STANDING will ultimately determine what happens in TILA Rescission

Posted on October 13, 2015 by Neil Garfield

For more Information about Rescission or Foreclosure Defense Strategies please call 954-4959867 or 520-405-1688
This article is NOT a legal opinion that can be used for any one case. It is for general information
only. Decisions and actions should be taken ONLY after consultation with an attorney licensed in
the jurisdiction in which the property is located and who has studied the TILA Rescission
procedures.
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We all know the problems. So what are the REAL solutions? This article addresses both.
People keep asking me about equitable tolling and other restrictions stated in the TILA Rescission
statutes 15 U.S.C. 1635 et seq. They are skipping the procedures, which is what the TILA
Rescission statutes are all about and going directly to the substance of the possible claim by an
adversary who claims that the rescission was wrongful.
TILA RESCISSION is a very specific statutory remedy that sets forth a procedure in which the
borrower sets everything in motion by sending a Notice of Rescission (I here by cancel the
above-referenced loan number). THEN the parties on the other side have a choice perform
the statutory duties or within 20 days bring suit to vacate the rescission, which IS LAW until some
other operation of law vacates it.
The issue everyone seems to be skipping over is both that there is a specific procedure set forth
in the statute and that the adversary must have jurisdictional standing to ask for the court to
vacate the rescission. Instead the adversaries are sliding by without asking for or getting an
order vacating the rescission. What they are doing is simply trying to negate or ignore the
rescission because it is contested but they are not directly contesting it by filing a pleading in
which they have standing seeking to vacate the rescission.
Remember that Justice Scalia said in Jesinoski that the statute makes no distinction between
disputed and undisputed rescissions. It plainly allows borrowers to send the notice, even if they
turn out to be wrong about whether they could have done so. And the notice is effective by
operation of law when sent. SO the moment the homeowner drops the Notice of Rescission in the
mail, it is effective by operation of law and that means, by express terms, that the loan contract,
the note and the mortgage no longer exist. They are void. So standing cannot be predicated
upon the loan contract, the note or the mortgage. It makes no difference whether they were
claiming holder status or even holder in due course status (which they never do).
What the adversaries are doing is taking the standing they managed to get validated in the
foreclosure and having the Court presume standing for a separate action to vacate the
rescission. They cant have it both ways. If their sole claim is based upon holding or possessing
the note and mortgage, they cannot then assert that the Rescission should simply be ignored
based upon their assertions that are made with respect to the note and mortgage which are now
void. One cannot claim relief based upon a void instrument.
Thus the adversaries are effectively asking the Court to violate the law, which is that no lawsuit
is necessary for the Rescission to be effective by operation of law. By ignoring the rescission
instead of setting it aside or vacating it they are proceeding on the premise that the rescission is
somehow NOT effective by operation of law until a judge rules on it. That is opposite to TILA
Rescission and opposite to Jesinoski and opposite to the rules and regulations published by the
Federal Reserve and now the CFPB. An order granting the motion of the adversaries saying that

the rescission was ineffective because the statute has provisions that might have been violated
is an order ruling on when and if the rescission was effective by operation of law.
Such Courts lack jurisdiction to consider the claims of the adversaries UNLESS they file an action
within 20 days of receipt of the notice of rescission. AND THAT is because the in order to rule on
the rescission they must first accept the premise that the rescission was effective by operation of
law and as specifically stated in Jesinoski. Its done.
Therefore a claim basing standing on the note and mortgage is misplaced because those are void
instruments. If a party alleges standing in such a claim and does so properly THEN the court has
jurisdiction to hear it. But no court has jurisdiction to ignore or grant relief based upon the idea or
inference that the rescission was not effective by operation of law. Motions that simply argue
law are intentionally avoiding the one point the adversaries can escape from. Once the rescission
is sent it is effective by operation of law. Once that happens the statute is ticking away the time
for either compliance or filing a simple lawsuit to vacate the rescission. So why have no such
lawsuits been filed?
The reason they are taking this tack is that they dont have a creditor. If they did, they would
have all claimed the status of Holder in Due Course. Being unable to make that claim they have
relied upon the skill of lawyers to plead holder but get treated as though they were holders in
due course. This is through no fault of the homeowner. The Wall Street banks essentially stole the
money from investors, stole the money from the Trusts and then committed the money to fees
that never should have been paid, trading profits that were fictitious trades, and to cover their
tracks to loans that the investors never would have approved if asked. And of course this was
contrary to the Prospectus and PSA.
When confronted with a memo or motion from the adversary, the foreclosure defense lawyer
should immediately attack the pleading, probably moving to strike it for lack of the courts
jurisdiction to hear the action unless they file one with standing and then ask the court to vacate
the rescission. The Court should be reminded that the Rescission IS effective by
operation of law, and that there is action pending wherein the adversary is pleading
standing because they lack standing, to wit: they lack any position in which they can
allege that they paid for the funding or acquisition of the loan. Thus there can be no
foreclosure and since the 20 days have expired, there can never be a foreclosure.
Equitable tolling is potentially part of the statute. But more importantly it probably doesnt
matter. All rescissions are effective whether disputed or undisputed. It is then up to the
CREDITOR to bring an action alleging standing (that they paid for funding or acquisition of the
loan), injury (they will lose the finance charges), and that the rescission should be vacated
because it falls outside of the 3 year period. We have never seen one of those lawsuits anywhere
in the country because they dont have anyone who answer the description of creditor. That
may seem impossible, but it is nonetheless true.
When the investment banks took money from the pension funds they failed to fund the trust that
issued the certificates that were Sold to investors. They then took the money and engaged in
various transactions never contemplated nor acceptable to the investors. The originator on the
note was not the lender and the originator was not in privity with the actual source of funds. The
real party is the group of investors but all investors from all trusts had their money dumped into
the same slush funds.
It is IMPOSSIBLE to determine which investors have an interest in any particular loan and
impossible to determine what size their interest is. In that fact pattern there is no creditor
(legally speaking) although the investors clearly got screwed. They have a claim against the
investment banks,and if they found a credible way to estimate their interests in loans and locate
those particular loans they could assert unjust enrichment or some similar equitable theory. Any

such claim would be unsecured unless equitable mortgages were suddenly allowed again which
would screw up title records even more thy already are corrupted.
The ONLY way investors and homeowners are going to get the protection they deserve, is for the
courts to follow the law. And the only way the investors and the homeowners are going to settle
this is if the investors acknowledge that the Prospectus and PSA have been completely ignored
and that the servicers, trustees etc have no power because the Trust that granted them power
on paper never came to own the loan or anything else. The investors should create a new quasi
public servicing agency that serves as the actual servicer, and allow the borrowers and the
investors to arrive a fair settlement of their respective claims, execute new mortgage
documents, and both agree that a quiet title action is appropriate to give the investors the
protection they always thought they had, and to give the homeowner clear title without being
required to deal with stonewalling from people who have inserted themselves into transactions
where their status was, as stated in the San Francisco study, complete strangers.
Using this approach, the courts would become unclogged, due process would return and the
investors could get solid mortgages from most homeowners and retain the option of litigation
against those homeowners who wont come to the table and the very lucrative litigation against
both the Investment Banks and the people who ran them during this period of darkness.