DEUTSCHE BANK NATIONAL TRUST COMPANY v. Gardner, 2015 PA Super 219 – Pa: Superior Court 2015
In this TILA rescission appeal the court explained exactly        why the borrower must tender in order to complete the rescission,        and why the court has the power to rearrange the process,        including the tender and lien removal sequence and mechanism. The        court also explained the difference between old money and new        money tender. And, most importantly the court explained that it        can relieve the borrower of the obligation to tender ONLY in the        case of creditor cheating or deceit.
"However, those cases relieving the borrower of his or her tender obligation, resulting in a forfeiture by the lender, are limited to "situations where creditors have tried to deceive or cheat the consumer."/In re Williams,/291 B.R. 636, 655 (Bankr. E.D. Pa. 2003) (quoting/Michel v. Beneficial Consumer Discount Co.,/140 B.R. 92, 101 (Bankr. E.D. Pa. 1992)) (declining to hold that the borrower "should be relieved of her `tender obligation'" under TILA even though it adopted the minority view that termination of the lender's security interest could not be conditioned upon tender)."
"We hold that, with this absence of any proof of an intent by Deutsche Bank or any of its predecessors to deceive or cheat Gardner, the trial court abused its discretion in ruling that rescission was appropriate, and in ordering the termination of Deutsche Bank's security interest obtained in the 2005 refinance transaction, without also requiring Gardner to fulfill his tender obligation."
I rightly point out that the borrower's failure to find and        lodge cheating/deceit causes of action against the lender team,        such as appraisal or loan application fraud, constituted a        COLOSSAL error that COST the borrower a LOT OF MONEY.
This of course vindicates my OFTEN REPEATED assertion that        all home loan borrowers should purchase a COMPREHENSIVE MORTGAGE        EXAMINATION from a COMPETENT PROFESSIONAL… BEFORE seeking a        rescission or defending against a foreclosure attack.
People interested in much more info can call me at 727 669        5511, because I know Neil Garfield cannot or will not give it to        them.
      
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DEUTSCHE BANK NATIONAL TRUST COMPANY,                  AS TRUSTEE FOR THE REGISTERED HOLDERS OF AMERIQUEST                  MORTGAGE SECURITIES, INC., ASSET-BACKED PASS THROUGH                  CERTIFICATES, SERIES 2005-R2, Appellant,
                  v.
                  MICHAEL S. GARDNER, Appellee.
Superior Court of                    Pennsylvania.
BEFORE: PANELLA, WECHT, and                STRASSBURGER,[*] JJ.
OPINION BY STRASSBURGER, J.
Deutsche Bank National Trust                Company, as Trustee for the Registered Holders of                Ameriquest Mortgage Securities, Inc., Asset-Backed Pass                Through Certificates, Series 2005-R2 (Deutsche Bank),                appeals from the judgment entered in favor of Michael S.                Gardner in this mortgage foreclosure action. We vacate the                judgment and the judgment order in equity upon which it                was based and remand with instructions.
The trial court offered the                following summary of the case.
Gardner lives in a residence he owns at 9887 Verree Road, Philadelphia, PA. In June 2003, he signed a mortgage on his home and borrowed $140,000 from Ameriquest. In January 2005, Gardner and Ameriquest refinanced in the amount of $185,400, adding $45,400 to the loan. A second mortgage was signed. At closing Ameriquest gave Gardner a federal H-8 Form to advise Gardner of his rescission rights.
At the early stages of the economic downturn in October 2007 and facing economic pressure, Gardner applied to rescind the refinance agreement and stopped repaying the loan. He learned he had not been given correct disclosure of his rescission rights, and this had taken place at a time when Ameriquest's mortgage practices were coming under national scrutiny. Hundreds of actions had been filed against Ameriquest under the [Truth in Lending Act (TILA)], and Gardner added his own complaint in the U.S. Court for the Eastern District of Pennsylvania. Gardner's action to enforce his rescission rights for the refinance loan was transferred and consolidated with an ongoing TILA class action against Ameriquest in the U.S. Court for the Northern District of Illinois. When this class action settled, Gardner waived his direct TILA claims against Ameriquest and kept the right to defend himself against mortgage foreclosure. Gardner also preserved his right to assert an affirmative defense based on inadequate notice.
