HUGE SCOTUS VICTORY FOR BORROWERS! TILA RESCISSION IS BACK!

AT LAST! The United States Supreme Court put the train back on the track!  A borrower's right to rescind certain home mortgages under the Truth In Lending Act is RESTORED as the most powerful remedy available against deceptive lending practices against borrowers!  This is the BEST. NEWS. EVER.

You can read about the ruling on many blogs and sites. Neil Garfield was one of the first I saw and his take on it is pretty good: UNANIMOUS SCOTUS: TILA RESCISSION EFFECTIVE ON NOTICE,BORROWER LAWSUIT NOT REQUIRED!

I don't mind telling you, when I opened my email that morning and saw the headline, I began to cry. I could not believe it. Finally, we have a ruling that makes sense, and puts right so many wrongs.

The whole intention of the law that allows a homeowner to RESCIND their mortgage up to three years after consummation of the loan is to give lenders a very STRONG incentive NOT to make mistakes on their paperwork that are unfair or deceptive.  It is about that document that you signed at closing on your (refinance) loan that tells you that if you decide that you aren't comfortable with the new mortgage you just signed, you can cancel it, with no penalty, within three days for any reason at all.  What too many people do not realize, is that this same law says that if you find material errors or omissions on your Truth In Lending Disclosure, you may also cancel the mortgage for up to THREE YEARS! 

 

That's right, and not only do you not pay a penalty, the LENDER must pay YOU back ALL of the finance charges that changed hands in the transaction.  All interest, closing costs, fees, and in three years, that is a LOT of cash.  That's not all.  Within 20 days of your notice that you wish to rescind the mortgage, the lender is required to REMOVE THE LIEN from your house. Yes, REMOVE. Clear title. The reason they are required to do this is so that you can then complete your responsibility in the transaction, which is to tender back the proceeds of the loan to the lender (presumably, from a new mortgage, which is impossible to do until they remove the lien.) This law was made to be harsh against lenders for a reason: DON'T BE FRAUDULENT or it will COST YOU DEARLY.  And then along came the lender attorneys... They would convince sleepy judges that these deadbeat people just wanted a free house and here is what the law "really says" and out came bad ruling after bad ruling.

 

This law is powerful. This law is underutilized in today's highly fraudulent mortgage transactions for one simple reason: it had been rendered almost unusable by the banks.  Their deep-pocketed firms had managed to wage a war on rescission over the years in many state courts, causing bad rulings to practically make it a dead end for homeowners. Consumer attorneys would rarely even use it because it had been rendered impotent by many ill-fought court cases.  Many circuit courts began ruling that in order to rescind, a borrower had to do MORE than the law actually said. Specifically, they had to SUE the bank for NOT complying with the rescission before the 3 year  statute of repose expired, and that they had to tender the proceeds to the lender BEFORE the rescission was valid.  You don't have to ponder that too long (only slightly longer than the courts did, actually) that what they created was, in effect, an incentive to the banks to IGNORE the rescission.  They removed the penalty for not complying with the TILA, and placed unreasonable demands on the borrower to perform tasks that were not even in the law.  How could a borrower be expected to read the TILA and perform a rescission correctly??? Well, I can tell you from personal experience, they CANNOT.

 

NO MORE! 

 

The Supreme Court has changed all of that. They have taken the derailed rescission law train and put it firmly back on the tracks.  They clarified in strong terms that the law MEANS WHAT IT SAYS. To enact the right of rescission, a borrower need only send a letter notifying the creditor of his wish to do so. PERIOD. At that moment, the note and the mortgage become VOID.  

 

There is a very good article from the Credit Union Association that states the obvious: This will be of no consequence to honest lenders. They already to everything right. It is rare that material errors are made on borrower Truth In Lending Documents.  You can read it here: TILA Ready Credit Unions Safe

 

IF a borrower sends a notice of rescission, the lender has only ONE option to defend itself: they must file a Declaratory Action in court and this will effectively make the borrower prove his claim.  If the bank does NOT respond with a court filing, the rescission is deemed valid automatically and the lender loses their opportunity to protest it after 20 days.   Contrary to the whining by banks who say there will be numerous frivolous rescission claims, this is an inexpensive fix for them.  Why are they whining? BECAUSE THEY DON'T WANT A COURT TO LOOK AT YOUR DOCUMENTS! That is exactly what will have to happen in order for them to fight your rescission.

 

Already we are seeing panic-stricken memos from bank attorney firms imploring their clients to stop ignoring rescission notices!  This is a very powerful ruling and you will begin to see great victories against fraudulent, bullying lenders in the very near future. This is a great ruling!

 

Now don't get me wrong, and this is important: I am NOT a "everyone deserves a free house" ranter at ALL.  If someone takes out a (fair) mortgage and doesn't pay their payments as agreed, then they should have their stuff thrown out in the street and the house sold to pay back the bank.  PERIOD.  The problem is, there has been an epidemic of the reverse of that going on in this country and there were a majority of mortgages that were DESIGNED to fail, and were deceptive by intention. It is these folks that I fight for.  

 

For those of us who have had a wrongful ruling against us with a perfect rescission: Stay tuned! We are on top of it and on the move.  There hasn't been a lot of talk about what to do about all of the hundreds, if not thousands of wrongful rulings against a borrower's rescission in State and Federal Courts.  This is a brand new ruling.  You can bet we are working on it and will keep you informed.

 

Do your part to help others who have had this crime committed against them: Share the news about this LANDMARK ruling by the Supreme Court! You'll be hearing more about it, I PROMISE. I welcome your questions and comments, and invite you to join those of us who are hoping the rule of law is restored to ALL PARTIES: Borrowers and Lenders alike so that people will feel confident taking out a loan again.  I for one, feel at this time that I will NEVER have a mortgage again after what we have been through.

 

And to our personal opponents in our own rescission case (Northwest Trustee Services and PennyMac Loan Services and Morequity and CitiMortgage) and the egregious violations against us over the last 6 years: I hope you are not sleeping well, because we are coming for you.