Check out this proof (linked below) of how hugely mortgage victims can win a wad of cash if you will only learn how (and commit) to attack the validity of the loan. NO OTHER methodology wins compensation for mortgagors.
Click the above link to download the pdf containing the trial opinion, amended complaint, and damages award.
An Illinois jury returned a money verdict in favor of Alena Hammer against Residential Credit Solutions, Inc. (RCS), a national mortgage loan servicer headquartered in Fort Worth, Texas, for its breach of contract, violations of the Real Estate Settlement Procedures Act (RESPA), and violations of the unfairness and deception provisions of the Illinois Consumer Fraud and Deceptive Business Practices Act. All of Hammer’s claims dealt with RCS’s misconduct in handling and servicing the mortgage loan on Hammer’s home in DuPage County, Illinois, where Hammer has resided for the last 27 years.
The court awarded Alena Hammer $500,000 in compensatory damages and $1,500,000 in punitive damages.
Revisit Current and Old Cases?
Do you think this additional revelation about the workability of “Mortgage Attack” methodology would justify your revisiting some of your client’s cases and actually doing the work it takes to find the injuries they have suffered at the inception of the loan?
I know a mortgage examiner who can guide you through the process. Why not call me so we can chat about it?
Is Neil Garfield high on the dope of the deprecated Glaski opinion? Neil has gone off on another rabbit hunt when he should spend his energy chasing the werewolves. But even if he caught a werewolf, he has no silver bullets, so the werewolf will just laugh at him.
In his message about the Legal Impossibility that a REMIC trust does not own the note, he brags on Dan Edstrom, who does scam securitization audits that never helped anyone save the house from foreclosure or win damages from injurious participants in the loan process. And he brags on the Thomas Adams amicus brief (Glaski_Affidavit-Thomas-Adams_5-15) on behalf of Glaski who lost his house to foreclosure and should have lost it, but got an appellate win by whining that the note went into the trust after the closing date.
And Neil knows that courts all over the land have lambasted the Glaski opinion. Recently a New York appeals panel whacked Erobobo’s nonsensical assignment-after-the-closing-date argument:
“On July 17, 2006, Rotimi Erobobo executed a note to secure a loan from Alliance Mortgage Banking Corporation (hereinafter Alliance), to purchase real property located in Brooklyn. Erobobo gave a mortgage to Alliance to secure that debt, thus encumbering the subject premises. Wells Fargo Bank, N.A. (hereinafter the plaintiff), as trustee for ABFC 2006-OPT3, ABFC Asset-Backed Certificates, Series 2006-OPT3 (hereinafter the trust), alleges that it was assigned the note and mortgage on July 18, 2008. Erobobo allegedly defaulted on the mortgage in September 2009, and, in December 2009, the plaintiff commenced this action against Erobobo, among others, to foreclose the mortgage. Erobobo’s pro se answer contained a general denial of all allegations, and set forth no affirmative defenses. The plaintiff thereafter moved for summary judgment on the complaint, submitting the mortgage, the unpaid note, and evidence of Erobobo’s default. In opposition, Erobobo, now represented by counsel, contended that the plaintiff lacked standing because the purported July 18, 2008, assignment of the note and mortgage to the plaintiff failed to comply with certain provisions of the pooling and servicing agreement (hereinafter the PSA) that governed acquisitions by the trust, and was thus void under New York law. The plaintiff replied that Erobobo waived his right to assert a defense based on lack of standing by not asserting that defense in his answer or in a pre-answer motion to dismiss the complaint, and that, in any event, Erobobo’s contention was without merit.
“The Supreme Court concluded that Erobobo’s challenge to the plaintiff’s possession, [*2]or its status as an assignee, of the note and mortgage did not implicate the defense of lack of standing, but merely disputed an element of the plaintiff’s prima facie case, i.e., its contention that it possessed or was duly assigned the subject note and mortgage. On the merits, the court concluded that Erobobo raised a triable issue of fact as to whether the purported assignment of the note and mortgage to the plaintiff violated certain provisions of the PSA governing the trust, and was therefore void under EPTL 7-2.4. The plaintiff appeals. We reverse.
“The plaintiff established its prima facie entitlement to judgment as a matter of law by producing the mortgage, the unpaid note, and evidence of the defendant’s default (see Deutsche Bank Natl. Trust Co. v Islar, 122 AD3d 566, 567; Solomon v Burden, 104 AD3d 839; Argent Mtge. Co., LLC v Mentesana, 79 AD3d 1079; Wells Fargo Bank, N.A. v Webster, 61 AD3d 856).
“In opposition, Erobobo failed to raise a triable issue of fact. Even affording a liberal reading to Erobobo’s pro se answer (see Boothe v Weiss, 107 AD2d 730; Haines v Kerner, 404 US 519, 520-521), there is no language in the answer from which it could be inferred that he sought to assert the defense of lack of standing. Nor did Erobobo raise this defense in a pre-answer motion to dismiss the complaint. Accordingly, the defendant waived the defense of lack of standing (see CPLR 3211[a]; [e]; Matter of Fossella v Dinkins, 66 NY2d 162, 167-168; Bank of N.Y. Mellon Trust Co. v McCall, 116 AD3d 993; Aames Funding Corp. v Houston, 57 AD3d 808; Wells Fargo Bank Minn., N.A. v Mastropaolo, 42 AD3d 239, 244), and could not raise that defense for the first time in opposition to the plaintiff’s motion for summary judgment (see Wells Fargo Bank Minn., N.A. v Mastropaolo, 42 AD3d at 240). In any event, Erobobo, as a mortgagor whose loan is owned by a trust, does not have standing to challenge the plaintiff’s possession or status as assignee of the note and mortgage based on purported noncompliance with certain provisions of the PSA (see Bank of N.Y. Mellon v Gales, 116 AD3d 723, 725; Rajamin v Deutsche Bank Natl. Trust Co., 757 F3d 79, 86-87 [2d Cir]).
