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Sunday – December 23, 2018

Myths and Realties That Every Homeowner Needs To Know About Truth-In-Lending Act (TILA) Rescissions As A Defense To Foreclosure

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Despite the importance of TILA rescissions in a borrower’s arsenal of defenses against foreclosure, no area of foreclosure defense is least understood or the subject of more uninformed debate.

For decades commentators and judges alike have too frequently demonstrated a continual misunderstanding of TILA rescissions, which has generated constant confusion not only among foreclosure defense attorneys, but also in an overwhelming number of unhelpful state and federal judicial decisions.

Born out of laudable Congressional concern half a century ago to protect mortgage borrowers, TILA is a classic example of a good idea poorly implemented.

Even worse, disagreements over the application of TILA disclosure rules and remedies have taken attention and availability away from numerous otherwise effective common law foreclosure defenses such as adhesion, unconscionability, estoppel, fraud, and unfair and deceptive business acts and practices.

On today’s show we will attempt to bring some clarity to this confused area of the law that promises, yet too often rarely provides homeowner relief against predatory lending, and John and I will chart future trends, attempting to separate TILA rescission myths from realities, answering, time permitting, the following questions:

1. How does a borrower exercise the right to cancel?

2. How long does a borrower have the right to cancel?

3. Which borrowers have the right to cancel and which do not?

4. Can the right to cancel be extended beyond three years?

5. Who must sign the cancellation letter?

6. What happens if the lender does not respond to the cancellation letter within 20 days of receipt?

7. Who must be served with the notice of cancellation?

8. Is an assignee of your original lender nevertheless bound by a TILA rescission?

9. Can you rescind a refinancing loan?

10. How must a cancellation notice be communicated?

11. Can a loan be rescinded following the death of a borrower?

12. Must all borrowers cancel a loan before being able to exercise the right to rescind?

13. Can a TILA rescission right be waived in a settlement agreement with a lender?

14. How is the start date of the right to cancel determined as based on loan “consummation”?

15. How does a borrower subsequently prove lack of delivery of two notices of the right to cancel at loan consummation?

16. What is the effect of a borrower signing an acknowledgement at an escrow closing of having received two notices of the right to cancel?

17. Can a loan modification agreement be rescinded?

18. What is the difference between a statute of limitations and a statute of repose in relation to a TILA rescission?

19. How can a borrower prove not having received two copies of the notice of the right to cancel at closing and during the extended three year rescission period?

20. If the extended right to cancel is terminated by a “sale,” what is the operative definition of a “sale.”

21. How long after a timely TILA cancellation does a borrower have in which to sue?

22. When must a borrower, canceling a loan, tender the reduced TILA rescission payoff amount?

23. How is the reduced TILA rescission payoff amount determined?

24. If a TILA rescission foreclosure case is settled without reference to an award of attorneys fees and costs, can a borrower recover attorneys fees and costs nevertheless?

25. How does the state “recoupment” exception to the federal TILA rules affect TILA rescission rights?

26. How does a bankruptcy case affect TILA rescission rights?

27. Can you rescind a loan pursuant to TILA rescission rights and still receive an award of damages?

28. Does a TILA rescission lawsuit have to be brought in federal court?

29. When can a TILA rescission be enforced even if a loan is not for consumer purposes, but is for business purposes or is for new construction?

30. What is the practical difference between interpreting a Congressional statute such as TILA and interpreting a constitutional provision?

We will also suggest, time permitting, some possible changes in TILA legislation that would better serve the purposes of the Act and homeowners.

Please join us this Sunday on The Foreclosure Hour in order to better understanding all of these rescission issues, to advance your understanding regarding the use of TILA rescissions as a defense against foreclosure, which knowledge might just save your home from foreclosure and you and your family from eviction.

Gary

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