Foreclosure Loophole (if your mortgage was underwritten more than three years ago, dont bother trying rescission)
“If they [the American people] remain quiet under such misconceptions, it is lethargy, the forerunner of death to the public liberty…” – Thomas Jefferson
If you are a homeowner in financial trouble facing foreclosure, there are several foreclosure loopholes you can utilize to stop the foreclosure and give a serious push back against your lender. These foreclosure loopholes include, but are not limited to the following strategies we employ for clients:
TILA and Regulation Z require specific disclosures to be made to you prior to and at the time of settlement on your mortgage loan. If the loan is secured by your primary residence there are even more rigorous requirements.
If you did not receive 2 copies of your right to rescind or right to cancel, -OR- You did not receive the federally mandated booklets on adjustable rate notes (in the event your mortgage is an ARM), -OR- the finance charge on your final TILA
(Truth in Lending Act) disclosure is understated by more than $35.00. You are still in the 3 day “cooling off” period that follows settlement because your mortgage company never perfected your mortgage. During this period you can rescind or cancel your mortgage. (Fill out contact form to the right for more information)
If you’re a homeowner and are being threatened with foreclosure, here’s a way you can perhaps avoid it. This foreclosure loophole might be your way out of foreclosure. If your mortgage documents violate the TILA, which requires lenders to make certain disclosures to borrowers about the true costs of a loan, then, depending on the violation(s), you may have the right to:
- Rescind the loan- or cancel the loan
- Recover or offset amounts already paid including interest, finance charges and closing costs, origination fees, commissions and illegal Yield Spread Premiums (YSPs)
- Collect potential statutory damages of $1,000 per violation, plus your attorney’s fees
TILA regulations require that lenders to disclose to borrowers the true cost of credit so they can comparison shop for the best loan. This is the primary purpose of the Act. Required disclosures include the Annual Percentage Rate (APR), finance charges, total payments, the amount financed and the payment schedule. The tolerance for deviations from accurate finance charge and APR rate calculations are very rigorous and the lenders often misstate this estimate and understate the finance charge by more than the $35.00. <—–THIS IS VERY IMPORTANT, PEOPLE!
The Act also provides home mortgage borrowers with an automatic three-day “cooling off” period to decide whether or not they want to rescind the loan when the loan was s a refinancing event , a second mortgage, a home equity loan or line of credit (HELOC) or some form of home improvement credit sale. This cooling off period, as stated above, is automatically extended for three years, extending the strong>rescission period if the lender violated the disclosure requirements. The disclosure requirements state clearly that the homeowner must receive:
1) 2 copies of the Right to Rescind
2) These Right to Rescind disclosures must be in the correct format and not just thrown onto a financing form or placed onto another disclosure.
Rescission is an important foreclosure loophole that you may be able to exercise if your disclosures are not in order and in accordance with TILA. Give us a shout if you wish to have your loan documents forensically audited.
UPDATE: this article (above) was written two years ago last week. While we still believe in rescission as a remedy, our experience is that most of you are well beyond the 3 year statute of limitations and even when you are within the statute, typically the judge will almost always try to help out the lender by allowing the lender to come in with a motion/demand that you tender the original loan amount (even though the statute is supposed to force the lender to return your interest/points/closing costs and strip their security interest within 20 days of your demand) .
The loopholes are bigger than rescission…Your lender probably doesn’t own your note. It was never properly transferred into the mortgage backed securities pool it was meant for.. Watch this video…. http://www.legalforensicauditors.com/quiet_title_action/
Questions? We offer a free mortgage review to see if your mortgage contains violations BEFORE we will ask you for one dollar.
Nothing on this entire site is to be construed as legal advice. It is only the opinion of the author. If you are a Virginia resident we do have a Virginia RESPA litigation attorney in our office who will be happy to discuss your mortgage issues with you.
Our offices are located in Virginia, but we have clients in Florida, Maryland, Pennsylvania, North Carolina, Georgia, Texas, Pennsylvania, Ohio, Illinois, Delaware, California and Washington DC. Law firms use LFA to Forensically Audit their client mortgages.
If you are behind on your mortgage, in jeopardy of losing your home, cannot afford your current payment because you expected to refinance but cannot, tead the step by step QWR page after filling out this form. We will contact you within 48 hours. We don’t spam and your information is completely private here. We are located in Virginia.