“Erobobo’s contention that the plaintiff is not a “holder in due course” of the note and mortgage, as that term is employed in the UCC, is raised for the first time on appeal, and is not properly before this Court for appellate review (see Goldman & Assoc., LLP v Golden, 115 AD3d 911, 912-913; Muniz v Mount Sinai Hosp. of Queens, 91 AD3d 612, 618).”
In other words, Erobobo screwed up his case out of incompetence, but it had no merit anyway. And the New York appeals court sent him packing.
Read the opinion, starting with the Justia summary:
“Plaintiffs appealed the district court’s dismissal of their claims against four trusts to which their loans and mortgages were assigned in transactions involving the mortgagee bank, and against those trusts’ trustee. The district court granted defendants’ motion to dismiss for failure to state a claim, finding that plaintiffs were neither parties to nor third-party beneficiaries of the assignment agreements and therefore lacked standing to pursue the claims. It is undisputed that in 2009 or 2010, each plaintiff was declared to be in default of his mortgage, and foreclosure proceedings were instituted in connection with the institution of said foreclosure proceedings, the trustee claimed to own each of plaintiff’s mortgage and that plaintiffs are not seeking to enjoin foreclosure proceedings. Assuming that these concessions have not rendered plaintiffs’ claims moot, the court affirmed the district court’s ruling that plaintiffs lacked standing to pursue their challenges to defendants’ ownership of the loans and entitlement to payments. Plaintiffs neither established constitutional nor prudential standing to pursue the claims they asserted.”
I can barely restrain myself from calling Neil Garfield an idiot for continuing to harp on this DEAD ISSUE of whether the note assignment into a trust after the closing date has any merit. Myriad courts have denounced the question as meritless. And it makes no sense when the Uniform Commercial Code clearly states that even a person in wrongful possession of a note may enforce it.
“UCC § 3-301. PERSON ENTITLED TO ENFORCE INSTRUMENT.
“Person entitled to enforce” an instrument means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to Section 3-309 or 3-418(d). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.”
Apparently, Garfield wants you, the reader, to call him to help you with your mortgage problems, so that he can lure you into wasting your money on a securitization audit or his rescission package or some other useless service that will not save you from losing your home AND will not win you any compensation for injuries.
By my observation, 90% of single family home mortgagors get injured by someone involved in the lending process. The only practical, reliable way to beat the bank lies in finding those injures, and then attacking the injurious parties, demanding a settlement beneficial to you under threat of suing. And this remains true even if you have lost your home by relying on a scheming foreclosure pretense defense attorney.
Most borrowers need a competent professional mortgage examination team to review their loan-related documents in a search for evidence of injuries. Such evidence constitutes the “silver bullets” needed to subdue a lender “werewolf” in a negotiated settlement or lawsuit. And that is the ONLY methodology that works reliably.
For more details, visit the Mortgage Attack web site. Then Call Me or email me for help.
A truly crazy craze has hit the foreclosure defense communities of America. It goes by the name of “securitization audit” or some variation thereof. The nature of the securitization audit service is such that only the crazy will foolishly waste money on it.
Okay, so we cannot fairly call ignorant foreclosure victims “crazy.” Why? Because they cannot easily know that a securitization audit is just another scam intended to bilk them out of yet more money they cannot afford for a service they cannot use. Except perhaps to replace the old Sears Catalog in their outhouse.
So, let’s just say most foreclosure victims are uninformed about the uselessness of securitization audits. Obviously. Otherwise they wouldn’t keep wasting money on them.
So, we have undertaken this “press release” to inform the uninformed so they will not waste their hard-earned money on useless Securitization Audits.
Let us start by explaining the nature and alleged purpose of the securitization audit. Then we shall analyze its achievement of the purpose.
What is Securitization? Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations and selling said consolidated debt as bonds, pass-through securities, or Collateralized mortgage obligation, to various investors. The principal and interest on the debt, underlying the security, is paid back to the various investors regularly. Securities backed by mortgage receivables are called mortgage-backed securities, while those backed by other types of receivables are asset-backed securities.
What is a Securitization Audit? The securitization audit consists of the activity of compiling a report of the rules and agreements regarding securitization, and the trail and timing of assignments of beneficial interest in the note and mortgage from the loan originator to the party foreclosing the loan for non-payment.
What is the Purpose of a Securitization Audit? The audit service provider alleges that foreclosure victims can use the audit to stop the foreclosure or cloud the title by proving that the foreclosing party does not have the right to foreclose.
Does the Securitization Audit Fulfill this Purpose? NO, it does not, Statistically, NEVER.
Why Doesn’t the Securitization Audit “work”? The Securitization Audit does not work because it does not change the essential facts of the case:
The borrower signed a note and mortgage giving the lender the right to sell the loan and the owner of the loan to foreclose the loan for non-payment and force a foreclosure sale of the mortgaged realty
The lender lent the funds to the borrower
The borrower used the funds to buy residential realty
The borrower took possession of the residential realty and occupied it.
The borrower started paying payments according to the note’s requirements
The borrower stopped making timely payments
The loan servicer called the note due and payable, giving notice to the borrower
The note assignee or mortgagee have the right to foreclose according to the terms of the note and mortgage.
What Vital Thing Doesn’t the Securitzation Audit Do? The Securitization Audit does not question whether or to what extent the following “Deal-Killer” flaws underlie the Note and Mortgage:
Tortious conduct of the lender or agents in making the loan. Examples:
Loan application tampering by the mortgage broker;
Over-valuation of the realty by the appraiser.
Breaches of the note or mortgage contract by the lender or lender’s agents.
Violation of any a variety of laws/regulations that justify fine or rescission of the loan.
You see, the Securitization Audit service provider claims that the foreclosure victim can use the audit to stop the foreclosure dead in its tracks. Some providers imply the foreclosure victim can get the house free and clear.
Why Does the Securitization “Miss the Boat” for Foreclosure Victims? The Securitization Audit ignores the factors that could constitute a cause of action against (reason to sue) the lender. Such a cause of action, equivalent to predatory lending, could make the lender squeal for a settlement to avoid a nasty, noisy lawsuit. The lender knows that a public lawsuit would tarnish the lender’s reputation and make other victims clamor for suit or settlement awards.
