TILA rescission

TILA Rescission Revived Without Tender

Posted on March 17, 2010 by Neil Garfield

Max Gardner’s Protoge Achieved
This result as Reported Max’s Current Newsletter:

Editor’s Note: Most of what we have seen reported
indicates that although TILA is clear in is legislative expression that
NO TENDER is required for the rescission remedy under TILA, Judges
don’t like it. It seems they feel that Big Bad Borrowers are taking
advantage of Bambi Banks. Yet here is a case where the Judge DID apply
the law as written.

TILA was written with teeth, but Judges are reluctant to
apply it. Yet on its face TILA
possesses the strongest remedy against predatory loan practices in
existence. It allows the borrower to declare a rescission which requires
the alleged lender to (a) step forward (which they don’t want to do)
(b) file a satisfaction of mortgage and (c) negotiate return of the
money, less of course any claims for damages that the borrower has
claimed and can prove.

This comes back to the issue of the real creditor, the
pretender lender etc. In the current environment, there is nobody around
who actually has the authority to satisfy a mortgage. But TILA
addresses that too. It says that by
operation of law the security instrument is void not voidable. Thus the mortgage or deed of trust no
longer applies because it is void even if it was properly recorded. In
turn, this means the debt, if any, has been converted from secured to
unsecured.

The bargaining power of the borrower cannot be overstated if
this provision of TILA is applied. By eliminating the secured aspect of
the mortgage, the loan is easily stripped down to fair market value less
damages, attorneys fees, interest paid, etc. We can only hope that we
see more application of law as written and less hip-shooting from the
bench creating uncertainty and complexity where the law could not be
more clear.

Defendant U.S. Bank, N.A., as Trustee for the LXS2007-4N Trust (“U.S.
Bank”), seeks dismissal under Federal Rule of Civil Procedure 12(b)(6)
of a complaint filed by plaintiff homeowner Henry Botelho. Specifically, U.S. Bank claims that Botelho
cannot state a claim for rescission of his mortgage loan under the Truth
in Lending Act, 15 U.S.C. § 1601 et seq., unless he alleges a present
ability to tender the loan proceeds. As discussed in further detail in the Order, such an allegation is not necessary for
Botelho’s case to survive the pleading stage. Accordingly, U.S. Bank’s motion is denied. Hat tip to Boot Camp Grad Carmen Dellutri

http://www.ca11.uscourts.gov/opinions/ops/200814991.pdf

Filed under: CDO, CORRUPTION, Eviction, GTC | Honor, Investor, Mortgage, bubble, currency, foreclosure | Tagged: , , , , ,
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