* * *
On January 12, 2008, Deutsche Bank, trustee for Ameriquest, filed this mortgage foreclosure action against [] Gardner. This case was in limbo for five years until the federal class action settled.
A bench trial took place on April 14, 2014. Gardner represented himselfpro se. Findings of fact and conclusions of law were entered on April 28, 2014. Among the points: 1) Deutsche Bank had standing as an Ameriquest trustee to bring this mortgage foreclosure action. . .; 2) Ameriquest did not comply with the TILA requirements, and therefore, Gardner's affirmative defense was valid and prevented foreclosure; 3) Gardner was entitled to rescind his refinance loan, but only up to the $45,400 which was added during the refinance, and so was not permitted to rescind the original $140,000 loan; and 4) Gardner's home remains mortgaged to Deutsche Bank under terms of the first mortgage in the amount of $140,000.
Trial Court Opinion,                3/26/2015, at 1-3.
Deutsche Bank timely filed a                post-trial motion. By order of September 5, 2014, the                trial court denied the motion without prejudice for                Deutsche Bank to seek in an in personam action recovery of                the $45,400 Gardner received pursuant the refinance                agreement.[1] Judgment was                entered on September 23, 2014, and Deutsche Bank timely                filed a notice of appeal. Both Deutsche Bank and the trial                court complied with Pa.R.A.P. 1925.
Deutsche Bank presents this                Court with the following questions:
A. Whether the trial court committed an error of law in holding that Gardner's right to rescind his 2005 loan refinance transaction with Deutsche Bank's predecessor in interest pursuant to [TILA] was extended from three days to three years because, at closing, Gardner received the incorrect model Federal Reserve Board form notice of that right to rescind, notwithstanding that the form delivered to Gardner "clearly and conspicuously" informed him of his right to rescind the refinance transaction at issue?
B. Whether the trial court committed an error of law or abused its discretion in structuring its Judgment Order in Equity to permit Gardner to rescind his 2005 loan refinance transaction where it (1) failed to require Gardner to tender back to Deutsche Bank all funds received by Gardner or expended on his behalf following the rescission, as required by TILA, and (2) refused to condition Gardner's ability to rescind on his first tendering to Deutsche Bank the funds necessary to make it whole, given the evidence that Gardner has no ability to repay Deutsche Bank?
Deutsche Bank's Brief at 2-3                (trial court answers omitted).
"In reviewing a decision of a                court after a non-jury trial, we will reverse the trial                court only if its findings are predicated on an error of                law or are unsupported by competent evidence in the                record." Boehm                  v. Riversource Life Ins. Co., 117 A.3d 308, 321                (Pa. Super. 2015) (quoting Wallace v. Pastore, 742 A.2d 1090,                  1092 (Pa. Super. 1999)).
In construing the federal                statutes and regulations at issue in this case, we bear in                mind that "[w]e are not bound by decisions of the federal                courts, but we may rely on them for persuasive authority." EMC Mortgage, LLC v. Biddle, 114 A.3d 1057,                  1064 n.6 (Pa. Super. 2015). Furthermore, "whenever                possible, Pennsylvania courts follow the Third Circuit                [courts] so that litigants do not improperly walk across                the street to achieve a different result in federal court                than would be obtained in state court." Parr v. Ford Motor Co., 109 A.3d 682,                  693 n.8 (Pa. Super. 2014) (en banc) (internal                citations and quotation marks omitted).
We begin with an overview of                TILA.
Congress enacted TILA in 1968 to promote the informed use of credit. To achieve this goal, TILA sought to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit. A consumer who does not receive the requisite disclosures regarding a loan secured by his principal dwelling may rescind the loan agreement.
Consumers have an absolute right to rescind for three business days after closing on the loan. To exercise this no questions asked right of rescission, the obligor on the mortgage note must simply notify the creditor of his intention to do so, consistent with the applicable regulations. No court filing is necessary to effectuate this right.
If the lender fails to make the requisite disclosures before the loan commences, the three-day restriction on the right of rescission does not begin to run. A consumer who does not receive the requisite disclosures has a right to rescind that lasts until three days after the disclosures are received. That right of rescission is not perpetual, however, even if the consumer never receives all of the requisite disclosures. The right expire[s] three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first.
Sherzer v. Homestar Mortgage Servs., 707 F.3d 255,                  255-56 (3d Cir. 2013) (internal                citations and quotation marks omitted).