What is the Core Problem of the Securitization Audit Strategy? The securitization Audit service provider tries to focus the foreclosure victim’s attention on the problems with the foreclosure of the loan rather than the problems with the loan itself. It presumes the loan has validity, a terrible strategic and tactical blunder. Personal injury attorneys can much more easily prevail against a predatory lender who cheated the borrower when making the loan, than can foreclosure defense attorneys prevail against the lender for some foreclosure flaw.
Why Can’t a Foreclosure Defense Attorney Use the Securitization Audit? The foreclosure defender has no use for the securitization audit for several reasons.
The judge focuses on the INJURY TO THE PLAINTIFF in a foreclosure lawsuit, or to the Defendant in a quiet title lawsuit in non-judicial foreclosure (deed of trust) states. The judge will cause the court to redress the injury.
The typical Securitization Auditor cannot function in court as an expert witness, for want of qualification. So the audit’s information will not get entered into evidence because no expert can testify to it.
The judge can plainly see any information about securitization which the SEC or lenders and others in the securitization process have posted on the world wide web for the whole world to see with a web browser. Such “self-authenticating” evidence tells the story of who assigned the note to whom
Whoever shows up with the note can foreclose it, so the Securitization Audit has no effect on that.
Even if the judge dismisses a case for robo-signing, wrong plaintiff, etc, the bank ALWAYS corrects the documents and either re-files or appeals the case, and, statistically, the bank always wins the foreclosure regardless of what the foreclosure defense attorney does.
The mortgage, which the borrower signed, plainly gives the lender or nominee (mortgagee) the legal right to force a foreclosure sale for no-payment of the note.
In Deed of Trust states, the trustee will foreclose
Does the Use of a Securitization Audit Delay Foreclosure? In a non-judicial foreclosure (deed of trust) state, the audit data will not stop or delay the foreclosure. In judicial foreclosure states, the audit data might contains information about robo-signing or improper assignment. In that case, the judge might dismiss the case. But this only delays, and does not stop, the foreclosure. Eventually, the foreclosure plaintiff will re-file the case after correcting the documents, and the court will grant the foreclosure.
Do Foreclosure Defenders Successfully Argue Against Split of Note from Mortgage? Some Foreclosure defense attorneys will argue that the securitization splits the note from the mortgage, and that gives neither the owner of beneficial interest in the note nor the mortgagee the standing to force a foreclosure sale. They argue that the mortgagee did not get injured by non-payment, and the note interest owner’s name doesn’t appear on the mortgage, and therefore the court can order foreclosure, but not sale of the mortgaged realty.
Why Doesn’t The Court Buy that Argument? Trial and appeals courts rule against this argument consistently. You can see why in this excerpt from the US Supreme Court in Carpenter v. Longan, 83 U.S. 16 Wall. 271 (1872):
“The mortgaged premises are pledged as security for the debt. In proportion as a remedy is denied the contract is violated, and the rights of the assignee are set at naught. In other words, the mortgage ceases to be security for a part or the whole of the debt, its express provisions to the contrary notwithstanding.
“The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity”
Why Do Foreclosure Courts Nearly Always Grant the Foreclosure? The Court MUST give relief and remedy to the injured party, the lender or assignee. Period. The borrower breached the note contract. The breach injured the lender. The mortgage requires that the borrower must pay off the note or forfeit the realty. The Court will order the use of the proceeds of the foreclosure sale to pay off the note. The Court will give the borrower the balance after payoff of liens, or it will award a deficiency judgment to the lender.
The Court MUST do this.
The Securitization Audit, even in the hands of a highly skilled attorney, cannot avoid this hard-core reality of contract law. Look at just a few court rulings that prove this point:
“[S]ince the securitization merely creates a separate contract, distinct from plaintiffs’ debt obligations under the Note and does not change the relationship of the parties in any way, plaintiffs’ claims arising out of securitization fail.” Lamb v. MERS, Inc., 2011 WL 5827813, *6 (W.D. Wash. 2011) (citing cases); Bhatti, 2011 WL 6300229, *5 (citing cases);
In re Veal, 450 B.R. at 912 (“[Plaintiffs] should not care who actually owns the Note-and it is thus irrelevant whether the Note has been fractionalized or securitized-so long as they do know who they should pay.”);
Horvath v. Bank of NY, N.A., 641 F.3d 617, 626 n.4 (4th Cir. 2011) (securitization irrelevant to debt);
Commonwealth Prop. Advocates, LLC v. MERS, 263 P.3d 397, 401-02 (Utah Ct. App. 2011) (securitization has no effect on debt);
Henkels v. J.P. Morgan Chase, 2011 WL 2357874, at *7 (D.Ariz. June 14, 2011) (denying the plaintiff’s claim for unauthorized securitization of his loan because he “cited no authority for the assertion that securitization has had any impact on [his] obligations under the loan, and district courts in Arizona have rejected similar arguments”);
Johnson v. Homecomings Financial, 2011 WL 4373975, at *7 (S.D.Cal. Sep.20, 2011) (refusing to recognize the “discredited theory” that a deed of trust ” ‘split’ from the note through securitization, render[s] the note unenforceable”);
Frame v. Cal-W. Reconveyance Corp., 2011 WL 3876012, *10 (D. Ariz. 2011) (granting motion to dismiss: “Plaintiff’s allegations of promissory note destruction and securitization are speculative and unsupported. Plaintiff has cited no authority for his assertions that securitization has any impact on his obligations under the loan”)
Do you see? Securitization has no relevance to whether the borrower owes and must pay the debt or the mortgagee may force a foreclosure sale.
What If I Want to Buy a Securitization Audit Anyway? Securitization issues have such an esoteric and arcane nature that NO FORECLOSURE VICTIM SHOULD EVER PURCHASE a securitization audit. Only the foreclosure defense attorney should obtain a review and analysis of securitization issues, IF and ONLY IF the attorney considers it necessary to advance the client’s cause.
What Do Foreclosure Defense Attorneys and others Say?
Matt Weidner, Matthew Weidner Law Firm, St. Petersburg, Florida
We all need a real discussion here about whether loan audits have any value at all. Let me be clear, 100% clear again….
IF A LOAN AUDITOR OR REVIEWER CANNOT BE QUALIFIED AS AN “EXPERT” BY A JUDGE AN AUDIT HAS ZERO VALUE
Too many clients have blow thousands of dollars on something that is totally worthless…if the person who prepared the report cannot be qualified as an expert over the strenuous objection of counsel, it just does not get in. And getting an “expert” qualified is next to impossible in this area.
We’re all like scientists cracking a very complex code. Now, too many people get involved with loan audits or securitization reviews THAT HAVE ZERO VALUE. ZERO VALUE. ZERO VALUE.
One thing everyone must keep in mind is that if whomever does an “audit” (whatever the heck that means) cannot be qualified as an expert in a court of law, THE AUDIT HAS ZERO VALUE. The court will not consider one single word on the page. So for everyone out there selling audits and for everyone out there thinking about using any of this garbage, you must ask whether the report can be qualified as an expert.
I asked for a copy of the audit, and, weeks later, I received literally dozens of pages of incomprehensive gobbley-gook. It wasn’t even written in English – it was random numbers thrown together in a completely nonsensical way. There’s no way any judge could read those documents and see that the Note/Mortgage had been 85% paid. Heck, I couldn’t read those documents and conclude as much, and neither could my client.
My point, simply, is that before any homeowners rush out to pay for an audit, they should be aware of what’s required for that audit to do them any good in their court case.
In the last 6 weeks I have met with three families that had paid up to $2,100.00 for an audit. All three of these “audits” were three ring binders filled with documents from the Securities and Exchange Commission Home page and articles from the newspaper detailing successful mortgage defense decisions. These products are problematic for a number of reasons:
The documents from the SEC are free and available to the public.
The newspaper stories, while informative, cannot be used as precedent to a judge.
The analysis does nothing to breakdown what has happened with your payments after they were received by the Mortgage Company.
The “expert” who is rendering the opinion would never be accepted by a court to testify in an expert capacity.
The analytical process supporting the audit conclusion is flawed and that leads to an impossible opinion.
None of the analysis brought to me by clients have included a review of the money paid by the homeowner.
As of today most judges in state courts and bankruptcy courts have not had a chance to fully grasp the ongoing fraud regaring the securitization process and the documents necessary to forclose upon a home. Arguments made on “note ownership” alone often prove to be unsuccessful in court. However, when you appear before the judge and you are able to support securitization or note ownership arguments, with evidence that also supports shenanigans with the loan payments– your legal hurdles will be much easier to cross. As a rule, judges and juries do not have to be taught about why the misapplication of money is illegal!
Fraudsters are using a documents-checking process known as a mortgage securitization audit as a means of scamming foreclosure-threatened homeowners… Even when the process is legitimately carried out, the Federal Trade Commission suggests it’s worthless.
How Do I Choose between Securitization Audit and Mortgage Fraud Examination? Imagine yourself as a foreclosure victim, or a homeowner with an “under-water” mortgage, one where you owe the mortgage company more than the value of the house. You have $1500. You want to spend it wisely to fight the foreclosure. Where to you spend it? Do you spend it on a mortgage fraud examination service, or on a securitization audit?
As the foregoing expose’ has revealed, only a fool would spend it on the audit because the audit will not stop the foreclosure and will not get you the house free and clear or a cash settlement, and the typical foreclosure does not have the skill to select a good service provider, determine the merit of the audit, or use the audit effectively if at all in a foreclosure defense.
Do Foreclosure Defense Attorneys Commit Malpractice? Some professionals in the mortgage-related industries believe attorneys defending a contract breach complaint commit malpractice IF they don’t aggressively examine the mortgage-related documents for evidence of fraud, tortious conduct, contract breaches, and other violations. It takes a lot of work and skill to do that, skill most lawyers don’t have. So, most foreclosure defense attorneys only want to drag out or delay the foreclosure, a violation of the rules regulating the bar and simple business ethics. Typically such “pretender defenders” charge $1500 to $2500 “retainer” (gift) to get started, plus $500 to $1000 a month for as long as they keep the foreclosure victim in the house. They typically know the victim will eventually lose the house within 6 to 24 months. The victim could have saved that money and took a keys-for-cash deal from the lender without paying a lawyer, and had enough money altogether to buy a house free and clear at a foreclosure auction. Foreclosure victims don’t need a lawyer to do that.
Why Should I Buy a Mortgage Fraud Examination? You ought to spend the money on a mortgage fraud analysis because with the evidence in the corresponding report, the court might rule that the lender or lender’s agent defrauded you or breached the contract. If so, the Court might order the lender to pay you treble damages. Why? Because the Court must redress YOUR injury. The damages award might provide you with enough money to justify a rescission order by the court. If it does, you might get your house free and clear to settle the damage claim, or a hefty cash award to reduce your loan balance. And the jury might award you punitive damages sufficient to let you retire at a young age.
For proof, see the West Virginia Quicken Loans case where the court ordered the foreclosure victim punitive damages of $2.1 million, plus the house free and clear, and all attorney fees paid.
How Do I Find a Competent Mortgage Fraud Examiner? You find a competent mortgage fraud examiner by calling me, Bob Hurt at 727 669 5511, or just Email Me. The Chief Examiner, a personal friend of mine, has 38 years’ experience examining and analyzing legal documents in order to find fraud, tortious conduct, breaches, and other violations and flaws. Nobody on the planet does a better job of examining the mortgage and foreclosure related documents and preparing a report that any competent attorney can use to demand a settlement from or sue the lender.
Can I Use the Mortgage Fraud Examination Report Even if My House is in Foreclosure? Yes, you can. In fact, it makes a lot of sense to do so if you have purchased or refinanced your home within the past 10 or 12 years. People who can make a mortgage payment can also usually feel less financial pressure, so they can typically find a way to pay an attorney for a couple of hours of work to negotiate a settlement with the lender.
