TILA : : : Bank of America v. Peterson | "Jesinoski REMAND"; but an additional "OF NOTE" . . . .

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TILA : : : Bank of America v. Peterson | “Jesinoski REMAND”; but an additional “OF NOTE” . . . .

TILA : : : Bank of America v. Peterson | “Jesinoski REMAND”; but an additional “OF NOTE” . . . .

CURRENT Opinion

In 2014, the Eighth Circuit held that the Petersons’ claim for rescission under the Truth in Lending Act, 15 U.S.C. 1601, was time-barred by 15 U.S.C. 1635(f) because of their failure to file a lawsuit within three years of their transaction with Bank of America. In 2015, the Supreme Court held that another court had erred in holding that a borrower’s failure to file a suit for rescission within three years of the transaction’s consummation extinguishes the right to rescind and bars relief. Following remand by the Court, the Eighth Circuit vacated its earlier judgment and remanded.
Court Description: Civil case – Truth in Lending Act. On remand from the Supreme court for reconsideration in light of Jesinoski v. Countrywide Home Loans, 135 S. Ct. 790 (2015). For the court’s prior opinion in the case, see Peterson v. Bank of America, N.A., 746 F.3d 357 (8th Cir. 2014). In light of the Jesinoski opinion, the court vacates that portion of the judgment that granted Bank of America summary judgment on the Petersons’ claim for rescission, reinstates that portion of the judgment that vacated the grant of summary judgment to Bank of America on the Peterson’s counterclaim for statutory damages and remands the matter to the district court for further proceedings.

This is a revision of a Previous Opinion originally issued on March 21, 2014.

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Previous Opinion

Bank of America v. Peterson, et al., No. 12-2508 (8th Cir. 2014)

 

OF NOTE: Pg 7 Para: 2

“…. The Petersons, however, have offered evidence that Bank of America failed to deliver the required documents.  They testified that the closing agent took the documents after they had signed them and did not thereafter give them copies.  Taking the evidence in the light most favorable to the Petersons, their testimony rebuts the presumption of delivery and creates a genuine issue of material fact for trial.  See Stutzka v. McCarville, 420 F.3d 757, 762-63 (8th Cir. 2005) (concluding that the presumption of delivery was rebutted based on the borrower’s affidavit that she did not receive the documents); see also Cappuccio v. Prime Capital Funding LLC, 649 F.3d 180, 189-90 (3d Cir. 2011) (“[W]e hold that the testimony of a borrower alone is sufficient to overcome TILA’s presumption of receipt.”) …..”

Defendants appealed the district court’s order granting Bank of America’s motion for summary judgment on their counterclaims for rescission and statutory damages under the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq. The court concluded that the district court did not err in determining that defendants’ right to rescission had expired and that their rescission claim was time-barred under section 1635 because defendants notified Bank of America of their intent to rescind but failed to file a lawsuit within the three-year period. The court concluded, however, that defendants have offered evidence that Bank of America failed to deliver the TILA disclosures and notices. Therefore, there was a genuine issue of material fact regarding the failure to deliver the required documents. Accordingly, the court affirmed the grant of summary judgment to Bank of America on defendants’ counterclaim for rescission; vacated the grant of summary judgment to Bank of America on defendants’ counterclaim for statutory damages; and remanded for further proceedings.
Court Description: Civil case – Truth in Lending Act. Because defendants notified Bank of America of their intent to rescind but failed to file a lawsuit within the three-year limitations period, the district court did not err in finding their right of rescission had expired and that their rescission claim was time barred under 15 U.S.C. Sec. 1635(f); however, the fact that the defendants’ rescission claim failed as a matter of law under Section 1635(f) does not mandate the conclusion that their failure-to-rescind counterclaim for statutory damages necessarily fails or is time-barred, and the district court erred in granting the bank summary judgment on this claim.

