September 13, 2008

What Triggers TILA Extended Rescission?

Filed under: TILA

Yes I need help! 

I have hired loansafe.org to help me with getting out of this mortgage.  I read your article about EMC mortgage and that is exactly what has happened to me in this option arm mortgage.  Loan safe has told me that I have big tila violations, so I told them to make EMC take the house back because it is primary residence but don’t live there anymore.

They referred me to a short sale person and said put in on the market.  I need another opinion because lender sent me a letter of default.  I am getting ready to put on market Monday, and I am not sure what to do about letter of default because have so many overcharges on account. 

Should I call FTC in meantime? Should I send mortgage company a letter?

Loansafe told me to put on market for 90 days and then if doesn’t sell negotiate for them to take house back.  Not sure if this is right – hard to get a hold of them with answers and I feel like I am told different things everyday.  They told me if would take two weeks to do audit of loan but now it has been two months and meanwhile I am sure this is on my credit. 

Kris

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Hello Kris,

I’m not sure what you mean by “big tila violations”.  The TILA is primarily a disclosure statute with statutory damages for closed-end mortgages of $200 to $2,000, plus actual damages, and attorney fees.  That’s not really a whopper of a claim.

But, perhaps by ‘big tila violations’ you are referring to a violation of the TILA under section 32 with HOEPA’s enhanced damages, or TILA’s extended right to rescind? 

Since I’m playing the guessing game here, let’s list the items that trigger the three year extended rescission right from NCLC’s “Stop Predatory Lending” (2 ed., p 119):

* Failure to give the rescission notice at all or to give each co-owner and co-borrower two copies.

* Creditor’s act of having the consumer sign a premature election not to cancel at time of closing renders notice of right to cancel unclear, thus giving rise to extended rescission right.  Courts also analyzed this as a waiver, which did not comply with waiver requirements.

* If the notice is provided in a timely way, it must be clear and conspicuous and contain certain information:

  • That there is a security interest in the home;
  • How to exercise right to rescind;
  • The effects of rescission; and
  • The date the rescission expires.

* A violation in the material disclosures defined, for closed-end loans, as:

  • Amount financed;
  • Finance charge;
  • APR;
  • Payment schedule; and
  • Total of payments.

* The material disclosures and notice of right to cancel must be clear and conspicuous and must reflect the legal obligations of the parties.

* Violations of many, though not all, of the protections in HOEPA.

And to answer your questions, you need to talk to an attorney.  Here is a California TILA attorney that may be able to review your case.

Read: Some Options Are Better Than Others 

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

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