What Kind of Attorney Should I Use To Settle or Sue? If the examination report reveals a cause of action sufficient justify suing, you should seek out a competent personal injury, tort, or contract attorney to negotiate settlement with or to sue the lender. It makes more sense to negotiate the settlement, and then to sue only as a last resort.
How Do I Order my Mortgage Fraud Examination Report? To order your examination and report, CALL for a Mortgage Fraud Examination at this number NOW:
On 13 January 2015 Justice Antonin Scalia wrote the unanimous opinion in Jesinoski v Countrywide, a case about whether a TILA (Truth In Lending Act) rescinder must file suit within 3 years after loan consummation. His holding stated this:
The Jesinoskis mailed respondents written notice of their intention to rescind within three years of their loan’s consummation. Because this is all that a borrower must do in order to exercise his right to rescind under the Act, the court below erred in dismissing the complaint. Accordingly, we reverse the judgment of the Eighth Circuit and remand the case for further proceedings consistent with this opinion.
This case did not address whether the lender actually violated TILA sufficiently to justify rescission, nor did it address the TILA rescission process. So, the case goes back to Minnesota US District Court to try the question of whether a TILA violation occurred and whether the creditor received proper notice from Jesinoski. See the original Minnesota US District trial court opinion. and the 8th Circuit appellate opinion.
Neil wrote this blog article about TILA rescission. People wrote over 500 comments in the discussion thread, loaded with proof of what TILA rescission means and how it operates, and laced with both well-considered and frivolous rebuttals. Neil insisted the Supreme Court invalidated present thinking on it in the Jesinoski opinion, which of course, it did not. It merely allows TILA rescinders to sue for rescission later than 3 years after loan consummation. Neil wrote this drivel about the case law Rock and I provided:
My critics were quick to point out that this “theory” of mine was patently absurd. And they pulled out case after case on rescission which absolutely and conclusively proved that I was wrong. You can go back to the early blog posts about this and see for yourself. I predicted that a U.S. Supreme Court decision would overturn all the decisions and opinions that were written and rendered during the 2007-2014 period. I was right. And all the naysayers were wrong. I was right to read the plain wording of a very clear statute (TILA) and the regulations under Reg Z. This was not old-style rescission and it never was meant to be.
It is fascinating to see that the old arguments are popping up again despite a decision from a unanimous US Supreme Court that ordinarily can’t agree on anything. And it was the determination of the court that Justice Scalia should write the opinion apparently to avoid exactly what is happening — people are saying the Supreme Court is wrong. Even if that were true, the US Supreme Court is FINAL. The argument is over regardless of why or how people are covering the previous ridicule of TILA and TILA rescission. Toothless they called it.
If you have already sent a notice of rescission you need to speak with a lawyer because you most likely have rights and substantial upside potential. If you have not sent a notice of rescission, I see nothing to prevent you from doing so, although IF the “lender” or “creditor” has standing and brings up things like the statute of limitations within the 20 day period, you might lose. But in order for them to have standing they would have to prove the debt without using the now void note and mortgage. And THAT is why we have not heard about any lawsuits being filed within 20 days of rescission.
What TILA Rescission Really Means
Here’s my assessment of the matter. TILA gives the borrower an absolute right to rescind within 3 days following loan consummation, for any reason whatsoever. Thereafter, for a violation such as failure to give borrowers requisite disclosures of the right to rescind, an extend right to rescind exists. Within 3 years after loan consummation, the borrower must give to the creditor a notice of rescission stating the grounds for the rescission and intention to rescind. An unwinding process follows that, including the creditor’s removal of any lien on the collateral property, and creditor’s tender back to the borrower of the full amount of money or property the borrower gave the lender, followed by borrower’s tender back to the creditor all of the money or property the borrower gave the lender, all to restore “status quo ante,” the status of the parties prior to the loan which the loan changed. Once the lender has received the notice, the lender has 20 days to evaluate the circumstances, determine whether a TILA violation occurred and whether the borrower provided proper and timely notice of rescission, and initiate action to avert rescission by reason of improper or untimely notice. If the creditor fails to act within 20 days, TILA gives the borrower a one-year window to sue for statutory damages. If the borrower or lender sues over the matter, a court will issue an equitable ruling and might therein adjust the process of rescission. If either party cannot tender, or if no TILA violation occurred, or if the creditor never received a valid notice of rescission, the court will deny the rescission.
The Jesinoski opinion did not undo 12 CFR § 1026.15(d). Well, THAT defines rescission as an unwinding process that BEGINS with detection of a relevant TILA violation and ends with both parties returning to their pre-loan condition with respect to the loan.
12 CFR §1026.15(d) (1) deals with the security interest and finance charges; (2) deals with lender tender or rebuttal; (3) deals with borrower tender after lender tender, location of tender, and lender failure timely to grab the borrower tender; (4) acknowledges the court’s power to modify (2) and (3) equitably. That constitutes the quintessential definition of TILA rescission and its unwinding.
Jesinoski did not change TILA, and for most courts it changed nothing other than the time limit for suing for rescission. Rescission has ALWAYS meant mutual tender to revert to status quo ante. And the courts have always required mutual tender to unwind the loan. Regarding the MEANING OF RESCISSION UNDER TILA, READ the REGULATION: 12 CFR 1026.15 and pay attention to item (3). BOTH PARTIES MUST TENDER. Rescission ALWAYS requires mutual tender.
12 CFR § 1026.15(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
(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.
Clearly, the Supreme Court fully embraces this definition. If you have looked at post-Jesinoski opinions, you should have noticed that NONE of them held that the above CFR section constitutes a nullity. You should have seen that the courts REFUSE to allow rescission UNLESS THE BORROWER CAN TENDER CASH. The borrower cannot tender the real estate or a family of circus monkeys. He must give back what the lender gave him (money). But don’t worry, because the borrower will lose the house in foreclosure, a consequence of foolishly failing to make mortgage payments.
Lesson: Borrowers should NEVER rescind UNLESS they can tender.
