In the midst of the mortgage meltdown, I’m searching for every tool that might provide a lever to modify a mortgage. In every case involving a home, I’m inquiring about when the existing loans were made, since the borrower has three years from the transaction to rescind a loan for violations of the Truth in Lending Act – if it is their primary residence and a refinance loan.
The neat thing about TILA violations is that they are strict liability causes of action: the aggrieved borrower doesn’t have to prove they were defrauded or misled, or that they had actual damages. The fact that the disclosures were defective or inadequate in amount gives the borrower the right to rescind the loan and deprives the lender of the right to interest on the loan. Pretty powerful stuff.
Powerful stuff is what we need to keep people in their homes: tools to bring the lender to the table to revisit the loan and find an alternative to foreclosure. Because absent some sort of restructuring, a tremendous number of these impossible loans will otherwise be foreclosed. In the long run, a foreclosure benefits neither party.
My small, unscientific sample says that I am finding TILA violations in at least half of the loans I’m reviewing these days. TILA doesn’t apply to financing of investment property, but for me, it’s the family homes that I’m intent on saving.
So, if you have a loan taken out in the past three years, gather all of the documents you got at closing and give me a call at 1-800-985-4685 to get the transaction reviewed for Truth in Lending compliance. Once those three years are past, there is little that TILA can do for you.
You need to really read what I’m about to quote from part of TILA – otherwise known as The Truth in Lending Act. This excerpt comes from 15 USC §1635 (a)(b) and (f). With our expert attorneys in our network, we can help homeowners who have refinanced in the last three years look for TILA violations. If any are found, the below excerpt applies to your situation. This is POWERFUL!
TITLE 15 > CHAPTER 41 > SUBCHAPTER I > Part B > § 1635Prev | Next
(a) Disclosure of obligor’s right to rescind
Except as otherwise provided in this section, in the case of any consumer credit transaction (including opening or increasing the credit limit for an open end credit plan) in which a security interest, including any such interest arising by operation of law, is or will be retained or acquired in any property which is used as the principal dwelling of the person to whom credit is extended, the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms required under this section together with a statement containing the material disclosures required under this subchapter, whichever is later, by notifying the creditor, in accordance with regulations of the Board, of his intention to do so. The creditor shall clearly and conspicuously disclose, in accordance with regulations of the Board, to any obligor in a transaction subject to this section the rights of the obligor under this section. The creditor shall also provide, in accordance with regulations of the Board, appropriate forms for the obligor to exercise his right to rescind any transaction subject to this section.
(b) Return of money or property following rescission
When an obligor exercises his right to rescind under subsection (a) of this section, he is not liable for any finance or other charge, and any security interest given by the obligor, including any such interest arising by operation of law, becomes void upon such a rescission. Within 20 days after receipt of a notice of rescission, the creditor shall return to the obligor any money or property given as earnest money, downpayment, or otherwise, and shall take any action necessary or appropriate to reflect the termination of any security interest created under the transaction. If the creditor has delivered any property to the obligor, the obligor may retain possession of it. Upon the performance of the creditor’s obligations under this section, the obligor shall tender the property to the creditor, except that if return of the property in kind would be impracticable or inequitable, the obligor shall tender its reasonable value. Tender shall be made at the location of the property or at the residence of the obligor, at the option of the obligor. If the creditor does not take possession of the property within 20 days after tender by the obligor, ownership of the property vests in the obligor without obligation on his part to pay for it. The procedures prescribed by this subsection shall apply except when otherwise ordered by a court.
(f) Time limit for exercise of right
An obligor’s right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first, notwithstanding the fact that the information and forms required under this section or any other disclosures required under this part have not been delivered to the obligor
