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Los Angeles, CA |

If I rescind my mortgage based on fraud would that =lawsuit?If I cancel (due to fraud)will my lender need to return all interest paid on my loan?And will I need to tender as well?
My loan=interest only fixed for 10 at 6%
Originated via loan broker,nov 2005.
Private label Investor securitized Investor chapter 11 in 2009.
Thank you.

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Attorney answers 3


There really is not enough information to give you a thorough answer but here are some things to think about.

1. Rescission of the mortgage, which is a contract, will undoubtedly require legal action.

2. Fraud is very hard to prove especially if you signed all of the loan documents and if you were represented by a real estate agent/broker. But look at a very recent case in the 6th Appellate District - Lona v Citibank Case No: H036140 Published 12/21/2011. It addresses some of the issues you raised.

3. As for return of interest, this would likely depend on the causes of action alleged in your complaint for rescission.

4. You may end up in foreclosure (if you are not already somewhere in that process).

Your best bet right now is to hire a very skilled real estate attorney which you can find here at

Good Luck with a complicated and difficult issue.


You need to speak with an experienced attorney in this area of the law. Only a lawyer who can look at your loan documents will be able to advise you. If you simply stop paying on your loan you will go into default and eventually be foreclosed upon. You cannot simply cancel the contract. These types of cases are very difficult even for very experienced attorneys.


No, your rescission claim would likely be barred by the statute of limitations. Moreover,even if you could rescind, you would not be entitled to recover back all of the interest paid.

In California, a contract may be rescinded if the consent of the party rescinding was obtained through mistake or fraud. (Civil Code § 1689(b)(1).) The party seeking rescissionary relief must “promptly,” upon discovering the facts entitling him or her to rescind, restore to the other party “everything of value” received under the contract or offer to restore the benefits received “upon condition that the other party do likewise” ... unless the other party “is unable or positively refuses to do so.” (Civil Code § 1691(b); see also Myerchin v. Family Benefits, Inc. (2008) 162 Cal.App.4th 1526, 1533.)

The information presented here is general in nature and is not intended, nor should be construed, as legal advice. This posting does not create any attorney-client relationship with the author (who is only admitted to practice law in the State of California). For specific advice about your particular situation, consult your own attorney.