Storm Bradford just won a Truth In Lending Act (TILA) lawsuit against HSBC. A US 4th circuit ruling opined that a TILA violation victim must post a rescission letter AND FILE A LAWSUIT within 3 years after consummating the loan in order to get the court to rescind the loan. He waited 4 years to file the lawsuit in order to challenge the ruling. Storm posted the Rescission letter within 3 years but waited another year to file the lawsuit, just to make a point. He lost that count but won $35,000 in damages and another $5000 in sanctions because the servicer HSBC had refused to identify the owner of the note. He sued the substitute trustee, mortgage broker, and bank.
Congress created a US Government agency to interpret TILA, Consumer Financial Protection Bureau (CFPB). A CFPB lawyer contacted Storm and said CFPB agreed with his position (the 4th Circuit erred in ruling the TILA violation victim must file the lawsuit within 3 years) and that they would write an amicus brief to that effect for his appeal. They wrote a similar one for the 10th Circuit. http://files.consumerfinance.gov/f/201203_cfpb_Rosenfield_vs_HSBC_Amicus.pdf.
Storm believes that generally a litigant can play the case correctly and win the heart of a judge who tends to favor the bank. In this case, the judge said HSBC substantially impeded Storm’s ability to rescind timely under TILA. Storm says he did not know whom to sue and couldn’t sue within the 3 year period because he did not know who owned the note. He had asked HSBC to tell him who owned the note, and they had refused in order to drag things out and make Storm miss the 3-year TILA window for filing the rescission case.
In the lawsuit against them, HSBC said they sold the note to Allied Bank. Storm called Allied and they said they didn’t own the note. HSBC filed motion to dismiss for failure to name and serve indispensable party (Allied). The judge told Storm to join Alled in the lawsuit. Storm said Allied is not an indispensable party because they had told him they did not own the note. He served them anyway. Allied moved to dismiss. Storm responded that they hadn’t the right to a dismissal for want of standing (they didn’t own the note). In discovery, Allied said they sold the note to Residential Funding. Storm served Residential Funding. Storm added a count to complaint that Allied had not timely told him they had sold the note. He demanded all attorney fees because trip through rabbit hole was made necessary by failure to disclose name of owner of note. And the judge agreed with him, awarding him $5000 in a motion for sanction of Allied for not admitting the truth to begin with.
Rescission is a common law remedy regarding contracts. But federal common law does not exist, Congress passed the TILA. Rescission restores the parties to their financial status prior to contract. The parties must return money to one another.
Note: A borrower under water on a loan cannot give money back. But in cases where the lender defrauded the borrower, the court will award treble damages, and that can provide the arithmetic necessary to justify the rescission order. In that way a borrower can get a house free and clear. For this reason, many mortgagors have chosen to dig for the lender/agent torts and contract breaches underlying the mortgage. It just so happens that Storm Bradford’s company Mortgage Fraud Examiners provides that service for beleaguered homeowners. If you want his help, contact him at http://mortgagefraudexaminers.com.
“When I give seminars and teach people about the principles in solving mortgage and foreclosure problems, I want them to know that I have walked in their shoes, that I myself have fought the battle in court,” said Bradford in an interview today. “I consider it important that people have well-grounded faith in their service providers,” he added. He mentioned that he remains available to speak at seminars nationwide for attorneys seeking Continuing Legal Education credits and learning the techniques and nuances of winning clients’ houses free and clear from tortious lenders.