Borrowers nearly always mess up the TILA rescission effort. Some think each borrower must receive two copies of the disclosure of right to rescind. That is not true. Each must receive one, even though the regulation requires two; the borrower can still rescind by making a copy of the disclosure to attach to the rescission letter. Some send a letter but don’t say they want to rescind. Some signed an acknowledgment that they received the requisite TILA disclosures, but try to rescind anyway (maybe they listened to Neil Garfield). Some cannot tender and know they cannot, and never bothered trying to work something out with the lender before trying to rescind. Some waited too long to rescind or to sue. Some miscalculated the difference between actual and reported cost of the loan or the error as a percentage of the loan amount. And nearly all borrowers seeking a TILA rescission stop making their loan payments, thereby provoking the creditor to foreclose the loan and try to take the house. They can bring up TILA violations and seek setoffs in the lawsuit, either a Temporary Restraining Order in non judicial foreclosure states, or an affirmative defense in judicial foreclosure states.
Some borrowers who gave proper rescission notice for actual TILA violations tried to sue later than 3 years after loan consummation to force the rescission, and the court denied them the right for the same reason that the Jesinoskis appealed – some districts and circuits misread the law. They thought a rescission and a lawsuit to force the lender to tender were one and the same thing. They probably reasoned, in addition to other reasons, that no lender will voluntarily allow a rescission, that ALL of them will buck against the rescission and NOT take any action at all within their 20 day window. It must have seemed axiomatic that a borrower doesn’t have forever to sue for rescission, and 3 years seemed long enough. But as Scalia wrote, it just isn’t.
However, the Jesinoski opinion did not undo nearly 50 years of TILA jurisprudence regarding the rescission process. It merely requires courts to allow borrowers 3+ years to file suit in order to force the lender to tender and release the lien in the rescission process.
No Substitute for Knowing the Law
It takes a lot of study to become familiar with the political process by which Congress makes laws and the Executive Branch makes enforcement regulation, to understand principles of statutory construction – how to read and grasp the law, the American language itself (including sentence composition, structure, and punctuation), the statutes, codes, and regulations, and the binding case law that governs the court decision processes. And this forms the backdrop to the moral dilemma of borrowers who breached their home loan notes, who have no clue how to litigate, and who desperately want to do anything possible NOT to lose the biggest investment of their lives – the family home. All of that pressure and the lust for earning money, often to pay of law school debts that have lingered for years, and to have a nice, POSH lifestyle… It all does come together and must come together in the maelstrom of the borrowing/lending-foreclosure process. And in the end, as Legisman has repeatedly and emphatically told me –
“There is no substitute for knowing the law. NONE!”
Please take advantage of these references to read up on TILA, RESPA, and other laws and regulations that protect consumers.
I might amend this blog article with case law items that provide excellent analyses of TILA rescission. I have tried to give you a salient exposition of it above, but the courts do a much more comprehensive job.
“For the foregoing reasons, all three summary judgment motions are granted in part and denied in part. Green Tree and MERS are granted judgment on the damage claims against them, though they are not dismissed from the case. Plaintiffs are granted judgment on the question whether the Disclosure Statements violated TILA (they did) and on whether their rescission notices were valid (they were). Defendants are granted judgment on their request to modify the rescission procedures — the Iroanyahs must make their tenders ($162,215.30 on the First Loan, and $26,037.10 on the Second Loan) to effectuate rescission, and if they fail to do so by June 14, 2012, judgment on the rescission claims will be granted to Defendants. Plaintiffs are granted judgment on the question whether Defendants failed to properly respond to the rescission notices, and are awarded $8000 in statutory damages and $2800 in actual damages; those sums have been incorporated into the tender amounts set forth above. The summary judgment motions otherwise are denied, though the Iroanyahs’ motion for summary judgment regarding attorney fees and costs under 15 U.S.C. § 1640(a)(3) is denied without prejudice. If the Iroanyahs wish to pursue attorney fees and costs under § 1640(a)(3) in light of the rulings set forth above, they may file a motion under Local Rule 54.3.”
“This Truth in Lending Act (TILA) case raises difficult and rarely seen issues that arise when transactions regulated by a given state — here, Massachusetts — have been exempted by the Federal Reserve from most of the Act’s requirements. See 15 U.S.C. § 1633; see also Bizier v. Globe Fin. Servs., Inc., 654 F.2d 1, 2 (1st Cir.1981). Only five states have received such exemptions. See 12 C.F.R. Pt. 226, Supp. I. In the end, however, this case turns on a narrower issue, one of first impression for this court under TILA. The question is whether TILA permits a damages claim to be stated by the debtor under 15 U.S.C. § 1640 based on the creditor’s alleged failure to respond properly to the debtor’s notice of rescission. We hold that it does. In doing so, we join the approach of four other circuits, and we know of no circuit which has held to the contrary.
“The plaintiffs, Richard and Theresa Belini, alleged that the defendant, Washington Mutual Bank, sold them a high-cost mortgage without making disclosures required by TILA and equivalent Massachusetts law. They sued in federal court, asserting claims for damages for failure to make these disclosures, for rescission, and for damages for Washington Mutual’s alleged failure to respond properly to their notice of rescission, under both TILA and similar Massachusetts law. The district court held that all of the Belinis’ damages claims were time barred, without discussing separately their claim for Washington Mutual’s alleged failure to respond to their notice of rescission. This left the rescission claim itself and the question of whether there was either federal question jurisdiction or diversity jurisdiction. The court found that the amount-in-controversy requirement was not met, so there was no diversity jurisdiction, and that there was no federal question jurisdiction over a claim for rescission (as opposed to a claim for damages) because of the Massachusetts exemption from certain TILA requirements.
“Although it is clear from the Federal Reserve regulations that a debtor’s ability to bring a federal damages action under 15 U.S.C. § 1640 is preserved despite the Massachusetts exemption, see 12 C.F.R. § 226.29(b), it is much murkier, given the current drafting of these regulations, whether a debtor’s right to sue for rescission under federal law is preserved. Similarly, the question of how to measure the amount in controversy in an action for rescission is difficult.
