Homeowners across the country owe a debt of gratitude to the states of Hawaii and Illinois. No, not for deep dish pizza and black sand beaches, but because their Appellate courts just handed down two of the strongest, pro-homeowner rulings on the issue of rescission that I have ever seen. Despite the fact that the Supreme Court of the United States was explicit in its Jesinoski decision, many lower courts across the country have been acting on their own and interpreting the law as they see it. As you can imagine, this tends to benefit the banks, with their high-priced legal teams, and not the homeowners who are fighting to keep their houses. Fortunately, this is not the way our government works. Our friends in Hawaii and Illinois are the latest and strongest courts to clear things up and ensure that TILA rescission continues to be a strong tool for homeowners to use to fight back against the banks.
One of the most important things that the Illinois court clarified is that ALL notices of rescission are effective upon mailing. It does not matter if the rescission is right or wrong. If the bank does not respond and contest the rescission in court within 20 days from the date they receive it, the rescission is done. Sending a letter at 19 days saying they aren’t going to approve the rescission is not a valid response by the bank. If the bank believes a rescission was mailed too long after consummation of the loan, they have to be able to prove their standing, prove that the rescission is wrongful WITHOUT using the note and mortgage as proof, then hope that the court sides with them and reinstates the note and mortgage. If they don’t file within 20 days of receiving the rescission, they are out of luck.
The Hawaii court hammered down the point for us that the law is the law is the law. The Truth in Lending Act was very clearly written and leaves no room for interpretation. According to the law, the bank MUST disclose the identity of the true lender. If they have not done this, the loan has not been consummated. It doesn’t matter if the borrower signed the loan and the money has changed hands. If the true lender of the money is not identified, the loan has not been consummated. This gives homeowners a much longer window during which they can rightfully rescind their loan. Hawaii’s Appellate court wrote that “the court may not read in its own view of a statute that is clear on its face.” The court went so far as to say that, when a lower court decides to take the matter into its own hands and ignores a rescission because it thinks it knows who would win a case to reinstate the loan, they are flipping substantive and procedural law on its head. No court except the US Supreme Court itself is able to overrule SCOTUS decision in our system of government.
What these decisions show us is that the law is finally catching up to the banks. Along with District and Appellate Courts all over the country, the Supreme Court has ruled as clearly as possible in the homeowners’ favor. With their ruling in the Jesinoski case, the Supreme Court has clarified that TILA rescission is a powerful tool to stop foreclosure and help homeowners stay in their houses longer. It also creates an opportunity for investors to do some pretty amazing deals. The tides have turned and the banks are being forced to negotiate on our terms. No more begging the banks to accept our short sale and REO offers only to have them demand ridiculously high prices. We can now get the banks to the table and demand that they prove they have the right to enforce a loan.
This makes it more important than ever that homeowners and real estate investors act NOW. This is a massive opportunity for real estate investors. If you know of anyone with a defaulted or underwater note, you need to get in contact with my office immediately at (706)-485-0162. I have spent the last two years building up a team of experienced attorneys and fraud examiners/forensic auditors who specialize in exposing fraud committed in the mortgage process and using that fraud as leverage to negotiate the sale of notes. This opportunity is not going to be available forever; we need to strike while the iron is hot!
We have a huge opportunity to help homeowners and do some great deals with multiple exit strategies. For more information, call me at 706-485-0162.