Using TILA Rescission In New Jersey Foreclosure Actions



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(This content is provided for informational purposes only and not legal advice. If you need legal advice please seek a knowledgeable foreclosure attorney with a successful defense track record)

Many homeowners facing foreclosure are unaware that the TILA Rescission can be a bargaining defense strategy. Another chance to work out a deal with the lender during a foreclosure lawsuit.

In the state of New Jersey contracts (in writing) follow statute of limitations for 6 years or 16 years. Which is pursuant to N.J. Stat. § 2A:14-1 (2016); N.J. Stat. § 2A:14-4 (2016). For Fraud is 6 years; pursuant to N.J. Stat. § 2A:14-1 (2016).

Also, please note that for New Jersey there is a six-year statute of limitations for fraud. Which the clock will start clicking from the date the act occurred or omission that caused the fraudulent claim.

Let’s say a homeowner is facing foreclosure in New Jersey…

Who actually really owns the loan? That’s the first question that everyone should be asking.

“Is the lender asserting the right to foreclose on the property the actual owner of the note and holder in due course??”

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Even with assignment transfers recorded or not recorded in public records, only proper TILA federal regulations can determine who is the true and correct lender.

Many times the foreclosing party is not the actual holder in due course with the correct enforceable security interest to foreclose on the property.

The cases of Jesinoski and Hoang made it clear that the borrower has up to three years to provide notice of the rescission of the loan.

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For example, the U.S. Supreme Court held that the notice of rescission could be issued at any time within three years after the loan closed and does not require to file a lawsuit to rescind within three years, as the mortgage lending industry had argued in Jesinoski v. Countrywide Home Loans, Inc.,135 S. Ct. 790 (2015).

More specifically on December 6, 2018, the Ninth Circuit issued an opinion in Hoang v. Bank of America, N.A., __ F.3d __, Case No. 17-35993, 2018 WL 6367268 (9th Cir. 2018). Where the Ninth Circuit expanded the time for a borrower to sue to enforce rescission of a loan if a lender fails to wind up the loan after a notice of rescission!!

Under the Truth in Lending Action (TILA) 15 U.S.C. § 1635(a), borrowers have the right to rescind certain loans within three business days after consummation of the loan.

Where 15 U.S.C. § 1635(f) asserts that if the lender fails to make the required disclosures under TILA, the deadline for borrowers to rescind the loan expands to three years from the consummation of the loan.

Put a pin in required disclosures!!

So if the lender didn’t reveal who is actually funding the loan at closing, couldn’t that also be considered a requirement for disclosure??

Those are issues that the Mortgage Cancellation Secrets Forms address and help to discover.

For example, when the lender fails to wind up the loan, the borrower has another six years to bring an action to enforce the rescission.

Ninth Circuit in Jesinoski and Hoang, upheld borrowers can have to up nine years from the consummation of the loan to enforce rescission under TILA.

The Ninth Circuit applied Washington state law that borrowers can certainly rely on Hoang and argue that the Ninth Circuit’s reasoning should apply to their specific case.

The statute of limitations to enforce a rescission claim may be shorter or longer than six years depending on the breach of contract statute of limitations for each specific state.

In Jesinoski, 135 S. Ct. at 792 the Supreme Court explained, “so long as the borrower notifies within three years after the transaction is consummated, his rescission is timely. The statute does not also require him to sue within three years.”

The borrower is not required to bring suit within the three years to effectuate the rescission.

According to 15 U.S.C. § 1635(b) it asserts that when an obligor exercises his right to rescind under subsection (a), he is not liable for any finance or other charge, and any security interest given by the obligor, including any such interest arising by operation of law, becomes void upon such a rescission. Within 20 days after receipt of a notice of rescission, the creditor shall return to the obligor any money or property given as earnest money, downpayment, or otherwise, and shall take any action necessary or appropriate to reflect the termination of any security interest created under the transaction. If the creditor has delivered any property to the obligor, the obligor may retain possession of it. Upon the performance of the creditor’s obligations under this section, the obligor shall tender the property to the creditor, except that if return of the property in kind would be impracticable or inequitable, the obligor shall tender its reasonable value.

Mortgage Cancellation Secrets presents Forms to give you the tools to rescind and cancel a mortgage loan contract.  Order Now, Click Here

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