9th Circuit Court: Properly Rescinded Loan void if lenders not forced to remedy within the three year statute?? True?

[Social Apocalypse]

The attorney I just met with told me that the loan I properly rescinded within the three year statute do to errors with the material disclosures is VOID because even though I FILED it on time, I ALSO have to force the lenders to comply within the the three year statute.

I disputed this and said that NO, I have ONE YEAR to force compliance in court, and she argued with me citing precedent in the 9th circuit court.

Have you heard of this??? HELP!! I am devastated. I have gotten such bad advice throughout this process. I can't even find two attorneys that agree. Can we take a vote? YOU guys know about this stuff!!!

She cites as precedent: King v. California, 784 F.2d 910, 913 (9th Cir.1986

[faith]

Originally Posted by TB98629

The attorney I just met with told me that the loan I properly rescinded within the three year statute do to errors with the material disclosures is VOID because even though I FILED it on time, I ALSO have to force the lenders to comply within the the three year statute.

I disputed this and said that NO, I have ONE YEAR to force compliance in court, and she argued with me citing precedent in the 9th circuit court.

Have you heard of this??? HELP!! I am devastated. I have gotten such bad advice throughout this process. I can't even find two attorneys that agree. Can we take a vote? YOU guys know about this stuff!!!

She cites as precedent: King v. California, 784 F.2d 910, 913 (9th Cir.1986

Hello and welcome to this forum,
I am sorry to hear of your situation. Hope all is well with you.
The link below will help you regarding this matter, it explains about rescission rights..

http://quiettitleaction.com/Rescissi...ansactions.pdf

and another link that might help also:

http://www.miamidade.gov/csd/library...e_DTLRESPA.pdf

God bless you and take care.

[Social Apocalypse]

God bless you Faith, for responding. Thank you.
If I ever succeed, I am going to try and help others through this confusing MESS.

Bless you.

[Nathan Fransen Esq.]

TB98629,
Rescission is a very misunderstood, and misinterpreted aspect of TILA. It is unfortunatley used by many "auditors" as a tool to convince you to pay them to audit your loan.
Here is some general info that may be helpful:
1) Sending in a letter to your lender stating there are violations and that you want to rescind, does not, in the 9th Circuit, void your security interest. I know the statute reads that way, but it is not how things work in Court.
2) Unless you can tender (payoff the remaining amount) you will have a very difficult time enforcing any rescission claims.
3) material disclosure violations are actually far more rare than many auditors will tell you. Banks are generally pretty good with calculators and computers, so the numbers usually add up. Material disclosure violations can happen, and you may in fact have them, but don't assume you do if you are told by an auditor you have them.
4) Seek a qualified attorney if you want to pursue legal claims against your lender. There are many out there. Check with the National Association of Consumer Advocates if you need a referral.

I have litigated numerous TILA cases, including those for rescission. The internet is full of misinformation when it comes to this topic. Please be cautious.

Best Regards,

[Social Apocalypse]

Greetings Mr. Fransen, and heartfelt gratitude for taking the time to help me.

Good advice to be sure. My question tho: Does the rescission expire in the 9th circuit court if not ENFORCED with the three year statute? I have seen NOTHING in the law that supports this, but she is insistent.

I haven't communicated with an "auditor", nor will I. I KNOW I have violations (example: my "amount financed" was overstated by at least 13K-there are mannnnny more, I 've done lots of homework)

Since I am filing Ch7 tomorrow, I wanted to pursue putting my rescinded loan down as "unsecured debt", which would naturally force an adversarial proceeding, but my attorney won't do it. I just want to make SURE I am not burying a chance to bring much needed relief to this terrible mess.

I rescinded using the provided NOR, filled out correctly, sent with a letter outlining the violations. Received a "nah, there's no violations." and silence.

I CAN tender the loan, although the bankruptcy will make that much more difficult. We only have to tender reasonable value (if it's a valid rescission) MINUS three years of interest and all fees. That makes the tender VERY small, compared to what we owe. PLUS the house is upside down by about $100K.

I have had EXTREME difficulty finding an attorney who feels they understand rescission well enough to represent me... I am trying very hard, exhausted the NACA site, it's been awful. STILL trying to find one. I've even PLACE ADS on Craigs List!!!