The Board of Governors of the                Federal Reserve System created the H-8, a model form for                general usage by lenders to satisfy the notice provision                of TILA. Porter v. Mid-Penn Consumer Discount Co., 961 F.2d 1066,                  1067 (3d Cir. 1992). However, it is not necessary                that any particular form is used because "the law does not                require an ideal notice of rescission rights, just a                clear, accurate, and conspicuous one." Id.at 1076.
There are exceptions to the                right to rescind. The portion of the Code of Federal                Regulations implementing TILA, known as Regulation Z,                provides, in relevant part, as follows:
The right to rescind does not apply to . . . [a] refinancing or consolidation by the same creditor of an extension of credit already secured by the consumer's principal dwelling. The right of rescission shall apply, however, to the extent the new amount financed exceeds the unpaid principal balance, any earned unpaid finance charge on the existing debt, and amounts attributed solely to the costs of the refinancing or consolidation.
12 C.F.R. § 226.23(f)(2). In                other words, with a TILA violation in the context of a                refinance loan, "a borrower may rescind the `new money'                portion . . . but not the `old money' portion" of the                loan. Porter, 961 F.2d at 1074.                "Because rescission rights in `refinancing' situations                differ from those applicable in new-loan situations, the                Board promulgated, in addition to the H-8, a model                rescission form H-9 for partially exempt `refinancings.'" Id.
These differences in                rescission rights are demonstrated by the comparison of                the H-8 and H-9 model forms. The H-8 model form provides, inter alia, as follows:
You are entering into a transaction that will result in a [mortgage/lien/security interest] [on/in] your home. . . .
If you cancel the transaction, the [mortgage/lien/security interest] is also cancelled. Within 20 calendar days after we receive your notice, we must take the steps necessary to reflect the fact that the [mortgage/lien/security interest] [on/in] your home has been cancelled, and we must return to you any money or property you have given to us or to anyone else in connection with this transaction.
You may keep any money or property we have given you until we have done the things mentioned above, but you must then offer to return the money or property.. . .
12 C.F.R. Pt. 226, App. H                (emphasis added). In contrast, the H-9 model form includes                the following language:
You are entering into a new transaction to increase the amount of credit previously provided to you. Your home is the security for this new transaction. . . .
If you cancel this new transaction, it will not affect any amount that you presently owe. Your home is the security for that amount. Within 20 calendar days after we receive your notice of cancellation of this new transaction, we must take the steps necessary to reflect the fact that your home does not secure the increase of credit. We must also return any money you have given to us or anyone else in connection with this new transaction.
You may keep any money we have given you in this new transaction until we have done the things mentioned above, but you must then offer to return the money. . . .
Id. (emphasis added).
Deutsche Bank's first claim                of error presents us with the question of whether the                disclosures in the H-8 form adequately inform a borrower                of his or her rescission rights in the context of a                refinance loan with the same lender. "Under both TILA                itself and Regulation Z, the test is whether the H-8 that                [the lender] provided constituted a clear notice of [the                borrower's] right to rescind the new-money portion of the                loan."Porter, 961 F.2d at 1076.
In Porter, as in the instant                case, the lender provided the H-8, rather than the H-9,                model form for a refinance loan. The Third Circuit held                that there were two plausible readings of the H-8 notice                in the refinancing context. On the one hand, "[o]ne could                read the notice as saying that if [the borrower] elected                to rescind, the new money portion would be rescinded and                the old loan document (and mortgage) would remain in                effect." Id. at 1077. Thus,                upon rescission only "the new security interest would be                voided," and the borrower need return only "the new                money," "leaving the parties where they were before this                latest transaction." Id.
However, one could also read                the H-8 notice as indicating that the borrower could                "rescind the whole new security interest, covering both                old and new money." Id.Under                this interpretation, the borrower upon rescission "would                have to return both old and new money, and both old and                new security interests would be satisfied." Id.Thus,                because a refinance borrower "may want to rescind the                new-money portion of the loan but may not have the funds                readily accessible to pay back the old loan immediately,"                the unclear H-8 notice could dissuade him or her from                exercising his or her right to rescind. Id. at 1077-78.
Because "both readings are                sensible, yet they have quite different legal                implications," the Third Circuit held that "the H-8 did                not provide Porter with a clear notice of what her right                to rescind entailed." Id. at 1077. The court                further stated: "More generally, we hold that a lender                violates TILA by providing the H-8 notice when the                borrower's right to rescind is limited by the                `refinancing' exception. . . ." Id.