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SEPARATE BUT RELATED DISCUSSION:

Rescission Summary As I see It

by Neil Garfield

If you read my blog for the last 3 weeks or so you should get a good idea of where I am coming from on this.  The basic thrust of my argument is that:

  1. BOTH Congress and US Supreme Court agree that there is nothing left for the borrower to do other than dropping notice of rescission in the mail. It is EFFECTIVE BY OPERATION OF LAW at the point of mailing. The whole point is that you don’t need to be or have a lawyer in order to cancel the loan contract, the note and the mortgage (deed of trust) with the same force as if a Judge ordered it. No lawsuit, no proof is required from the borrower. No tender is required as it would be in common law rescission. The money for payoff of the old debt is presumed to come from a new lender that approves a 1st Mortgage loan without fear that they will lose their priority position.
  2. Lender(s) must comply within 20 days — return canceled note, satisfy mortgage, and return money to borrower.
  3. Lenders MUST file a lawsuit challenging the rescission within 20 days or their defenses are waived. Any other interpretation would make the rescission contingent, which is the opposite of what TILA and Scalia say is the case.
  4. Therefore a lawsuit by borrower to enforce the rescission need only prove mailing. (SEE “OF NOTEabove in “Bank of America v. Peterson, et al., No. 12-2508 (8th Cir. 2014)”)
  5. Any attempt to bring up statute of limitations or other defenses are barred by 20 day window.
  6. The clear reason for this unusual statutory scheme is to allow borrower to cancel the old transaction and replace with a new loan. This can only happen if the rescission is ABSOLUTE. It can be declared void or irregular or barred or anything else ONLY within the 20 day window. If the 20 day window was not final (like counting the days for filing notice of appeal appeal, motion for re-hearing, etc.) then no new lender or bank would fund a loan that could be later knocked out of first priority position in the chain of title because the rescission was found to be faulty in some way. This is the opposite of what TILA and Scalia say.
  7. The content of the rescission notice should be short — I hereby cancel/rescind the loan referenced above. You merely reference the loan number, recording information etc. at which point the note and mortgage become VOID by operation of law.
  8. BY OPERATION OF LAW means that the only way it can be avoided is by getting a court order.
  9. If any court were to allow “defense” in a rescission enforcement action AFTER the 20 day window the goal of allowing the borrower to get another loan to pay off the old lender(s) would be impossible.
  10. Hence the ONLY possible logical conclusion is that they MUST file the action within 20 days or lose the opportunity to challenge the rescission. And any possible defenses are waived if not filed during that period of time. That action by the “lender” or “creditor” must be an equitable action to set aside the rescission, which is already “effective” by operation of law.

The worst case scenario would be that rescission is the most effective discovery tool available. If the lender(s) file the 20 day action they would need to establish their positions as creditors WITHOUT the note and mortgage (which are ALREADY VOID). This would require proof of payment and proof of economic interest and proof of ownership and balance. Any failure to plead these things would fail to establish standing. The attempt to use the note and mortgage as proof or the basis of pleading should be dismissed easily. The note and mortgage are void by operation of law by the time the bank or servicer files its action.

In all probability the only parties who actually have an interest in the debt are clueless investors who by contract have waived their right to enforce or participate in the collection process. The problem THEY have is they gave their money to a securities broker. They can neither show nor even allege that they know what happened to their money after they gave it to the broker.

The important thing about TILA Rescission is that it is a virtual certainty that the borrower will be required to file an enforcement action. In that action they should not allow themselves to get sucked into an argument over whether the rescission was correct, fair, barred by limitations or anything else, all of which should have been raised within the 20 day window. AND that recognition is the reason why we have been inundated to prepare pre-litigation packages, analysis and reports to assist lawyers in filing actions to enforce rescissions, whether filed today or ten years ago.

Caveat: I have no doubt that attempts will be made to change the law. The Supreme Court has made changing the law impossible by a ruling from the bench, That means state legislatures and Congress are going to be under intense pressure to change this law or the effect of it. But as it stands now, I don’t think any other analysis covers all the bases like the one expressed here.

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2 Responses to “TILA : : : Bank of America v. Peterson | “Jesinoski REMAND”; but an additional “OF NOTE” . . . .”

  1. Lazarus says:

    Bruce … what state are you in?
    I may be able to help you … 619. 212. 1653

  2. ontiveros says:

    I lost my property in a forclosure proceedings!

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