Consumer complaint received 2016-02-03
Company: SELECT PORTFOLIO SERVICING, INC.
State: CA
Product: Mortgage
Sub-product: Conventional adjustable mortgage (ARM)
Issue: Application, originator, mortgage broker

Complaint:
This is attorney XXXX XXXX writing on behalf of the borrower XXXX XXXX. My client sent a Rescission Letter under the Truth in Lending Act and Select Portfolio Service provided an inadequate Response to my client 's Rescission. The response is inadequate because it misinterprets and misrepresents the law surrounding rescission pursuant to Federal Truth and Lending Act-TILA 1635 ( b ), Regulation Z, and a Unanimous Decision by the US Supreme Court ( XXXX ). Under this law, as I stated in my letter, the creditor has Twenty days to " return to the obligor any money or property given as earnest money, down payment, or otherwise, and shall take any action necessary or appropriate to reflect the termination of any security interest created under the transaction. '' Accordingly, SPS would have thus had Twenty days to either comply with the mandate of Federal Truth and Lending Act-TILA 1635 ( b ). 

Alternately, if Select Portfolio Servicing , Inc. wished to dispute the rescission, it could have filed a lawsuit along the lines of Quiet Title or Declaratory Relief in order challenge the rescission but this MUST HAVE BEEN DONE WITHIN 20 DAYS OF THE DISPATCH OF THE RESCISSION LETTER. In the XXXX decision, XXXX XXXX emphasized that " Section 1635 ( a ) [ of Federal Truth and Lending Act-TILA ] nowhere suggests a distinction between disputed and undisputed rescissions ... .. '' By this logic, even though SPS might have wished to dispute the validity of my client 's rescission on the grounds that the underlying loan may not have been a purchase money loan or was allegedly consummated outside of the three year statute of limitations, the fact remains that when my client sent the rescission letter the rescission became valid by operation of law, and the onus would have been on SPS to file a complaint for Declaratory relief or Quiet Title within the 20 day time period proscribed by TILA. Select Portfolio Servicing , Inc., has now waived the right to contest the validity of the rescission on any grounds, because the twenty day time period has elapsed. Accordingly, the Secruity Interest in question is now void. 

The fact that 3 years has elapsed is irrelevant because the statute of limitations ( or any other defense for that matter ) is a defense that the loan servicer or lender should have raised within twenty days of the receipt of the rescission letter. Moreover, it is not clear that Select Portfolio Service even has standing to challenge the rescission. 

The response the SPS provided to my client 's Rescission under the Truth in Lending Act is boilerplate and completely does not address the underlying concerns addressed in my letter. Please have them address the concerns as outlined above. Moreover, until this matter is resolved I am asking that the impeding Foreclosure be cancelled. 

If these concerns are not rectified in a manner that is satisfactory to my client by either complying with the Truth in Lending Act or providing an intelligent explanation as to why they are not barred by the 20 day rule, I will have no choice but to file a complaint in Federal Court for a Judicial Determination of this matter and Damages that my client may be entitled to. 


Thank you, XXXX XXXX XXXX, XXXX. 
Attorney for Borrowers XXXX

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation