predatory lending, truth-in-lending violations, and foreclosure

Today I want to discuss how people get out of their mortgage by asserting that there was fraud, or violations of law, involved.

The primary law that deals with mortgage lending are the Truth In Lending laws. They are federal statutes that specify how a lender is supposed to document a loan application and loan paperwork. There are very specific requirements even including how large the typeface is in certain cases.

I spoke today with a lawyer who specializes in helping people get out of loans that were made in violation of the Truth In Lending laws.

She says that if you have some equity, and have refinanced in the last three years, and are in an owner occupied single family home, you might have a case against your lender.

(But wait…are you on my high quality subscriber list yet? If not, put your name and email in the blanks. You'll get instant access to my high quality 25 page report Keep Your Home, learn inside tips on avoiding bankruptcy, getting a lower mortgage payment without a new loan, slashing your credit card debts and more. I will always keep your info private.)

She regularly finds violations — in fact, about 12 out of 15 times, she said she reviews a file and discovers some violation.

The law lets you sue the lender and if you win, the lender pays attorney's fees.

The law's remedy is called rescission. You rescind the loan by telling the lender that you want to take it back. Rescission involves getting back to where you were before the loan was made.

That means you have to pay back the loan.

But if there was a violation, you have some negotiating room. You may be able to get the lender to agree to stop foreclosure. And you may be able to stop making mortgage payments to the lender until things are sorted out. That could take 3 or 4 years or even longer.

The downside is that you must pay an attorney. The lawyer I spoke to does not do contingency cases. She requires fees from the homeowner. That doesn't mean all lawyers do but I would imagine a lot of them do.

She also told me that a lot of cases where there are truth-in-lending violations also involve mortgage fraud. The broker lied, or encouraged the homeowner to make  misrepresentations on the loan papers, or even worse. So that gets put into a lawsuit as well.

She said she can stop a foreclosure but this requires going into court to get a temporary restraining order, if the lender won't cooperate. She says the lenders are highly uncooperative, which I suppose is not surprising.

I do want you to be aware of this remedy. The lawyer I spoke with is in California. This is a federal law we are talking about but the situation is a bit different in different states due to the fact that foreclosure laws are governed by state law, not federal law.

Permalink • Print

11 Comments on predatory lending, truth-in-lending violations, and foreclosure

[…] you can, too.And meanwhile, for more detailed information I urge you to read predatory lending truth and lending violations and download my 25 page detailed free report that explains how to lower your mortgage payments […]

HERMIE PILI @ 3:38 pm:

WOULD LIKE TO KNOW MORE ABOUT PREDATORY LENDING VIOLATIONS.
HOW MUCH ARE THE PENALTY AND HOW LONG DOES IT TAKE.

john evans @ 4:31 pm:

i have a problem with CITI FINANCIAL i paid off my second mortgage and the charge me $6,878.00 at the end of the loan which caused me another year of paying on the loan.when ask to review the contract the manager refused and said that they would foreclose on the loan.Ifiled a complaint with the FTC,BETTER BUREAU AND THE ATTORNEY'S OFFICE.STILL NO RESULTS.WHEN WE TALK TO THE ATTORNEY HE SAID THAT THERE IS NOTHING WE CAN DO,BUT PAY THE ENTIRE LOAN OFF.IS THERE ANY HELPOUT THERE?

This seems unfair, doesn't it? Why would they charge you at the end of the loan? Was that in the original contract?

warmly

–Richard

JoAnna Jensen @ 8:13 pm:

Hi,

My only thought would be that you paid it off early?? You should go over your contract, sometimes if you pay it off in the first three years you will get a penalty for paying it off early. It would be important to review your loan docs to see what type of interest rate you were charges as well.

If you send the lender a "Qualified Written Request" asking for a statement of all the fees you paid and how they were applied they have to respond within 20 days and they have to give you a statement within 60 days. They could find themselves in violation of laws that protect us.

STAN CLARK @ 9:35 pm:

MY CLOSING PAPERS WERE DATED THE 21ST AND THE CLOSING WAS ON THE 27TH 3 WORKING DAYS IN BETWEEN THE 21 AND 27 THE BROKER SAID THE LOAN WAS AT 6 % BUT 4 DAYS BEFORE CLOSING HE CALLED AND SAID WHY DIDN'T I TELL HIM I HAD A BANKRUPCY 2 YEARS AGO HE SAID IT DID NOT SHOW UNTILL JUST BEFORE CLOSING WAS TO BE DONE AND MY INTREST WENT TO 8.5

It sounds like you may have gotten hosed. There are remedies in the Truth In Lending Act that let you cancel this type of transaction. I would see an attorney who knows about the Act and practices law in the area of "predatory lending" on behalf of consumers.

warmly

–Richard

STAN CLARK @ 3:35 pm:

HOW DO I PROVE THE CLOSING DATES ARE WRONG ON MY PAPERWORK

STAN CLARK @ 12:40 pm:

how can i prove the closing dates are wrong the closing was on the 21st my check for closing fees that i paid was dated by the bank on the 27th it was a cashiers check i got from the bank is that enough to prove the dates are wrong
thanks

Susan Imbeault @ 5:04 pm:

We got an 80/20 loan on our home. We were told the first two years were interst only. After the two years were up, we were told by the lender that we signed an ammendment stating our interest only payments were for five years. Second loan is for $55000.00 at $553 a month witha 47,900.00 balloon payment at the end of 30 years. We were told about none of this, however we signed all the papaers that were thrown at us the day of closing.

Now a forensic loan auditor wants 1700.00 to review our mortgage for discrepancies stating we can get the mortgage adjusted. But I think it is a scam. Comments??

robert brown @ 9:03 pm:

i need help with tila should i file against bank? help me what is tila can they put you on payment plan and screw you on the end

sunll @ 4:44 pm:

i recently had an audit on my loan. they found several violations.the main one was the recistion expire date was omitted and entered wrong. is this a tila violation? and can i take lender to court?

Nancy @ 7:10 pm:

Very good information. I have a friend who closed in Sep 21, 2008 and the disbursement took place on the 27, they were not provided with the rescission letters, at disbursement date Sep 27, they they told them that they need to sign a paper that stated that they will not rescind this loan. It is legal.