes.


Nancy Duffy McCarron, CBN 164780
Attorney, Real Estate Broker, BBB Arbitrator, CA Notary Public
Certified Forensic Loan Auditor, Property Manager


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