TILA Rescission Case results in Mortgage eliminated – forensic loan audits do have a place in the loss mitigation marketplace and can lead to a valid TILA rescission.

Okay, this is a real interesting case.  A California homeowner from Westminster California pulls off a HUGE Truth in Lending / Quiet Title win against Chase mortgage.  Validating the need to obtain a forensic loan audit when you have a loan (refi loan) originated within the last three years and suspect there may have been material truth in lending violations in your loan file.

As we have discussed on many other blog posts, including on our site http://www.rescindmyloan.net IF YOU HAVE A REFINANCE LOAN TRANSACTION WITHIN THE LAST THREE YEARS AND YOU ARE FACING A FORECLOSURE (OR EVEN IF YOU ARE NOT FACING A FORECLOSURE BUT WANT TO SEE IF YOU HAVE ANY LEGAL RIGHTS WORTH PRESERVING), you should consider having a Truth in Lending (“TILA”) forensic loan audit performed to see if you have an ability to excerise “extended three year rescission rights.”  Yes, that’s right, where you have material TILA violations in your loan documenhts (ex. under-disclosure of the APR or finance charge, and/or failure to receive two copies for each borrower or person with a security interest in the property) you have a LEGAL RIGHT to rescind your loan as against your current lender – which includes those secret lenders which the loan servicers are trying to protect, like the trustee of a securitized loan trust, etc.  Why?  TILA rescission rights apply TO ALL ASSIGNEES OF THE LOAN.  Trust me when I tell you, this is not something the “lenders” want to deal with.

Under TILA, when you rescind your loan, the security interest is automatically void and the lender must return all monies received in connection with the loan and the borrower has no obligation to pay any finance charges.  The key is the identify the TILA violation through a forensic document examination, and then to submit a valid rescission letter to all appropriate parties.  Once you do this, technically speaking, the lender must acknowledge your request to rescind and takes steps to reflect cancellation of their security interest.

What happens is when this right is exercised, normally the lender will ignore it, or dispute it altogether.  TILA is desiged to be a self-enforcing rememdy and it is a “consumer protection statute” that is to be “liberally construed to protect borrowers against the mighty banks who are in the best position to ensure TILA compliance by giving clear and conspicouos disclosure of the cost of credit and other meaningful disclosures essential to a consumer credit transaction.

Well in this case (Nguyen v. Chase Bank), the Plaintiff, GOING IN PRO PER WITH A VERY WELL WRITTEN COMPLAINT, socked it to Chase who was also confronted with questionable conduct that it was argued violated the preliminary injunction obtained by the savvy Plaintiff. 

The Plaintiff sent in his rescission letter and made an offer to tender which was rejected by Chase.  Under TILA, the borrower must also tender back the loan proceeds received minus what they are owed the lender.  When Chase rejected the tender offer, the Plaintiff sued for TILA violations, Forgery, Rescission, and other damages.  Mr. Nguyen obtained a preliminary injunction.  The Defendants, despite the injunction, filed a Notice of Sale acting in complete indifference to the Plaintiff’s Federal TILA rights.

At the end of the Day, the judge issued an order that “the Deed of Trust recorded with the Orange County Recorder……is WHOLLY VOIDED……..THAT A DEED OF RECONVEYANCE ISSUE……ALL ADVERSE CLAIMS AGAINST THE PROPERTY ARE QUIETED…….AND THAT THE PROMISSORY NOTE IS RESCINDED…….

Folks, if you were wondering why we have been shouting from the rooftops that if your refi loan was in the last three years, you should get a mortgage documents analysis from a qualified loan auditor or legal professional.  This case shows the potential power of TILA, as we state on our website, is perhaps “your most powerful weapon” to battle and win the war on foreclosure.

Even if you are working with a modification company, or “attorney-backed” firm, or even a law firm, if your loan is within three years, DO NOT NEGLECT TO GET A GOOD SOLID TILA ANALYSIS AND DISCUSS A TENDER LITIGATION STRATEGY WITH A TRUTH IN LENDING LAWYER.  THE HOUSE YOU SAVE MAY BE YOUR OWN.

Mr. Nguyen, my hat is off to you for a job well done.

