Please go to Neil Garfield’s website for tons of powerful information. His blogs are incredibly educational and useful. The notes (below) are long, but trying to put them into some specifics as an overview.
TILA = Federal Truth In Lending Act
Neil’s blog about TILA and Worksheets for download to see if you can utilize TILA regarding your loan.
In another of Neil’s blogs he cites a recent HSBC case in which the 4th DCA in Florida finally concluded that the fraudulent behavior perpetrated by the banks (i.e.,robo-signing, document fabrication, backdating, forgery, etc.) has been occurring because there really was no transaction behind the paperwork the bank relied on.
Please do not take these notes as “gospel” but inform yourself about TILA and how it may apply to your case.
NOTES from Neil Garfield information
“US Supreme Court, usually bitterly divided by partisan lines, unanimously put TILA back on the table.”
In 2006 the TILA protections began to face, as millions of homeowners began to lose their homes to fraudulent mortgages foreclosures. Courts were not upholding this federal law and, in fact, were throwing it out as irrelevant! Nothing could be more relevant!
WHAT IS TILA?
TILA is a federal law called the Truth in Lending Act. It’s principal purpose according to all accounts and seminars given on the subject is to provide the borrower with a clear choice of lenders with whom he/she wants to do business and clear terms for comparison of terms offered by each lender. It is also designed to smoke out undisclosed parties who are receiving compensation and it has real teeth in clawing back such undisclosed compensation.
Essentially the mortgage becomes void if you notify the pretender lender that you rescind the transaction within TILA time frame (a three-year statute of limitations)
You can google TILA and find the particulars
Borrowers are supposed to receive Good faith estimates and
Full disclosure of who the lender was.
It gives consumer the power of choice as to whom they were doing business with
It also intended for the borrower to see and know precisely who all is involved in the loan – i.e., who is really being paid as a result of its origination.
Neil goes into depth about how it is used in forensic examination and the limitations of TILA.
He says: “Note that the absence of a prohibition in TILA or the apparent expiration of TILA does not block common law actions based upon the same facts and some states have more liberal statutes of limitations.”
Undisclosed compensation is very broadly defined in TILA so it is fairly easy to apply to anyone who made money resulting from the purported loan transaction, and the clawback might include treble damages, attorneys fees and other relief. “
WHAT ACTION SHOULD THE BORROWER TAKE?
Notify Lender Or Pretender Lender That You Rescind The Transaction
“Note that rescission does NOT mean you must offer up the house (“give it back”) to the lender. The lender, if there was one, gave you money not a house. rescission is a reversal of that transaction which means you must tender (according to the 9th Circuit) money in exchange for cancellation of the transaction. If you follow the rules, a TILA rescission eliminates the note and mortgage by operation of law, so while you have the right to demand and sue for return of the note as paid and satisfaction of the mortgage (release and reconveyance in some states). Unless the “lender” files a Declaratory action (lawsuit) within 20 days of your demand for rescission, the security is gone and can be eliminated in bankruptcy.”
Doesn’t mean you don’t owe the money. The party who actually loaned the money was not party to the contract . So still could owe the money but it is unsecured.
Judges are conflicted as to how they rule, as with everything else in foreclosure. Judges don’t agree as to what “tender” means (payment plan, etc.)
Some do not require the borrower to tender payment, but some do, as for instance the 9th circuit in FL
100s of courts have held. Well if you are going to rescind, you have to have money to pay the lender or pretender lender otherwise your rescission means nothing. That’s not what the statute was intended to do and isn’t what it says
Purpose to give borrower a hammer in event lender misbehaved. So there is no tender required in order to rescind and we have the issue now of all those notice of rescission that were sent and continue to be sent where the foreclosure was allowed to occur and where bankruptcy courts lifted a stay to allow the foreclosure to condition – all those orders, judgments and decisions appear to be void if the borrower gave notice within the three-year period. For now from the date of closing but there will be arguments as to when that three years begin.
However, who precisely is the creditor to whom the borrower sends the Rescission?
In some cases the other side will laughably claim that the creditor was not notified because they will claim that “who the creditor is” is not the party notified. BUT THAT IS PRECISELY BECAUSE THE BORROWER NEVER WAS PRIVY TO WHO ACTUALLY FUNDED THE LOAN – the investors!
- If you are a homeowner lured into a deal with blatant lies by people who knew better
- The other lie – have to be 90 days behind to be considered eligible for a mod.
