In Moore v. Wells Fargo Bank, N.A., 2:08cv 413 (E..D.Va., Feb. 2009) the plaintiff-mortgagor brought an action against the mortgagee seeking a declaratory judgment that the mortgagor had validly rescinded two mortgages when he served notice to rescind on the mortgagee. He also sought a finding of statutory damages based on the mortgagee’s repudiation of the mortgagor’s rescission notice. The District Court held that the rescission notice did not automatically void the mortgages. The court followed Fourth Circuit precedent holding that a mortgagor’s unilateral notification of cancellation does not automatically void the loan contract. Rather, it merely advances a claim seeking rescission and a loan contract will not be effectively voided until the creditor acknowledges that the right to rescission is available, or … [an] appropriate decision maker has so determined. American Mortgage Network, Inc. v. Shelton, 486 F.3d 815, 821 (4th Cir.2007). However, the Court denied the mortgagee’s motion to dismiss on the issue of whether the mortgagor was entitled to rescind the mortgages because he had not plead he was capable of tendering the proceeds from the mortgage transactions upon rescission. This was a factual dispute that could not be resolved at the motion to dismiss phase. The Court rejected Defendant’s invitation to take judicial notice of the declining housing market in order to make a factual finding that Plaintiff was unable to tender, as Rule 12(b)(6) does not countenance … dismissals based on a judge’s disbelief of a complaint’s factual allegations.
Author
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Solomon has nearly two decades of experience representing financial institutions, real estate investors and privately owned business entities. Solomon concentrates his practice in the areas of banking, consumer financial services, real estate, business law and related litigation and appellate practice.