About Vondran Real Estate Litigation
Steve Vondran is the author of all blog posts on this website. He is a real estate lawyer who can represent you in financial elder abuse, distressed real estate issues, short sale, predatory lending, foreclosure defense, wrongful foreclosure, lis pendens, injunctions, state and federal real estate litigation, arbitration, real estate broker compliance, accusations, real estate zoning & land use, eminent domain and other real estate law issues. Call (877) 276-5084


10 Responses to “TILA Rescission Case results in Mortgage eliminated – forensic loan audits do have a place in the loss mitigation marketplace and can lead to a valid TILA rescission.”
  1. Philip Shelley says:

    Yeah, you know what’s amazingly kind of screwed up about this case? The Fact that my case was filed before this one, I’m also from Westminster CA and the merits of my case are substantially similar (if not better than) this case, but the California Central District jerked us around and now we’re on appeal in the 9th Circuit. Shelley v. Quality, 09-56133

  2. Foreclosure Defense Attorney Steve Vondran says:

    Yes I agree this is FORECLOSURE-GATE! Keep up thefight to save yourhome and please keep me posted!

  3. cindy arriaga says:

    Ours is in Chicago, Illinois and very similar and filed April 6, 2009. Since the week after refinancing in July 2005, we had questions about the loan paperwork given to us at closing (2 urlas, 2 loan applications -neither correct – 2 different loan numbers, etc), but the lender never returned our calls or answered our letters. We also asked for a copy of the appraisal w/i 15 days of closing – never got an answer. We turned to the servicer (who used to be our mortgagee before the refinance, wouldn’t lower our rate, but referred us to the current lender, wierd) The servicer had made so many mistakes in our escrow that our fixed-rate motgage bill was constantly changing, and we could no longer make a budget, so we decided to sell and get a more affordable one. After many months of trying to get the lender to properly disclose the refinance, we tried to sell our home and couldn’t – because the selling price would be $200,000 less than the mortgages.
    We sent notice to cancel within 3 years of the refinance (April, 2008), offering to give up our house of 17 years or arrange to tender the principle. We figured the lender forfeited under TILA, since after 3 months of our notice it did not rescind – so we stopped paying the servicer and bought a smaller home in July, 2008 with money we had and a new loan. We continued to try and sell the old house. Well, we were 50% moved in when we got the servicer’s foreclosure summons in December 2008. Then, our realtor said he had to take the old house off the market because no one would buy a house for fair price while it is in foreclosure. 30 days later, the servicer’s attorneys filed an affidavit as a MERS officer swearing that a mortgage assignment was made to the servicer on an unspecified date before foreclosure was filed. The foreclosure complaint caused a domino effect of destruction to our finances, destroying our almost perfect 20 year credit record. So we filed our Federal lawsuit for failure to rescind (we had to go pro se, because no attorney was interested in taking our case). We found out later that TILA also prohibits filing foreclosure after notice to cancel.
    Now we are near bankruptcy, and the servicer’s chancery case has been in limbo for over a year. Our Federal case has been a rollercoaster ride and we keep getting Motions 12(b)(6). We are on our Second Amended Complaint, trying to get the words right. My 10th-grade education doesn’t help much, and my husband is limited in the English language. We are still in the pleading stage – the servicer and lender want us to pay the entire loan back before we can rescind – how convenient, now that we have suffered financial damage. Normally, I guess it would benefit a homeowner to not have to pay a mortgage for 2 years, but in our case, being forced to remain in the unwanted home to preserve our rights has caused us irreversible damages and losses.
    To preserve our rights, we had to remain in the old house, and our financial resources, including our 401k’s and all our savings is now gone, because we are maintaining both houses. Even worse, last winter the pipes in the attic of the new house broke because we had the heat down to save money on the bill. We haven’t had the money to fix it, and can’t even get a loan because our credit is trashed. It’s not liveable. We refuse to believ that the lender/assignee has an unlimited time to rescind and that it can get away with fraud and violating consumer laws, then cause us irreversible damages and violate our rights even further, and still get rewarded if we can’t tender years after we first offered to tender. Something must be wrong with consumer protection laws if it protects the crooked lenders and not the consumer. If anyone is interested in looking, our case is on Pacer 2009cv02115 Arriaga et al v Wells Fargo et al.
    Good luck to everyone, especially those who have to fight these dogs alone!