The trial court in the                instant case was persuaded by the reasoning in Porter, and held that the                H-8 notice supplied by Deutsche Bank's predecessor did not                inform Gardner clearly that his "existing first mortgage                is unaffected by timely rescission of a second mortgage."                Trial Court Opinion, 3/26/2015, at 8. Because the                disclosures were inadequate, the trial court held that                Gardner had three years to exercise his rescission rights. Id. (citing 15 U.S.C.                § 1635(f)(i)(1)(B)). As the refinance agreement was made                in January 2005, and Gardner filed his rescission notice                in October 2007, the trial court determined that Gardner                timely exercised his right to rescind the refinance loan. Id.
We agree with the Third                Circuit's reasoning and legal conclusions stated in Porter: the                ambiguity created by the language of the H-8 notice in the                context of a refinance loan constitutes a violation of                TILA, extending the duration of the borrower's rescission                rights from three days to three years. Although Deutsche                Bank correctly notes that other federal circuit courts                have reached the opposite conclusion,[2] we find the Third                Circuit's analysis more persuasive. Accordingly, the trial                court did not err in determining that Gardner's right to                rescind the 2005 refinance mortgage was extended to three                years. Deutsche Bank's first issue entitles it to no                relief.
With its second issue,                Deutsche Bank argues that, even if Gardner's rescission                rights were extended based upon a TILA violation, the                trial court erred in permitting him to rescind the 2005                refinance agreement without tendering back the $45,400                that Gardner received in cash when the 2005 loan closed.[3] Deutsche Bank's                Brief at 35. We agree.
When a party seeks the                equitable "remedy of rescission, part and parcel of the                award of that remedy is returning the parties, to the                extent possible, to the status quo ante." In re Fowler, 425 B.R. 157,                  204 n.65 (Bankr. E.D. Pa. 2010) (citing Baker v. Cambridge Chase, Inc., 725 A.2d 757,                  766 (Pa. Super. 1999) ("It is well known                that the purpose of equitable rescission is to return the                parties as nearly as possible to their original positions                where warranted by the circumstances of the                transaction.")). "[R]escission traditionally required                either that the rescinding party return what he received                before a rescission could be effected (rescission at law),                or else that a court affirmatively decree rescission                (rescission in equity)." Jesinoski v. Countrywide Home Loans,                    Inc., 135                  S. Ct. 790, 793 (2015).
However, TILA "alters the                traditional process for unwinding such a unilaterally                rescinded transaction[.]" Id. Regulation Z                provides the following rescission procedure.
(d) Effects of rescission.
(1) When a consumer rescinds a transaction, the security interest giving rise to the right of rescission becomes void and the consumer shall not be liable for any amount, including any finance charge.
(2) Within 20 calendar days after receipt of a notice of rescission, the creditor shall return any money or property that has been given to anyone in connection with the transaction and shall take any action necessary to reflect the termination of the security interest.
(3) If the creditor has delivered any money or property, the consumer may retain possession until the creditor has met its obligation under paragraph (d)(2) of this section. When the creditor has complied with that paragraph, the consumer shall tender the money or property to the creditor or, where the latter would be impracticable or inequitable, tender its reasonable value. At the consumer's option, tender of property may be made at the location of the property or at the consumer's residence. Tender of money must be made at the creditor's designated place of business. If the creditor does not take possession of the money or property within 20 calendar days after the consumer's tender, the consumer may keep it without further obligation.
(4) The procedures outlined in paragraphs (d)(2) and (3) of this section may be modified by court order.
12 C.F.R. § 226.23(d).
Thus, the default procedure                once notice of rescission has been honored by the lender                or validated by a court,[4] is for the lender                to take steps necessary to reflect termination of the                security interest and to return any property or money                given by the borrower before the borrower's duty to tender                loan proceeds back to the lender is triggered. Subsection                (d)(4) empowers the court to alter or reorder the                procedure of the rescission.
