Many indebted home-owners, challenged by mortgage payments due and feeling misled into over-priced and oppressive loans, have gone to court and sought “rescission” of their mortgage loans. And some have been quite successful in these efforts (the borrower in this case, for example).
However, borrowers (and their lawyers) need to keep the basic principle of “rescission” in mind. The lender and borrower are supposed to “unwind” the mortgage loan transaction, meaning the borrower must tender the bank’s money back to the bank. The bank, in turn, is supposed to give back closing costs, fees, loan payments, etc., etc., received from the borrower. But, if borrowers want to rescind, the court might condition rescission on the borrowers’ coming up with a large amount of cash to give the lender back its money in the first instance…
Whereas U.S. District Court Judge Patrick J. Schiltz (D. Minn.) set out the Court’s discretion under the Truth-in-Lending Act to fashion a somewhat more flexible “unwinding”, U.S. District Court Judge Donovan W. Frank recently took the more “by the book” approach recently in Franz v. BAC Home Loans Servicing LP.
Franz, the plaintiff, has 45-days to put up the $417,000 loan principal (or, more specifically, 45 days in which to amend his complaint to plead that he has the ability to tender).