Landmark ruling leaves no doubt that rescission is effected when the borrower notifies the creditor of his intention to rescind.
In order to challenge the rescission the bank must file a lawsuit within 20 days asking for declaratory relief that the rescission is not effective. If their grounds are that TILA rescission is not available because there was no contract, then they are essentially arguing that the borrower can’t rescind because there was no contract. Either way they lose the deal, the mortgage, the note; everything.
Read on...
Jesinoski v. Countrywide Home Loans, Inc., 574 U.S. ___ (2015), was a United States Supreme Court case in which the Court held that the Truth in Lending Act does not require borrowers to file a lawsuit to rescind loans and that sending written notice is sufficient to effectuate rescission. Some analysts have described Jesinoski as a "landmark case" in Truth in Lending Act.
Truth in Lending Act Rescission Requirements.
In 1968, Congress passed the Truth in Lending Act to help consumers "avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing." The Act gives borrowers the unconditional right to rescind loans within three days of consummation of the loan, after which they may rescind only if the lender failed to satisfy the Act’s disclosure requirements. However, even if lenders never provide the required disclosures, borrowers only retain the right to rescind loans up to three years after the loan's consummation.
Rescission Explained!
A borrower must exercise the right of rescission within (1) three business days of signing the loan papers, (2) receiving all the loan disclosures, (3) and getting a copy of the NOTICE OF RIGHT TO CANCEL the right of rescission. Usually, all three of those requirements are met on the same day; if they aren’t, the clock starts ticking only after all three conditions have been satisfied.
“The language[of TILA] leaves no doubt that
rescission is effected when the borrower notifies the creditor of his
intention to rescind.
To stop rescission the Bank must file a suit within 20 days and argue that rescission is improper. Therefore you can rescind the mortgage even when past the three year right of rescission. See Jesinoski v. Countrywide Home Loans, Inc. Held: "A borrower exercising his right to rescind under the Act need only provide written notice to his lender within the three-year period, does not have to file suit within that period. Section 1635(a)’s unequivocal terms—a borrower “shall have the right to rescind by notifying the creditor of his intention to do so”
This ruling leaves no doubt that rescission is effected when the borrower notifies the creditor of his intention to rescind. This conclusion is not altered by §1635(f), which states when the right to rescind must be exercised, but says nothing about how that right is exercised. Therefore the TILA's (The Truth in Lending Act's) three year right of rescission never tolled.
Why? Because the true lender was never disclosed.
Why? Because the loan was never "consummated."
In the Ramsey v. Vista Mortgage Corp, 176 BR 183 (TILA RESCISSION IN BANKRUPTCY CHAPTER 13) case the court laid down the test of when the three year right to rescind begins to run and specifically tackles the concept of when a loan is “consummated.” Several internal citations also help clarify this point. Here is what the Ramsey Court said:
“When Ramsey signed the loan documents on September 13, 1989, he knew who was going to provide the financing. Courts recognize the date of signing a binding loan contract as the date of consummation when the lender is identifiable.” The Court also cited to the Jackson v. Grant, 890 F.2d case (9th Circuit 1989), a NON-BANKRUPTCY CASE, and said:
“under California law a loan contract was not consummated when the borrower signed the promissory note and deed of trust because the actual lender was not known at that time. Under these circumstances, the loan is not “consummated” until the actual lender is identified, because until that point there is no legally enforceable contract.”
If you have no contract, there is nothing to rescind, but I guess you could say that it’s merely a discovery point and the rescission is conditionally effective until discovery is complete as to what actually occurred and can be put together by the court from the evidence (Then maybe a TILA rescission will be effective, maybe not; if not because there is no contract, what does the homeowner care? You will get the same result, plus he gets to sue for fraud and other damages suffered.), but what’s a homeowner to do when past three year right of rescission when arguing TILA?
...if it turns out that consummation did not occur because the broker willingly withheld the table funded partners identity, or alternatively was acting as STRAWMAN for undisclosed investors, and was using their money directly instead of funneling through the REMIC to purchase the home loan (therefore it really was not a buy-sell transaction, it was a disguised buy using duped investors money who expected a legitimate buy-sell to occur, but the REMIC was not properly funded), then what angle do you think is best for TILA? Leave consummation out of the initial argument, and hang your hat on equitable tolling if past three year mark, or keep it in and argue both points”
This raises an interesting question. If the lender was not disclosed at closing, then is a TILA rescission effective? My first answer is that if the rescission notice is sent, then the mortgage and note are nullified by operation of law unless the “lender” files a lawsuit within 20 days contesting the notice of rescission. So whether you were right or wrong, it would be my opinion that if the “lender” does not respond, the matter is closed and that is the end of the note and mortgage. And if there is no note and mortgage then anything that happens afterwards is void because you can’t get a foreclosure on a mortgage that legally does not exist even if a copy of the mortgage is sitting in county records. And a sale would also be void (a wrongful foreclosure).
The answer is found in the court system is that if the lender is not disclosed there can be no consummation because there is no loan contract unless you have at least two identified parties. If there is no loan contract there is nothing to rescind. But an admission from the “lender” or a finding by the court that TILA rescission is not available because the loan contract was never consummated or did not exist leads to one conclusion: the borrower still wins. The borrower can then sue to nullify the note, mortgage, debt, foreclosure and foreclosure sale on the basis that they are void by operation of law because there was no deal. And the borrower could then, in my opinion, sue to have the banks and servicers return the monthly payments and other payments they collected on the nonexistent contract for all the money they collected. This too is supported by some case decisions where Bank of America and others have been required to disgorge money they received when they had no right to collect it in the first place.
For The Full Story See: http://www.yourrighttocancel.com
http://articleatlas.com is here to help you with your annual credit report, credit repair, cease and desist letter, credit history, credit rating.
Sitemap
Articles
Contact Us
About Us
Privacy Policy
Legal Disclaimer