Thanks SOOO much for contributing, it helps me a great deal.

[Social Apocalypse]

Quick update-the plot thickens...

Just received notification that our mortgage was sold (big surprise) to:

1. First sold to 3rd Street Funding, LLC on July 30th.
2. Then immediately transfered to: American General Mortgage Loan Trust c/o US Bank National Association, as trustee.
3. Servicer will be Pennymac LLC

They stated in the letter that it was possible that if our loan was found to be illegitimate or illegal then the sellers would be forced to take back the loan. (hahahaha-this would explain why my lender acted like they didn't know anything about my rescission-I suspect they were keeping it under wraps pending this sale!)

I called the 800 number provided, which was to US Banks investor servicing arm. (kinda funny).

I spoke with a very attentive person there who, when I told her that I was just calling to make sure they knew that the loan they just purchased has been rescinded, she asked if I would please fax the letter I recieved to her as soon as possible and then call her right afterwards.


Yes, I will do that. This is so crazy it's like a movie.

[Nathan Fransen Esq.]

TB98629,
A borrower has 3 years to rescind a refinance transaction on their primary residence, unless the lender provides accurate material disclosures and properly delivers 2 copies of the 3 day right to cancel notice to each borrower. I wrote an article on this that is floating around this forum some where...
Keep in mind, the 1 year statute of limitations is for remedies cited under section 1640(a) of TILA.

Here's a couple points that may be useful. First, i assume you mean your finance charges are understated as overstated would actually not be a violation. $13k is a great deal to be understated. Make sure you are using the index that was in place at the time you signed your loan to determine the correct amount. Some people mistakenly use the maximum, which is not the correct figure.

Second, a more accurate statement of your status is that you have "made a claim for rescission". You have not rescinded your loan. At least not the way the Court's view it. If the bank does not agree, you would need to bring suit against them. A lawsuit does not per se stop a foreclosure proceeding, so understand you still may have issues. Further, a skilled attorney will cost $$ to bring this suit in Court.

Third, you mentioned that they have to reduce interest from the current value. This is not the case. To determine a tender amount, the proper method is to deduct interest and fees from the current loan balance. The borrower must then be able to tender that amount. Some Courts are even requiring that the borrower demonstrate the ability to tender in order to avoid the case being dismissed. This is a high bar for many plaintiffs to reach.

I am not trying to dissuade you from pursuing any legal remedies. I just want you to understand the challenges ahead of you. In my experience, rescission claims that can actually provide positive results for a homeowner are rare these days...

[Social Apocalypse]

Thank youuu!

Yes, I know, the tender amount is the amount of the loan, minus the fees, interest, etc, and IF that amount is still above the value of the loan, then reasonable value is considered, is that correct? I think I have that one right. I did mistate, sorry about that. I also, as you pointed out mis-stated the finance charge being inflated/deflated. I'm probably dislexic on top of everything else.

Yes, I have only enacted the recission. I will have to enforce it (plus I am in a non-judicial state) and am seeing a GREAT attorney on Wednesday (FINALLY!) in Seattle. I am seeing stars I am so happy to have found one.

My loan is nearly current, I am not in foreclosure (not taking any chances).

Big news tho: I finally found the missing piece today!

The HUD-1 that we signed at closing is totally different than the one the bank has (unsigned) from closing. The effect of the differences on the Hud-1 are as follows:

The amount financed is about $13,000 MORE than what actually got financed. (They inflated the payoff our previous loan by over 11K and also had to refund -and "did" a $1,700 broker overage that I caught at closing. ) I struggled to figure out what it all meant, or why they would do this... Now I know.

This difference changed all of the other numbers into (I would assume) a very unfavorable arrangement for the lender, and would probably make the loan a HOEPA loan. I presume the motivation for the broker was to make the loan compliant so that he could get his BIG FAT YSP that he got... The APR on the TILA disclosure is 7.997

I am making the obvious and serious claim that the BROKER intentionally had us sign a bogus HUD-1 at closing (even the settlement dates changed by two days) and trashed it as soon as we left, then printed the REAL one.

