Quack Attorney Neil Garfield just posted this dreck on his LivingLies blog:
Removing Liens Rendered Void by TILA Rescission 15 USC §1635
Client goes into the office of an attorney and tells him/her that a notice of rescission was sent. The attorney without studying the issue says the rescission never happened. And so it goes.
In my opinion once the time limits have expired on claims arising from TILA (which includes the debt) the county recorder should remove the encumbrance from the chain of title or be ordered to do so by a court of competent jurisdiction.The attorney might be on the right track but for the wrong reason. There literally is no question about the meaning of the TILA Rescission statute 15 USC §1635 because the highest court in the land said there is no question. And without any question there is no room for interpretation. See Jesinoski.*The plain wording of the statute says that once the notice is sent the OLD loan agreement is replaced with a NEW statutory mandatory loan agreement. This is the factor that is missed by most lawyers and judges on trial and appellate courts. The wording of the statute is clear and it is effective by operation of law the moment the notice is dropped in US postal Service mail.*It’s not a declaration that the deal is completely gone. It is a change in terms required by statute. Banks have ignored it at their peril but so far successfully.*The courts have strained themselves in their rebellion against this statute because they don’t think so much power should have been vested in each borrower by the legislature. So the judges answer to the problem is to pretend that the legislative branch did not say what it said. SCOTUS thought it was putting an end to that nonsense in Jesinoski but most judges continue to ignore the mandate of both Congress and the Supreme Court.*So there we are. In simple terms the average person who has sent a notice of rescission has title to property that by operation of law has no encumbrance thereon. But the OLD encumbrance from the OLD loan agreement is still in the County records. I think the recording of the notice of rescission is sufficient to bring an action in mandamus against the county recorder’s office to remove the encumbrance from the chain of title, but I can offer no guarantee that a court will order that, even though it is legally and morally correct.*In order to do that properly I think it would be prudent to first send a demand letter to the county recorder asking that the encumbrance be removed and asking for whatever instructions they would give in accomplishing the removal.
Bob Hurt responds…
You might want to re-read the SCOTUS opinion and the final opinion in the Jesinoski case
- Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790 – Supreme Court 2015
- JESINOSKI v. Countrywide Home Loans, Inc., 883 F. 3d 1010 – Court of Appeals, 8th Circuit 2018.
The district and circuit court judges both ruled AGAINST Jesinoskis. They concluded that NO TILA VIOLATION OCCURRED, and therefore the Jesinoskis had NO RIGHT OF RESCISSION under TILA. And SCOTUS, in its Jesinoski opinion, made this statement:
This regime grants borrowers an unconditional right to rescind for three days, after which they may rescind only if the lender failed to satisfy the Act’s disclosure requirements.
You should know that to trigger a conditional right of rescission TILA and its supporting Regulation Z require a violation and notice of rescission within the post-consummation 3-year repose period. In order to obtain money damages for the creditor’s failure timely to tender and remove the lien, the borrower must sue within one year and 20 days after notice, or counterclaim/sue within one year after initiation of a foreclosure. As stated in the Hoang case, no federal statute of limitations exists for enforcing the rescission, so the courts must go to state law to find a pertinent statute of limitations.
Jesinoskis claimed that they did not recall receiving the requisite notices of right to cancel, and each had signed an acknowledgement of receipt of the requisite notices. For that reason the courts relied on the signed acknowledgements rather than on the Jesinoskis’ faulty memories, as indicated in the following excerpt from the opinion:
“The language of the acknowledgment as presented to and signed individually by Larry and Cheryle more than suffices to demonstrate clearly each spouse’s receipt of two copies. There is no indication on the acknowledgment that the Jesinoskis were signing jointly on one another’s behalf. As such, we agree with the Sixth Circuit which interpreted identical language and concluded, “[s]uch clarity should be rewarded with a presumption of delivery that cannot be overcome without specific evidence demonstrating that the borrower did not receive the appropriate number of copies of the Notice.””
Thus, no TILA violation occurred in the Jesinoskis’ loan. And THAT explains why the courts denied their rescission effort. It also demonstrates that YOU do not comprehend the simple language of TILA (15 USC 1601), Regulation Z (12 CFR 1026), and the SCOTUS Jesinoski opinion. For example, take note of section 12 CFR 1026.23(d)(4):
(d) Effects of rescission.
(1) When a consumer rescinds a transaction, the security interest giving rise to the right of rescission becomes void and the consumer shall not be liable for any amount, including any finance charge.
(2) Within 20 calendar days after receipt of a notice of rescission, the creditor shall return any money or property that has been given to anyone in connection with the transaction and shall take any action necessary to reflect the termination of the security interest.
(3) If the creditor has delivered any money or property, the consumer may retain possession until the creditor has met its obligation under paragraph (d)(2) of this section. When the creditor has complied with that paragraph, the consumer shall tender the money or property to the creditor or, where the latter would be impracticable or inequitable, tender its reasonable value. At the consumer’s option, tender of property may be made at the location of the property or at the consumer’s residence. Tender of money must be made at the creditor’s designated place of business. If the creditor does not take possession of the money or property within 20 calendar days after the consumer’s tender, the consumer may keep it without further obligation.
(4) The procedures outlined in paragraphs (d)(2) [and (3) of this section may be modified by court order.
A creditor who knows he did not violate TILA will naturally resist the expensive process of tendering and removing the lien, and of litigating. So he will simply foreclose (because the borrower thinks he has rescinded and will stop making mortgage payments), or wait for the borrower to sue to force the creditor to tender and remove the lien. Generally, the borrower must sue or counterclaim in a foreclosure action in order to enforce the rescission, and in section (4) above, that means a court must order the rescission.
Remember that the SCOTUS granted certiorari in the Jesinoski case because the 8th Circuit had ruled that Jesinoskis must have sued within 3 years after consummation in order to enforce the rescission effort. SCOTUS did not deal with the question of whether a TILA violation had occurred or whether and how the courts must settle the differences between borrower and lender in TILA rescission dispute arising because the creditor refused to tender or remove the lien. The Jesinoski case in the District Court had never gotten to the point of considering whether Jesinoskis had justification for demanding TILA rescission. The District Court only got to that point AFTER the SCOTUS had rendered its opinion, that the borrowers need not sue for damages within the repose period of 3 years after consummation – they needed only to send the notice of intent to rescind within the repose period.
And that (as everyone but you seems to know) means the District Court must settle the matter when the creditor (as in the Jesinoski case) claims no TILA violation occurred and therefore refuses to tender or remove the lien until a District Court judge orders it. That, after all, is why the Jesinoskis sued to enforce the rescission.
When will you stop misleading borrowers into thinking they can rescind under TILA more than 3 years after consummation, or that they can rescind even though no TILA violation occurred?
⚓ Bob Hurt
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One thought on “Neil Garfield Gets TILA Rescission WRONG, AGAIN!”
Great article, but TILA ITSELF DOES NOT PROVIDE A LIMITATIONS PERIOD. Hoang v. Bank of America, N.A., 2018 WL 6367268 (9th Cir. December 6, 2018).