9th Circuit Denies US Bank’s Motion to Dismiss for No Tender

Big news from the 9th Circuit Federal Court!

Thanks to my friend Theresa at SocialApocalypse.com. Theresa (her real name) is like Jane (not her real name), fighting the fight against her lender and mortgage broker.

I haven’t written much here about rescission because it applies to refinanced loans and many of those loans are outside of the three year statute of limitations. However, for those of you with rescindable loans, this information will be of interest to you.

I read this opinion, and basically what happened is that the judge ruled against the bank’s Motion to Dismiss. The bank alleged that before the borrower could rescind the loan, they were required to make an allegation (representation) that they could tender (give back) the loan proceeds.

Rescission means that you are telling the lender that you want to go back to the way things were before the loan was made – like it never existed.

Under TILA, the lender is supposed to ask the borrower to tender back within twenty days the money borrowed, (minus interest, loan fees and the mortgage payments you’ve already made) or the property, within twenty (20) days.

If they do not ask for this back, you may be able to keep the property!

Note: I am not a licensed attorney and this is not written in stone — just my interpretation. Check with a lawyer or do your own research!

Additionally, as I’ve mentioned before, there is a difference between what happens under statutory law and case law. I find it interesting that a judge arrived at a conclusion that I think is in line with TILA. There’s nothing in TILA that requires you to demonstrate or allege tender for a rescission to be valid.

In the past, I’ve seen rescission work two ways. The first was when a homeowner sent a rescission letter and the servicer sued the borrower to enforce the mortgage contract. Typically, a judge would tell the borrower he/she had to tender back the property or the money they borrowed or the judge wouldn’t let the borrower rescind the loan, just like in the 9th circuit case.

I’ve also seen, like in Theresa’s case, where the borrower sends a recission letter and the servicer/lender ignores it completely.

By the way, I’m going to share Theresa’s story on the blog in a future blog post.

This is certainly good news on the homeowners’ front in the 9th Circuit.

From the SocialApocalypse blog:

“Celebrating here in the 9th Circuit Court!!! FINALLY we have justice done!
Thank God, and God Bless America’s justice system.

I have faith in it, and this helps a lot.

RESCIND YOUR TERRIBLE MORTGAGE!!! DO IT NOW!

HENRY BOTELHO, Plaintiff, v. U.S. BANK, N.A., as Trustee for the LXS 2007-4N Trust, Defendant

Defendant U.S. Bank, N.A., as Trustee for the LXS 2007-4N Trust (“U.S. Bank”), seeks dismissal under Federal Rule of Civil Procedure 12(b)(6) of a complaint filed by plaintiff homeowner Henry Botelho. Specifically, U.S. Bank claims that Botelho cannot state a claim for rescission of his mortgage loan under the Truth in Lending Act, 15 U.S.C. § 1601 et seq., unless he alleges a present ability to tender the loan proceeds. As discussed in further detail below, such an allegation is not necessary for Botelho’s case to survive the pleading stage. Accordingly, U.S. Bank’s motion is denied.

TILA Rescission Success Without Tender – HENRY BOTELHO, Plaintiff, V. U.S. BANK, N.a., As Trustee for the L…

Now, this also doesn’t mean that this homeowner will win this lawsuit…it just means that his case will stay alive long enough to get to the next round of motions from the bank.

Stay tuned folks! It’s getting interesting!

Got questions? Send me an e-mail: christine@desertedgelegal.com. Please remember to send your telephone number.

DISCLAIMER:
****CHRISTINE SPRINGER IS NOT A LICENSED ATTORNEY. THIS BLOG IS COMPRISED OF HER OPINIONS, OBSERVATIONS AND INTERPRETATIONS AND IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE. PLEASE CONSULT WITH AN ATTORNEY BEFORE RELYING ON OR TAKING ANY ACTION BASED ON THE INFORMATION IN THIS BLOG.****

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