What got me looking is that seeing that the correct amounts were reflected on the last HUD-1, I kept saying, "Where did all that money go??" "WHY Didn't our payment amount change ONE PENNY??" That was confounding me, because the TILA disclosure changed NOT AT ALL, even though those amounts changed a LOT on the HUD-1.

Crazy huh? Well, How did they build that cushion in there? (which is where they stuck their broker compensation, for, SURPRISE, the same amount)

Our "bogus" hud-1 says on line 303: Cash due X From Borrower: $11,700
On the "real" hud-1 we got after closing from the title company the same line says we got a check for $79 back (we did).

Did we have to tender $11,700 at closing? HECK NO! We didn't have gas money! I would have remembered that!

It's insane, but I have a LOTTT of other documents that support my realization that they actually FORGED our HUD-1 to both us AND THE LENDER. I doubt the lender ever saw the one we signed at closing... I wish there was a way to see if they had the guts to forge our SIGNATURE on the real one??? WOW That would be epic. We'll probably never know.

The one I got from the lender as a rebuttal to my rescission does not have our signatures on it.

What do you think of THAT??

Thanks again for all your help. I wouldn't be able to cope without this forum. You guys are AWESOME!!!

[Nathan Fransen Esq.]

TB98629,

Glad to hear you found an attorney to meet with. Sounds like you have much to discuss with him/her. Best of wishes on your claims. Be sure and let us know your progress.

Best Regards,

[Social Apocalypse]

Thanks, you KNOW I will. It might help someone else. I will keep in touch all the way through (good or bad) unless I have a stroke first, which I might. A guy came yesterday to repo my 5th wheel. I feel like I am in a Simpsons show. I want to scream, "THIS IS NOT MY LIFE!!!"

I am happy that my whole rescission story is now very simple. I don't even have to tell the attorney anything now. I will simply lie the material disclosures I have in front of her and I KNOW that she will be able to understand it. It took me 8 months to figure this out. It will probably take her 9 minutes.

And after all, that's the only chance I have, is that the violations clearly exist on the documents and speak for themselves. I don't have to say a word.

Much gratitude~Any news on the San Jose couple today who had a August 31st date with the court to get their banks last chance to produce the note?? I'm dying to hear.

[otisanddinga]

hi nathan,

If recission is unrealistic then what leverage regarding the Tila Violations in the buyer's loan documents have when modifying a mortgage? What can a lender be liable for? Thanks

[Social Apocalypse]

I promised an update - Good or bad - and here it is.

So far it's bad.

We saw the attorney. YES I was impressed with her apparent compentency and knowledge of predatory lending/foreclosure/TILA litigation. It's all she does. Yes, I am glad I went to see her, and it was cathartic to finally collaborate with someone who knew what I was talking about and even offered a compliment on my understanding of the law. That was about all the good news tho.

Here was the crushing relative facts per her experience in the 9th Circuit Court, followed by my questions:

Even IF my recission is valid (we are assuming it is on first blush, more on that when she's done looking at it), we have no shot at rescission due to the Yamamoto case in 2003 in which the court ruled that even though the rescission was valid, they CONDITIONED the rescission on the borrower's ability to tender the loan. Since they could not, it was dismissed. Much controversy followed, even to the extent that the federal government issued a letter of comment which basically said, "that was a bad ruling, and it is not what TILA/Reg Z says..." Nobody has yet been successful in reversing that ruling in subsequent rescissions. They always defer to Yamamoto and require proof of ability to tender BEFORE sustaining an otherwise valid and deserving rescission. Too bad we are in the 9th circuit court.

Her comment to me when I said that I would like to TRY to provide her evidence that I can tender the loan was, "There is no way in hell you can tender the loan after a Ch 13 or Ch 7 bankruptcy." I debated that, and said I do have SOME resources, and she shut me down firmly and said, no way. I don't know if that's true, but I am going to find out. I am, of COURSE, pouring through information looking for help. We have good income, and great credit history up until we hit the wall in December when I lost my job. Our house will be extremely finance-able, especially after hopefully getting our 2nd stripped in the Ch13.

And lastly-and this one really shocked me-she said that the judge probably wouldn't grant the rescission anyway, because I waited so long (almost three years) to do it. She said he would want to know "What took me so long?" and based on my "excuse for not catching it sooner" would probably say, well, too bad, you should have read your paperwork.

