[This article is not a substitute for an attorney advice. If you have more specific questions, please contact a licensed attorney, and that too a Nevada licensed attorney. Malik Ahmad attorney & Counselor at law.]
Welcome to one of the toughest battle of your life.
Ladies and gentlemen: Please tighten your seat belt. This ride is difficult, and very scary for your lenders.
First of all, I suggest that a consumer has to be educated to be well equipped in this field. It does not mean that you call various law offices, and get tidbits of legal information and fight back. If you can afford, by all means hire an attorney. They have wealth of knowledge and can see a remedy from different angles. Truthfully, there is no substitute for an attorney. I caution against people who are doing it as pro se. Judges frown upon them. They tie up the important times and values of court. Judges throw their cases out on the smallest procedural violations and pretext. Most of the judges are former attorneys and never secretly like pro se folks, not because they hate their causes: because of their actions slow down the process for everyone, and takes up important court time for other important matters.
When attorneys are involved, things starts moving fasts, phone calls are returned, letters are replied swiftly. You know why because lawsuits are very expensive even for the rich lenders. Now let us discuss some of the weapons in your arsenal.
1. Truth in Lending Act (TILA) -
Does your loan have legal violations? Are you the victim of predatory lending? Did you know that 90% of victims do not even know they are victims? The law is designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement and all costs.
By far, this is the most abused laws by lenders and the one that has the most teeth. It has the most potent weapon of rescission. Yes, normally there is three days period provided, if you can prove the violations, the rescission period can be extended to three years.
Homeowners can use this defense even if they are not late on their mortgage and an effective tool to bring litigation against their lender.
Here are some very important Truth in Lending Act cases:
Class Action Under the Truth in Lending Act Andrews v. Chevy Chase Bank, FSB (2007 WL 112568, E.D. Wisconsin, January 16, 2007).
Borrowers alleged that the lender:
(1) failed to properly disclose the payment schedule because the schedule did not reflect that the required payments were due monthly;
(2) did not clearly disclose the APR and variable rate feature, based in part on disclosures reflecting a note rate of 1.950% and a five year fixed period that applied to the payment and not the rate;
(3) added information to the TILA disclosure that was not directly related to the information required to be disclosed (i.e., the initial discounted interest rate of 1.950% set forth as the note rate);
and (4) failed to properly disclose the possibility of negative amortization.
The federal district court agreed with the first three allegations and determined that the loan was rescindable because of the violations. The court further determined that this matter was appropriate for class certification, finding nothing in the language of the TILA that precludes the use of the class action mechanism to obtain a judicial declaration of whether a TILA error entitles each member of the class individually to seek rescission.
Right to Rescind After Loan Pay-Off Barrett v. JP Morgan Chase Bank, N.A. (445 F.3d 874, 6th Cir., April 18, 2006). The borrowers refinanced their mortgage with Bank One in May 2000 and again in January 2001. In May 2001, the borrowers refinanced the loan with another lender, and Bank One released its security interest in their home. The borrowers requested that the Bank One loans be rescinded based on alleged TILA violations.
Bank One responded that because both loans were refinanced, and the security interest released, there was nothing left to rescind. The district court agreed, but the United States Court of Appeals for the Sixth Circuit reversed.
The Sixth Circuit stated that nothing in the TILA or its implementing regulations provides that the act of refinancing extinguishes an unexpired right to rescind, and that the right to rescind gives consumers the right to recover fees in addition to the right to the release of the security interest.
2. Challenge the Ownership of Your Note – Does your lender really own your mortgage? Are you sure? Why don’t you make them prove it?
Judge Christopher A. Boyko of the Eastern Ohio United States District Court, on October 31, 2007 dismissed 14 Deutsche Bank-filed foreclosures in a ruling based on lack of standing for not owning/holding the mortgage loan at the time the lawsuits were filed.
Judge Boyko issued an order requiring the Plaintiffs in a number of pending foreclosure cases to file a copy of the executed Assignment demonstrating Plaintiff (Deutsche Bank) was the holder and owner of the Note and Mortgage as of the date the Complaint was filed, or the court would enter a dismissal.
More on RESPA, HOEPA later in our next column.