Neil Garfield just scribbled this bit of lunacy:
He claims the loan is bad because the lender somehow didn’t lend his own money, so borrowers ought to file a motion to dismiss because the loan was never properly consummated and the rescission made the loan documents void (by some inscrutable magic I suppose). With such baloney he mesmerizes borrowers into buying his services for things they don’t need and shouldn’t want, like a cuckoo bird fooling other birds into rearing them. You wouldn’t believe the number of people who echo his goofy theories without realizing that courts have ruled against them repeatedly.
Anyway I write in response to his nonsense, so as to straighten out readers on the question of how TILA rescission has operated for decades in spite of Garfield’s vapor money theory.
The courts don’t care where the lenders got their money to lend, and they have taken a monstrous dump in their opinions for decades on the vapor money theory that underlies your corresponding worries. So drop it, already.
TILA rescission works EXACTLY the way it has worked in the past under the present laws. SCOTUS on Jesinoski changed only one thing – trial courts in Circuits that didn’t already now must allow TILA lawsuits later than 3 years after consummation.
TILA rescission, for the borrower to initiate it, first and foremost requires a breach of TILA through the lender’s failure to give the borrower proper disclosures, principally of the right to rescind. If the lender did not breach TILA, then NO RIGHT TO RESCIND ACCRUES TO THE BORROWER, and that means any associated notice of rescission constitutes a NULLITY.
EVEN IF the right to rescind accrued AND the borrower sent valid notice of rescission, the loan requires unwinding which requires the participation of both borrower and creditor. So if the creditor won’t do it, the borrower must sue to make it happen. Otherwise, when the borrower breaches the note in dispute, the creditor will foreclose and the borrower can bring up the rescission in court at that time.
Thus, the note and security instrument are STILL VALID and IN FORCE, even in rescission process. Why? For example, the borrower still does not have clear title to the house, and the borrower must maintain it properly and not let it become decrepit and lower in value.
Neil ALL OF THE CIRCUITS have managed rescission of decades before Jesinoski, and still manage them the same way after Jesinoski, except that now ALL of them, not just some of them, allow the borrower to sue under 15 USC 1640 later than 3 years after loan consummation.
And all your other hoopla about how the lender got the money to lend is just the frivolous theories until YOU can SHOW come supporting CASE LAW, which, so far, you cannot.