Now, that one really got me, because NEVER have I heard that the determination of whether or not my rescission was valid based on the judges opinion on whether I personally deserved it or not... I thought it was based on the content of my material disclosures being either missing or inaccurate outside of acceptable margins (they are). NOT whether I was not saavy enough to catch it before now.

My questions:

Anyone know or heard of a way to refinance a house after bankruptcy? Do any of the Home Affordable programs allow a bankruptcy to be forgiven if there is enough income, equity and payment history to support it? (Please UNbreak my heart and say yes)

Anyone know of any reason why I should question these opinions of this very well-known, and active attorney (whom I thought was incredibly knowledgeable, direct, and helpful, except for the hurtful information I got) I didn't pay her to make me happy, I paid her to tell me the truth, and I appreciate that. But I don't want to dismiss my 8 long months of pure horror and hell getting this far, based on a misunderstanding I may have had in a one-hour consultation with an attorney who I still think knows what the heck she is talking about.

I can't remember the rest because I cried all the way home... (it was a three hour drive)

Thanks again -I am aware I ramble in my postings... I just can't help it. You guys are my therapists.

Hang in there everyone... I am a few quarts low of sunshine today but I'll find some somewhere.

[Nathan Fransen Esq.]

TB98629,
Sounds like you met with a very competent attorney. Yamamoto is the law of the land with respect to this issue. The issue with tender in most cases is not just your credit worthiness but also the subject property. Even with a rescinded balance, the amount due is likely higher than the value. In that instance, a borrower simply cannot get a loan. Without the ability to get a loan, you would literally need cash to tender.

I commend you on your search and efforts. You obviously have put a great deal of time and effort into this. I too wish you discovered more desirable information, but it seems you have discovered very accurate information.

Best Regards,

[Social Apocalypse]

You are so awesome for helping Nathan, thank you. If EVER I am successful... YOU will be credited in my heart for providing several of the thousands of pieces in this puzzle, out or sheer generosity. So grateful, you'll never know.

Here's my plan, so far (now looking for holes in it, which is where I spend most of my time) Tell me what you think if you like:



THEN:

1. My property will definitely secure a new loan (I have been paying for three years, I know the house is worth about 320K, maybe less. I have paid in finance charges alone over the last three years $110K (I am STILL making my payments) Loan amount is $336K. That means tender, if I am not mistaken, should be around 226K. In a perfect world I will be awarded some compensation for at least a PORTION of the TONS of other violations that exist... (example: I recieved my GFE in the mail two days AFTER we closed, just to give you an idea of the level of slime we are talking about here). But I am erring on the side of caution.

2. I have been pretty encouraged by advice from a banker and subsequent checking that I can get a Hard Money loan committment for that amount, which would be a very HIGH rate, but it is likely that I will not even BE tendering the loan, because my plan is to include the rescinded mortgage in my ch 7... (Which my attny concurs usually works fine IF we can produce Yamamoto support in a rescission.)

I don't have to actually TENDER the loan according to Yamamoto, I simply have to PROVE THAT I CAN. And I think I can. If I have to beg a rich friend to do it, I WILL!!

HOPEFULLY: Worst case scenario, loan gets rescinded, but NOT discharged in CH 7, I take my time and get the snakes the money when I feel like it... I have no intention of actually consummating the hard money loan. My note is released, and I simply don't answer their calls till I can get a real refi after my credit rebounds enough for an FHA loan (2 years).

Whaddya think?

Thoughts??

[Nathan Fransen Esq.]

TB98629,Conditional rescission essentially means that the bank does not have to release the security interest until you tender. As such, your plan may have some challenges.

[Social Apocalypse]

good to know. Well, then I will get the hard money loan, and tender it. Probably am not allowed to do that after Ch 7

Thanks again Nathan. It needs work. I'm not giving up.

[Social Apocalypse]

All of the caselaw on successful rescissions in the 9th Circuit that I am reading says that proof of tender required the plaintiff to deposit the tender amount with the court trustee. Upon satisfaction of that requirement, the court trustee then returned the money to the PLAINTIFF! That makes sense. It's up to the Plaintiff to actually tender to the lender... (or not) The court simply is proving ability by actually collecting the money. I am still checking.