"Pursuant to [TILA], courts                have the discretion to condition rescission on tender by                the borrower of the property he has received from the                lender. [C]ourts have denied rescission where the                borrowers were unable to tender payment of the loan                amount."[5] Jobe v.                    Argent Mortgage Co., LLC, 373 F. App'x                  260, 262 (3d Cir. 2010) (internal                citations and quotation marks omitted) (citing American Mortgage Network, Inc. v.                    Shelton, 486                  F.3d 815, 819 (4th Cir. 2007); Yamamoto v. Bank of New York, 329 F.3d 1167,                  1173 (9th Cir. 2003); Williams v. Homestake Mortgage Co., 968 F.2d 1137,                  1140 (11th Cir. 1992)). This majority view is                designed "to prevent . . . an unduly harsh result to the                creditor or a windfall to the consumer." In re Sterten, 352 B.R. 380,                  385 (Bankr. E.D. Pa. 2006). "[A] court may abuse its                discretion in not conditioning rescission on tender where                the TILA violations are not egregious and the equities                otherwise favor the creditor. . . ." WMC Mortgage                  LLC v. Baker, No.                CIV.A. 10-3118, 2012 WL 628003, at *15 (E.D. Pa. Feb. 28,                2012) (citation omitted).
Third Circuit courts have                held repeatedly that a debtor's inability to tender the                funds delivered by the lender rendered inappropriate                termination of the lender's security interest in                effectuating rescission. See, e.g., Jobe, 373 F. App'x at                  262 ("Here,                plaintiffs testified that they are unable to repay the                loan advanced to them, and they have not made any payments                for more than four years. Accordingly, the District Court                properly found that . . . they would not be able to                rescind the mortgage obligation because they are unable to                return the money defendant advanced to them in reliance on                their performance under the contract."); Sterten, 352 B.R. at                  387-88 ("I                find the concept of permitting a consumer a reasonable                time frame to repay the creditor while the creditor                retains the security interest it acquired in the rescinded                transaction to be a balanced, equitable approach."); In re Cruz, 441 B.R. 23, 36                  (Bankr. E.D. Pa. 2004) ("[T]he Court's                Order will provide that [the lender] shall retain its                security interest until the [borrower] completes payment                of the `tender' sum; in other words, the rescission shall                be effective only upon completion of the tender."); In re Apaydin, 201 B.R. 716,                  724 (Bankr. E.D. Pa. 1996) ("[T]he Court                will, at least to some extent, condition the avoidance of                [the lender's] security interest on the return of its                money by the [borrowers]."); Bookhart v. Mid-Penn Consumer Disc. Co., 559 F. Supp.                  208, 212 (E.D. Pa. 1983) ("The rescission                and return of any monies paid to [the lender] is thus                conditioned upon [the borrower's] return of the remaining                loan proceeds. In this way, the parties will be most                nearly returned to their respective pre-transaction                positions.").
Even when trial courts                conclude that satisfaction of the borrower's tender                obligation need not precede rescission and the resulting                termination of the lender's security interest, the courts                still have required the borrower to pay the tender in some                form as part of its declaration of rescission, unless                there was proof of an attempt to cheat the borrower. See, e.g., In re Gisondi, 487 B.R. 423,                  434 (Bankr. E.D. Pa. 2013) ("[T]his Court                finds that the [borrower's] admitted inability to tender                the Loan's proceeds is not necessarily fatal to her                rescission claim. . . . If [the court determines that                there was a TILA violation warranting rescission], this                Court will then consider how the [borrower] may comply                with her tender obligation.); Shepeard v. Quality Siding & Window                    Factory, Inc., 730                  F.Supp. 1295 (D. Del. 1990) (terminating                security interest but requiring the borrower to pay the                tender obligations in monthly installments).
In contrast to the above                cases, the trial court in the instant case ordered that                (1) "equitable rescission applies to a sum of $45,400,"                which is the new money provided by Deutsche Bank's                predecessor pursuant to the 2005 refinance loan; (2)                Deutsche Bank's security interest created by the 2005 loan                is rescinded, but it "retains a security interest by                mortgage on the property in the amount of $140,000" per                the original 2003 loan; (3) Gardner is to repay the                $140,000 according to the terms of the 2003 mortgage, with                interest beginning to accrue from the date of judgment at                the rate set forth in the 2003 mortgage instrument.                Findings of Fact and Conclusions of Law, 4/28/2014, at 3-4                (incorporated by reference in Judgment Order in Equity,                4/28/2014). The trial court instructed Deutsche Bank to                establish a new monthly payment schedule to effectuate the                order. Judgment Order in Equity, 4/28/2014, at 2.