- That’s how they get you into default, calling you “deadbeat” even though they told you to do it and so continue with foreclosure.
- That is backfiring on many foreclosure cases and there are many other issues as well.
- Begin with the basics. The loan contract. The loan contract is several docs
- Who made offer
- Who accepted?
- What were the terms?
- Who loaned the money?
- Who were the parties
- Was the loan completed by the parties to the contract? This is the key!
- The answer in many in fact most cases is – NO
STATUTE OF LIMITATIONS
As to the statute of limitations, it simply does not apply if the “lender” has intentionally mislead the borrower, committed fraud or otherwise withheld information that is deemed fundamental to the disclosures required by TILA. This is the most common error committed by borrowers and their attorneys. In most cases the table funded loan is “predatory per se” and gives you a leg up on the allegation of fraud or misrepresentation at closing.
TYPES OF FRAUD WHICH COULD AFFECT YOUR CASE
FRAUD IN THE INDUCEMENT
Example: (they told you that even though your payments would reset to an amount higher than your household income has ever been, you would be refinanced, get even more money and be able to fund the payments through additional equity in the house).
FRAUD IN THE EXECUTION
Fraud may be in the execution where you signed papers that you didn’t realize was not the deal you were offered or which contained provisions that were just plain wrong.
For instance, If you thought that you were getting a loan from Party A but it was really Party B who funded the loan
(Party B being an unrelated person or company – i.e., investors in mortgage backed securities)
And if the pretender lender did not disclose this fact that it was really Party B lending the money.
Neil argues that your legal obligation to repay the money goes back to the Party B, however, another catch
The very existence of Party B indicates that the loan was what they call table funded.
Table funded loans are considered predatory per se.
Neil says “The terms of repayment are different from what was offered or what was agreed to by the lender acting through the investment banker that was creating (but not necessarily using) REMICs or trusts. In plain words the mortgage bond and the prospectus, PSA and other securitization are at substantial variance from what was put on the note, including the name of the payee on the note and the name put on the security instrument (Mortgage or deed of trust).”
LOAN ORIGINATORS ARE A TELL-TALE SIGN
Neil goes on to discuss what a “loan originator” actually is. In essence it is “Arranging” the loan from a third party” which does not fit the definition of being a lender.
Any transaction using a loan originator is usually one in which the name on the mortgage is a pretender lender and, most importantly, the presence of a “loan originator” in any transaction violates TILA and overcomes any statute of limitations.
He even goes so far as to say that
“The office of the controller has published a series of papers describing the meaning and intent of TILA and to whom it applies, even pre Dodd-Frank.
For example, it describes “Conditions Under Which Loan Originators Are Regulated as Loan Underwriters.” Thus the use of a strawman is expressly referred to in the OCC papers (see below) and there are specific indicia of whether an entity is in fact a loan underwriter, which is the basis for my continual statement that a loan originator is not a lender (pretender lender) and the very presence of a loan originator on the paperwork is a violation of TILA tolling any state of limitations.”
Since the likelihood in the majority of these fraudulent foreclosures is that your loan was table funded and securitized, your signature was procured by both fraud in the inducement and fraud in the execution, because it was predicated upon that payee giving a loan of money.
The banks and servicers argue that origination documents are enforceable, which is absolutely bogus.
You have defective paperwork
You have an unknown third party funding the loan (investors) who are now suing investment bankers for the fraud perpetrated on them. The investment bankers lied about what was in the REMIC, or going into it
On face value the documents were never supported by real consideration from the parties named. If the documents were correct the name of the REMIC, or group of investors would have been on the origination documents as the true lenders.
Judges take it as fact that if a big name bank is on the papers, how could it be incorrect? How could a bank be lieing and be a pretender lender? – a DUH
This is where examination of bank records is vital. Did they ever book the loan as a loan receivable or did they book the transaction as a fee for services to the investment bank?
If you are looking for the characteristics of a loan underwriter, versus a loan originator the OCC paper provides a list. In the case of banks the presence of some of these characteristics may be irrelevant in the subject transaction if they treated the “securitized” loan differently through different departments than their normal underwriting process. There such a bank would appear to be a loan underwriter, but when you scratch the surface, you can easily see how the bank was merely posing as the lender and was no better than the small-cap originators that sprung up across the country who were used to provide the mega banks with cover and claims to plausible deniability as to the existence of malfeasance at the so-called closing:
He does, however, have a caveat there so it would be well worth reading that particular blog for further explanation.