“We reverse. We find it unnecessary to resolve the difficult question of whether the federal court had either federal question jurisdiction or diversity jurisdiction over the rescission claim, because we find that the Belinis have a viable, non-time-barred federal damages claim under TILA based on the defendant’s alleged failure to respond properly to the Belinis’ notice of rescission. This damages claim provides a basis for federal question jurisdiction. That means that the Belinis’ claim for rescission, which has virtually identical elements under TILA and Massachusetts law, is within the court’s supplemental jurisdiction. This case does not fall into a category that would render the district court’s exercise of supplemental jurisdiction discretionary.”
And further in the opinion, the court says this about the obligation to sue under TILA within one year if the lender does not act with 20 days after rescission to rebut or tender:
“The statute of limitations for bringing an action under section 1640 is “one year from the date of the occurrence of the violation.” 15 U.S.C. § 1640(e). The “date of the occurrence of the violation,” here, is at the earliest the date that Washington Mutual received the Belinis’ notice of rescission; in truth, the date of the occurrence is likely twenty days later, when Washington Mutual’s time for responding to that notice expired. See Fid. Consumer Disc. Co., 898 F.2d at 903. The Belinis’ notice was not mailed until May 9, 2003. The “date of the occurrence of the violation” cannot be the date the loan was closed; the closing is not the source of the debtor’s complaint, and such a rule would create nonsensical results. 15 U.S.C. § 1635(f) states that “[a debtor’s] right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first,” notwithstanding that the necessary material disclosures or forms have not been received. It cannot be that the one-year statute of limitations under section 1640 for a creditor’s failing to respond properly to a debtor’s notice of rescission expires before the debtor is required to send that notice in the first place. Since the Belinis’ second action was filed on May 4, 2004, the action was obviously filed within one year of the “occurrence of the violation.””
These opinions are still valid.
“First, the Supreme Court’s decision in Jesinoski does not constitute an intervening change of controlling law.”
In re: RESIDENTIAL CAPITAL, LLC, et al., Debtors. Case No. 12-12020 (MG) UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK April 9, 2015
Beukes v GMAC
I can see how borrowers get confused about TILA rescission. The opinion in BEUKES v. GMAC, LLC. makes that very clear. Beukes sent timely notice of rescission, and the bank rejected it, claiming Beukes had no right to cancel. Beukes sent the notice prior to foreclosure and not after foreclosure. One law (15 U.S.C. § 1605(f)(2)(A)) allows rescission noticed prior to foreclosure for loan cost more than 1/2% of the loan amount, but another law (15 U.S.C. § 1635(i)(2)) allows rescission noticed after initiation of foreclosure for charging more than $35 above actual loan cost.
Since Beukes’s cost fell between those two amounts and they did not give notice of rescission after foreclosure started, they could not rescind at all.
That happens when borrowers and their attorneys don’t read or cannot understand the law.
Scherzer v Homestar
The Scherzer v Homestar opinions explain TILA rescission thoroughly. And they TROUNCE the idea that rescission can happen without about tender – a borrower who cannot tender cannot rescind, period. This principle has the simplicity of 1-2-3.
“Given the facts of this case, the Court finds that the plaintiffs are UNABLE TO TENDER back the loan amount and that rescission is thus ineffective. Not only did the plaintiffs fail to respond to defendants’ motion for summary judgment — even after the Court gave the plaintiffs ample time to do so (at this point, more than a full year) — but Mr. Sherzer conceded in an on-the-record telephone conference almost five months ago that he’s “out of money” and, in any event, DOES NOT BELIEVE HE WOULD NEED TO RETURN THE MONEY IF THE LOAN IS RESCINDED (Docket No. 134). The Court cannot ignore these facts because one of the “goals of [15 U.S.C.] § 1635 is ‘TO RETURN THE PARTIES MOST NEARLY TO THE POSITION THEY HELD PRIOR TO ENTERING INTO THE TRANSACTION.’” Sherzer, 707 F.3d at 265. Mr. Sherzer’s statements and beliefs contravene this goal (Docket No. 134). For that reason, the Court grants the defendants’ motion.
Note also that before Jesinoski the 3rd Circuit had held the mortgagor didn’t have to file suit within the 3-year Statute of Limitations. Therefore the holding that clarified the Scherzer opinion makes all of the Scherzer opinions precedential.
Therefore, without exception, rescission requires tender, and tender consist of returning whatever the other party gave, or returning its value (in money, of course), to restore status quo ante. No rescission will happen without mutual tender. The court can adjust the tender as necessary, such as setting up a payment plan, and bankruptcy court could discharge a tender debt.
Community for Creative Non Violence v Reid
Some try to argue that rescission merely means cancellation, and that the courts should use normal dictionary meanings for legal terms of art. Rescission is such a term, and courts must use the legal meaning:
Rescission – Theabrogation of a contract,effectivefromitsinception,therebyrestoringtheparties to thepositionstheywouldhaveoccupied if no contracthadeverbeenformed.
“‘It is a well-established rule of construction that ‘[w]here Congress uses terms that have accumulated settled meaning under . . . the common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms.’ ‘ Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322 (1992) (QUOTING Community for Creative Non-Violence v. Reid, 490 U.S. 730, 739 (1989)); see Standard Oil Co. of N. J. v. United States, 221 U.S. 1, 59 (1911) (“[W]here words are employed in a statute which had at the time a well-known meaning at common law or in the law of this country, they are presumed to have been used in that sense’).”
“The Act NOWHERE DEFINES the terms “employee” or “scope of employment.” It is, however, well established that “[w]here Congress uses terms that have accumulated settled meaning under . . . the common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms.” In the past, when Congress has used the term “employee” without defining it, we have concluded that Congress intended to describe the conventional master-servant relationship as understood by common-law agency doctrine.
TILA violations constitute just one of many ways lenders and others involved in the lending process can injure a borrower. NINETY PERCENT of single family home loan borrowers have sustained actionable injuries, by my estimation. They borrower who breached a valid note gets nowhere with foreclosure defense EXCEPT by timely raising such injuries as salient issues in negotiations with or a lawsuit against the injurious parties. You cannot raise such issues if you don’t know they exist, and if you don’t have the knowledge of law and contracts sufficient to find those injuries, you must contract with a competent professional to find them for you.