Notably absent from the trial                court's order is any provision for Gardner's tender of the                new money portion of the rescinded loan. Instead, the                trial court provided that Deutsche Bank may file an in personam action against                Gardner to recover the $45,400. Order, 9/5/2014.
The trial court cites two                Third Circuit district court cases from the 1980s as                precedent for its decision to absolve Gardner of his duty                to tender, at any point, the 2005 loan proceeds as part of                the rescission of that loan agreement. See Trial Court                Opinion, 3/26/2015, at 10 (citing Gill v. Mid-Penn Consumer Discount Co., 671 F.Supp.                  1021, 1026 (E.D.Pa. 1987), aff'd mem., 853 F.2d 917 (3d                  Cir. 1988), and In re Melvin, 75 B.R. 952, 960                  (Bankr. E.D.Pa. 1987)[6]). "This line of cases may be                conceptualized as manifesting the court's exercise of its                discretion to modify the statutory rescission procedure in                order to impose a further sanction on the creditor due to                the equities in the particular case." Sterten, 352 B.R. at 385.
However, those cases                relieving the borrower of his or her tender obligation,                resulting in a forfeiture by the lender, are limited to                "situations where creditors have tried to deceive or cheat                the consumer." In re Williams, 291 B.R. 636,                  655 (Bankr. E.D. Pa. 2003) (quoting Michel v.                  Beneficial Consumer Discount Co., 140 B.R. 92, 101                (Bankr. E.D. Pa. 1992)) (declining to hold that the                borrower "should be relieved of her `tender obligation'"                under TILA even though it adopted the minority view that                termination of the lender's security interest could not be                conditioned upon tender). As one district court in the                Third Circuit explained:
There is some precedent for the proposition that because [TILA] requires the obligor to tender the proceeds only after the creditor appropriately reacts to the rescission by returning the property given and satisfying any security taken within twenty days, the recalcitrance of a creditor to accept a valid rescission obviates the obligor's requirement to tender and leaves the obligor with both a right to recover any payments made and a vesting of the proceeds of the transaction in himself without an obligation to repay it. See Gill [and] Tucker[, supra]. However, in the majority of prior cases the courts have either explicitly held that an obligor must tender or offer to tender the proceeds of the consumer transaction before finding a forfeiture; or the particular circumstances of the case indicated that the consumer had tendered the proceeds in those cases where a forfeiture was found. Although mindful that the statutory language contemplates a tender by the debtor after the creditor has performed his duties, several courts that have expressly addressed whether or not a tender by the consumer is required before finding a forfeiture of the proceeds of a transaction by the creditor, have found tender to be required to insure compliance with the congressional purpose of restoring the parties to the status quo.
Mayfield v. Vanguard Sav. & Loan                    Ass'n, 710                  F. Supp. 143, 147 (E.D. Pa. 1989)(some citations                omitted).
Indeed, in Mayfield, a case with a                similar factual basis as the instant case, the court held                as follows:
In this case, [the borrower] does not allege, nor is there evidence of record that establishes, that [the borrower] tendered the loan proceeds. Moreover, while I find from the uncontradicted evidence of record that [the lender's] conduct was questionable in that it was extremely careless in complying with the TILA statutory requirements and charged plaintiff, who was in a desperate credit situation, excessive settlement charges and an unconscionable interest rate [(20%)] far above the prevailing market rate thereby placing her home in jeopardy, there is no real evidence of record that defendant tried to deceive or cheat [the borrower]. . . . In the absence of evidence of fraud or deceit by [the lender] and of a tender of the proceeds by [the borrower], I conclude that [the borrower] has a continuing duty to return the proceeds of the loans.
Id. at 147-48. The                court went on to allow the borrower to repay her tender                obligation in monthly installments. Id. at 149.
Here, Gardner proved that                Deutsche Bank's predecessor violated TILA by providing the                wrong model form. The record also shows that the trial                court was troubled by the fact that Gardner was paying                "interest at 11 percent in an era of 4 percent interest. .                . ." N.T., 4/14/2014, at 90-91. See also id. at 92 ("I have                questions about the whole rescission aspect of this.                Because that loan rescission, there is something to it, in                an era of cheap interest, that he wanted to withdraw the                loan at 11 percent and somehow was unable to do so.").                However, Gardner offered no admissible evidence that                Deutsche Bank or any of its predecessors was guilty of                fraud or deceit.[7]
We hold that, with this                absence of any proof of an intent by Deutsche Bank or any                of its predecessors to deceive or cheat Gardner, the trial                court abused its discretion in ruling that rescission was                appropriate, and in ordering the termination of Deutsche                Bank's security interest obtained in the 2005 refinance                transaction, without also requiring Gardner to fulfill his                tender obligation.