  4. Foreclosure Defense Attorney Steve Vondran says:

    Thank you for sharing, we will think positive thoughts that you will prevail against them. Please keep us posted. Thank you.

    Steve Vondran, Esq.

  5. disableddad says:

    Cindy your story is EXACTLY where I’m at now and still putting up the fight. This has been my home for 25 years. 2 TILA’s blah blah. So any good things to report?

  6. Foreclosure Defense Attorney Steve Vondran says:

    Keep up the foreclosure fight!! TILA is a good one to look into!! Steve Vondran, Esq.

  7. smity says:

    The handshake at the end of the loan process was the promise that matters. So busy looking for loop holes you guys have lost sight of what matters- your word-your honor-your integrity.

  8. cindy arriaga says:

    well, I haven’t been served yet, but I noticed today that an order was filed on 4/21/2011 in my case – the judge dismissed my TILA rescission claims WITH PREJUDICE because I did not affirmatively prove that we are currently able to tender the entire “loan” amount, and because we did not send the tender amount with our rescission letter back in April, 2008 (in the notice, we only offered to give up the property or find a refinance to pay off the loan, both of which we were fully able to do in April, 2008, especially since the lender would have had to deduct the $70,000 we had already paid off the proceeds amount, and our credit was near perfect).
    So far, it seems the Judge has decided that, even though our financial destruction and current inability to tender was directly caused by the defendants, our TILA claims need no adjucation ie, failure to rescind, non-disclosure violations (should be tolled due to the gross concealment), the filing of foreclosure after notice to rescind, etc.
    I really don’t know what to do next. I want to challenge the Judge’s ruling on the TILA claims – but I have no idea where to start and no attorneys will give me advice unless I hire them, which I can’t afford to do.
    When the Judge says “TILA rescission claim” does he mean ALL of my TILA claims, like statutory damages for the non-disclosure violations that led up to the rescission notice, and stat/actual damages for violation of failure to rescind? Is he basically saying, we had no right to rescind when we gave notice because we can’t currently tender, or is he just saying that we cannot have the remedy of rescission because we can’t currently tender?
    I’m not sure if maybe someone here can give me an idea of how – and I wonder how this will affect the foreclosure complaint filed by the servicer 8 months after we sent notice to rescind, which has been in limbo since 10/2009, and is based on a false affidavit that magically gave the servicer standing 30 days after the foreclosure complaint was filed. Now that the Judge has dismissed my Federal TILA claim, can the servicer go ahead with the foreclosure? Doesn’t it matter at all that we had the right to rescind and an ability to pay at the accrual of that right? Can someone point to (free or cheap) info that can tell me what I may (or may not) do to challenge the Federal Judge’s ruling?
    My Federal case has other counts – the Judge hasn’t yet ruled on those – RESPA, FCRA, ECOA, Fraud and Misrepresentation by the lender, broker, MERS, and servicer, quiet title (declaration as to true parties – I have, so far, received 3 different “true copies” of the note).
    All of these, plus FDCPA and lack of servicer’s legal standing, were also included in my answer to the State foreclosure complaint, which was never responded to by the servicer. When we filed our Federal complaint, it was not in defense of the foreclosure – I believe we subjected ourselves to Federal jurisdiction and so we left the foreclosure complaint as it was, and the servicer also has not filed anything since we answered there. What effect does the Federal Judge’s rule have on my (possibly) pursuing the same claims as a defense to the State foreclosure complaint, if the Judge dismissed any of the claims with prejudice in Federal court (like he did with our TILA claims)??
    I am getting more frustrated each day. These past 3 years have been hell – paying 3 gas and electric bills and insurance, etc on 2 properties just to get justice is going to push us into bankruptcy. This is all so unfair. Thanks to anyone who is willing to help in any way.

  9. A Win for Homeowner’s: Circuit Court upholds Clean Hands Doctrine; Mortgage Rendered Void Ab Initio

  10. Foreclosure Defense Attorney Steve Vondran says:

    Sheryl, thanks for posting this case. For my California readers, we must note it is from the 6th Circuit. California is in the 9th Circuit. I will give this case a read and post comments if appropriate!

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