You can learn about the nature of a “mortgage attack” – a challenge of the validity of the loan, at http://MortgageAttack.com. Then, if you need further help, such as finding a competent mortgage examiner, you can call or write me.
I have begun fleshing out LivingLiesTheTruth.com to make it more useful to everyone who wishes he for that info from the living lies blog. I just added a HEROES & HEELS page where people can write the names of the lawyers who bilked them out of money and led them into the jaws of foreclosure without ever examining the mortgage, or where they can write the names of lawyers who DID examine their loans and used the causes of action to attack the malefactors.
I intend to add pages explaining TILA, RESPA, and other regulatory laws, but honestly, the discussions in the rescission thread showed readers all kinds of case law that explains how the courts will rule in that issue. Google scholar and other opinion repositories have become excellent resources for people to look up cases and read them. I believe the law and regulations speak clearly for themselves, and the opinions show that judges, with help from the smarter lawyers appearing before them, just dig in and do the same kind of research all of us can do in order to come up with a viable opinion. Most of the time you will agree with them because their opinions make sense.
That’s why I began a few years ago to hold Garfield in some disdain. First all, no lawyer can blog like does and represent clients and manage their cases. Second, he has formed an opinion about things and propounds it for the purpose of getting people to buy his services, seminars, securitization audits, “rescission packages” etc. So his blog entries tend to push people into his services, usually services they don’t need. And underneath it all, his firm has devoted itself to foreclosure defense, not to mortgage attack. That’s the biggest disappointment I have with him.
And I suspect that most of the people who troll these pages have followed his suggestions and lost their houses as a result.
ALL of them might still benefit from a mortgage examination. Neil will NEVER tell them that.
He does bring up interesting cases, but he nearly always makes something of them that isn’t there. Like in this article, he tries to make a big deal out of the fact that the court will let the RICO case go forward because it could survive a motion to dismiss.
Also, he tries to say courts assume borrowers defaulted by looking at the foreclosure complaint that alleges the default. How many did not default? virtually none. Millions have defaulted on their home loans, so NATURALLY judges assume they defaulted. The judges want the borrower to come up and say “Yeah, judge, I defaulted, but they breached the note first, the loan was unconscionable, they lied about the value of the house in the appraisal, they bait and switched me in the loan deal, they charged me excessive interest, they didn’t give me disclosures, etc.” Now the judge will enjoy a venture into proof of injury to the borrower rather than having to hate the nonsense Garfield would bring up if he litigated foreclosure cases, like “where’s the note, there isn’t any money, the note financed the loan, the note and mortgage got bifurcated, MERS is an evil empire, securitization is evil, they violated the PSA, they robosigned the assignment, the dog ate our homework, etc”
Look, folks. I don’t mince words, but I don’t go out of my to malign well-intentioned people. And it seems fair to me to jump on somebody’s case when I show them the law and the supporting court opinions, and that somebody goes on and on and on with pointless rebuttals and what-if scenarios, then calls the courts crooked.
Realize that judges are the mothers and fathers of society. If they issue an opinion and you flout it, you will go down. Get used to it. That’s our system. So the judges are generally honest, and even the crooked ones are honest most of the time. They are NOT picking on you. YOU are coming into their court with a non-meritorious case, a poor grasp of the rules of procedure and evidence, no knowledge of litigation practice, mouthful of patriot myths and nonsense they have already trounced numerous times, and they simply will not sit still while you spout it at them. LEARN FROM THEIR OPINIONS. Stop acting like they don’t mean anything.
And don’t put up with attorneys and other practitioners who try to sell you useless securitization audits (yes they are useless to borrowers), fake loan audits, mortgage rescue scams, and foreclosure defenses based on flim-flam, copy-machine pleadings.
Congrats Bob, you finally got it done after me badgering you for the last year.
Unlike Garfield’s blog, there will be comments and posts from individuals and attorneys that are, and have been successful in defeating foreclosure. Now, homeowners will have access to verifiable methods and causes of action to help them stay in their homes on their terms, not the banks’.
We’ve created a “safe harbor” for homeowners to come and see what arguments actually work, and to forget the witless arguments desperate homeowners find on blogs like Garfield’s, and the other blogs that follow his misinformation.
Thanks again, for creating light within the darkness.
At first we just laughed at his ignorance and incompetence, but then it became evident he’s totally delusional, which is quite sad. Not only for his mental status, but because he’s convinced other delusionals what he’s posted has any factual or legal basis.
BTW, I was thinking about his alleged status as an attorney, and it hit me. The rciferri moniker through me off. He is Rod Ciferri, a known scammer that works at Loss Mitigation, LLC a known scam group, both are being investigated as we speak.
From there website:
“About Roderick Ciferri esq
The practice emphasizes residential and commercial litigation and trial advocacy, with a concentration on Contract Law, Mortgage Litigation, and Real Property matters. Roderick Ciferri esq HAS TRIED IN SEVERAL HUNDREDS OF CASES and has appeared on televised programs regarding pre-trial procedure and trial strategy and has appeared as a guest lecturer on topics ranging from real estate law to trial practice a national organization dedicated to bringing back professionalism and civility into the legal profession.
Areas of Practice
Real Estate- Roderick Ciferri esq has extensive practical experience in real estate and mortgage matters. We have handled complex and routine unlawful detainer matters, easement disputes, construction defect, environmental, and land use and zoning matters. We are involved in loss mitigation and loan workout solutions, and our firm regularly negotiates with lenders to achieve workable solutions for our clients.”
Which begs the question, here is a guy that has been in Ca. for years, why is he not an attorney there. Couple of reasons, could be, can’t pass the bar, or there is something in his background, like mental illness.
Now first of all, I have no idea what “HAS TRIED IN SEVERAL HUNDREDS OF CASES” means. But if their trying to convey he’s “tried” cases, we know that can’t be true. Because he’s not a member of the Ca. bar. That’s why that Loss Mitigation, LLC is a known scam.
These individuals spreading misinformation and giving false legal advice to homeowners, belong in jail!