Accordingly, we vacate the                September 23, 2014 judgment and the April 28, 2014                judgment order in equity and remand the case for further                proceedings consistent with this opinion. Specifically,                the trial court upon remand must calculate the amount of                Gardner's tender obligation and order Gardner to satisfy                that tender obligation either by paying that amount to                Deutsche Bank in a lump sum or by satisfying it over time.                Upon full consideration of the case law discussed above,                the trial court also must determine whether termination of                Deutsche Bank's 2005 security interest prior to Gardner's                full tender is equitable under the circumstances of this                case.
Judgment vacated. Case                remanded with instructions. Jurisdiction relinquished.
Judge Panella did not                participate in the consideration or decision in this case.
[*] Retired Senior                  Judge assigned to the Superior Court.
                
[1] The trial court                  initially denied the post-trial motion by order of                  September 3, 2014. However, its order of September 5th                  vacated the earlier order and added the caveat about                  recovering the additional money in another action.
[2] See Deutsche Bank's                  Brief at 27-30 (discussing Watkins v. SunTrust Mortgage, Inc., 663 F.3d 232                    (4th Cir. 2011) ("Model                  Form H-8 includes all of the information required by                  TILA and Regulation Z to advise borrowers of the right                  to rescind a consumer credit transaction, including a                  refinancing transaction[.])"; Santos-Rodriguez v. Doral Mortg. Corp., 485 F.3d 12                    (1st Cir. 2007) (same); Mills v.                      EquiCredit Corp., 172 F. App'x                    652 (6th Cir. 2006); Veale v. Citibank, F.S.B., 85 F.3d 577                    (11th Cir. 1996) (same)).
[3] Deutsche Bank                  also claims that the trial court should have ordered                  Gardner to tender $26,702.55 paid "to third parties in                  the course of servicing the Mortgage." Deutsche Bank's                  Brief at 35, 37. However, Deutsche Bank does not explain                  why the unwinding of the refinance transaction, and                  reinstatement of the original mortgage, requires tender                  of taxes and insurance which it would have paid under                  the original 2003 loan. The rescission process is not a                  vehicle by which Deutsche Bank may recoup those funds.
[4] "The [consumer's                  rescission] notice itself is merely procedural, serving                  as a non-judicial method by which a party indicates his                  or her intent to disaffirm the contract." Bertram v. Beneficial Consumer Disc.                      Co., 286                    F. Supp. 2d 453, 459 (M.D. Pa. 2003). "Until the                  creditor honors the notice, or a court certifies its                  validity, it is without legal effect, and serves only to                  preserve the consumer's ability to pursue the remedies                  provided under the statute." Id.
[5] The Seventh                  Circuit has taken an even stronger position:
Tender is inherently part                  of rescission, not an occasional effect of it. For this                  reason, . . . rescission is often unavailable to                  consumers because they are unable to return unpaid                  principal as a result of decreased property value, poor                  housing market or any number of reasons. Accordingly, .                  . . a borrower's inability to satisfy his tender                  obligations may make rescission, even if based on a TILA                  violation, impossible. Ultimately, rescission is                  fundamentally meant to unwind the entire transaction,                  not merely change the amount of the loan. If the                  [lender's] security interest remains intact and the loan                  continues to exist or if repayment is impossible, then                  rescission, by any definition, has not taken place. . .                  .
Iroanyah v. Bank of Am., 753 F.3d 686,                    692 (7th Cir. 2014) (citations                  omitted).
[6] In reaching its                  conclusion, the Melvin court relied                  heavily upon Tucker v. Mid-Penn Consumer Discount                      Co., 74                    B.R. 923 (E.D.Pa. 1987), which is                  mentioned infra.
[7] Gardner offered                  multiple documents printed from the Internet as evidence                  in an effort to prove wrongdoing by Ameriquest and some                  individuals whose relationship with Deutsche Bank is                  unclear, but the trial court excluded them as hearsay. See, e.g., N.T., 4/14/2014,                  at 159-60.
 
 
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