The following is a short article written by a good lawyer from California who understands the advantages and uses of TILA, audits etc. It doesn’t address the forensic analysis of the ledgers of the mortgage servicer or the securitization process, but it does state eloquently the case for knowing what you are doing:
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And the truth (in lending) shall set you free
By Cathy Moran, California Bankruptcy Attorney
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.
The neat things 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 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 sample, 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 see a lawyer immediately. Get the transaction reviewed for Truth in Lending compliance. Once those three years are past, there is little that TILA can do for you.
Filed under: CDO, Eviction, foreclosure, GTC | Honor, Mortgage | Tagged: foreclosure defense, TILA audits, Truth in Lending Act |
I’m still wondering why no answer to the first question. There is no Cathy Moran listed with the California State Bar. Please explain. Thank you.
Thanks for the info Cathy. btw, i did a search of attorneys licensed to do business in California at http://www.calbar.ca.gov and neither your name, nor any similar sounding name, appeared in that directory.
Did you ever find the attorney you need for your situation here in CA. If so do you care to share?
I live in Orange County California Cathy my question is what if i sent an extended rescission letter(certified mail) within the three year limit for failing to provide tila & hoepa disclosures, a payment schedule and the APR and the lender & the broker are in non-compliance? Keep in mind that i refie’d with fremont in 2006 and the loan is now being serviced by litton and continuing foreclosure proceedings after agreeing to modify the loan terms but didn’t.I can’t seem to find a willing and able attorney.I found one who used to represent lenders and brokers that sent me a retainer agreement for a grand a month that wasn’t a recoverable fee and if i couldn’t pay all fee upon demand they would withdraw as council they want $300 cash to do thier own audit after i just paid Myrecast to do an audit for $300 and the Myrecast people sai that thier attorney was very interested in the case but didn’t have the legal connections out in california considering they’re out in Texas. The attoney said there was tila hoepa & rico statue violations but i can’t find an attorney i’ve cmplained to the FTC and still no help i’ve been calling attorneys since march and still no calls back I’m telling you theres somthing hinky about the whole ordeal the original grant deed is missing and everytime i mention to litton that i’m seeking legal council they all scatter like rabbits is’t there any attorneys out there willing to help an honestly distressed homeowner?
Strong tools are good, especially if it brings parties to the table. Foreclosures aren’t good for anyone. My only frustration would be a homeowner who should have known better “getting off because of a technicality”. Similar to a criminal escaping conviction because of a technicality.
One solution that seems logical to me would be for the bank to reduce the payment. However, the bank would retain a lein against a future sale. That seems like a win-win for everyone.
When we bought our first home we used a similar program. The interest rate was underwritten by the state, but if we sold the home sometime in the first 9 years, we could have to repay some of the interest based on a formula that would take change in income and change in value of the home into account.
Good article, Cathy, thank you for your help I’m not a lawyer, but it’s my understanding that most TILA time frames are unlimited in defense of foreclosure and in the case of fraudulent concealment (which is often present) the three year clock may not start ticking until the violation is discovered. Bottom line…no matter how old your loan, start with a good Forensic Audit and take those results to a qualified lawyer. Don’t let the “three-year rule” stand in your way.