The U.S. Court of Appeals for the Eighth Circuit recently rejected an attempt to rescind a mortgage loan and recover damages under the federal Truth in Lending Act (TILA), affirming the district court’s grant of summary judgment in favor of the mortgagee because the borrowers only tried to cancel their mortgage loan before foreclosure proceedings were initiated, and not thereafter.
Therefore, the Court held, the borrowers did not qualify for TILA’s expanded right to rescind in foreclosure arising under 15 U.S.C. § 1635(i)(2).
AUSTIN, TX (October 6, 2015) — FOR IMMEDIATE RELEASE
Travis County Clerk Dana DeBeauvoir, joined by the Travis County Commissioners’ Court, issues the following statement regarding the recent ruling by the United States Court of Appeals for the Fifth Circuit in Harris County v. MERSCorp Incorporated:
Most people will never notice that the public paperwork you typically expect to be recorded with the County Clerk whenever you buy a house, get a new lender, or refinance your mortgage isn’t being filed at all. A group of residential lenders created MERSCorp (Mortgage Electronic Recording System) several years ago for its own purposes and for bypassing the public record. This group has succeeded in creating its own private registry. The Travis County Commissioners Court, supported by the Travis County Clerk, joined a federal lawsuit in Nueces County to put a stop to this secret, substitute recording system.
Following is a very good analysis on common law rescission as applied in the case of Wong v Stoler (2015) 237 CA 4th 1375. One of the more interesting comments by the appellate court is that the chief error committed by the trial court was its refusal to effectuate the rescission because of a perceived prejudice to the sellers. The same is true in a TILA rescission. The courts have bought the banks’ arguments that following the strict language and procedures under TILA will prejudice the banks. The banks’ must be protected at all costs even if it means re-writing a Congressional statute.
The basic facts are that the purchasers of a hillside residence in San Carlos rescinded their completed contract because of misstatements made by the sellers to the effect that the property was served by a public sewer, when in fact the system was privately owned by the 13 residents of the area, who all had to share its maintenance costs. The trial court found that the sellers’ statements were negligent misrepresentations, but it declined to order rescission because of the complications involved in unwinding the deal. Instead, it ordered the sellers to indemnify the purchasers for their sewer maintenance costs over the next decade.
The complications that deterred the trial court from granting recessionary relief included that this contract had been completed in 2008. In the seven years since then, the purchasers had spent $300,000 on remodeling the property, including rebuilding the garage and the kitchen and removing much of the landscaping, before giving up attempting to get their neighbors to take the steps the city was requiring about the sewer. Meanwhile, the sellers had spent $100,000 on improving their new house. Would you want to be the judge who had to untangle a mess like that?
The USA consumer watchdog reported widespread failures in the servicing of student loans on Tuesday and urged new rules to protect borrowers.
“Federal agencies have entered into numerous recent enforcement actions from payment allocation problems and billing errors, to mistreatment of service members, to illegal collections practices”, Treasury Department Deputy Secretary Sarah Bloom Raskin said in a speech Monday.
Originally published in Consumer Affairs
An auto finance company and its subsidiary have been ordered to pay $44 million in refunds and balance reductions to consumers, as well as a $4 million fine.
The Consumer Financial Protection Bureau (CFPB) said that Westlake Services, LLC and Wilshire Consumer Credit, LLC deceived consumers by calling under false pretenses and using phony caller ID information. The CFPB said the companies falsely threatened to refer borrowers for investigation or criminal prosecution and illegally disclosed information about debts to borrowers’ employers, friends, and family.