The previous entries detailed a consumer’s right to rescind a loan under TILA, as well as the details and conditions wherein one can use the that right. Now we shall discuss the actual process of rescission:

1. You must send a written notice of rescission to your creditor. Within 20 calendar days upon receiving it, they must return any money or property collected from you with regards to this transaction, as well as perform the necessary steps for the rescission itself. In the meantime, you may retain ownership of any money or property given to you by your creditor, until they accomplish their obligations.
2. After your creditor has complied with item 1, you must tender the money or property to them. If this is not possible, then you must tender its reasonable value.
3. If for some reason your creditor does not collect the money or property within 20 calendar days, you may keep it without any further obligation.

There are, however, some things to keep in mind when exercising your right to rescind a loan.

1. The right only applies to transactions secured by your principal home. Those secured by vacation homes or second homes are not included.
2. The TILA does not apply to business, commercial and agricultural loans. Neither does it apply to public utility credit, home fuel budget plans, and some student loans. It must be for personal, household, or family purposes only.
3. The loan must have been issued to a consumer.
4. The right does not apply to loan amounts greater than $25,000 and not secured by your primary home.
5. Even if you properly rescind the loan, the mortgage company is still the holder of a secured claim on the property.  In order to release that claim, you will need to bring an action to force the acceptance of the tender amount.  Without legal action, the security interest continues.

Stopping foreclosure using the TILA requires knowledge of the many rules and technicalities involved. If you feel your creditor has not been upfront or accurate with the details of your loan, go over them with an experienced foreclosure lawyer well-versed on the TILA. You may find you have just rescued your own home.

In the previous post, we established the consumer’s right to rescind a loan under TILA. This second part of the series details how a consumer’s right to rescind can be extended beyond the normal three days.

According to the TILA, your lender must have informed you of several crucial details.

You must have been given proper notice of your three-day right to rescind your loan. This provision is meant to give you time to go over the details of the loan, and to give you a chance to change your mind about risking your home as a security interest. The document must specify the following:

a) The retention or acquisition of a security interest in your principal dwelling;
b) Your right to rescind the transaction;
c) How to exercise your right to rescind, using a form that designates the address of the creditor’s place of business;
d) The effects of rescission, and;
e) The date the rescission period expires.

Another thing your creditor should have disclosed is an accurate computation of the following:

a.    The annual percentage rate (APR), which is the effective interest rate you will be paying on the loan;
b.    All finance charges, meaning any fees paid directly or indirectly to the lender;
c.    The Amount Financed, which is the mortgage amount you applied for;
d.    The Total of Payments;
e.    The Payment Schedule, and;
f.    Other disclosures and limitations.

All of these charges must be accurate to a certain degree of tolerance, which is $35. This means that if you paid $10,040 dollars when you should have only paid $10,000 as stipulated in the contract, your creditor has violated the agreement and can be held liable.

To summarize, you must have been made explicitly aware of your right to rescind and of all the fees you have agreed to pay for. Failure to properly disclose ANY of these extends your right to rescind your loan to up to three years since the signing.

Defending foreclosure effectively means that you need to know all of the laws, and use all the defenses, at your disposal.  One of the tools to use may be the Truth-In-Lending Act (also known as TILA).

Enacted in 1968, this law is meant to protect consumers from inaccurate or unfair credit billing, by stipulating full disclosure of all key terms and conditions of credit by their lenders. Violations of TILA can mean severe penalties for the creditor, but more importantly, you can use it to keep your home through a special provision known as the right to rescission.

When one rescinds a loan, it will be as if the loan never happened.  You will be entitled to a return of the interest and fees you have paid to the lender to date.

Take note, however, that this right applies only to a non-purchase money security interest on your primary residence. This means TILA applies only to transactions on your primary home - whether it’s a regular house, a trailer, or a boathouse.

This right to rescind normally lasts for three business days, starting from the day you signed the agreement. However, this time period can be extended to three years under special conditions:

1.    You are not properly notified of your right to rescind your agreement.
2.    Your lender fails to properly disclose all credit terms of the transaction, as according to the TILA.

If either case happens, you may be able to rescind your loan in order to halt an impending foreclosure.

If you’re a great salesperson, have real estate contacts, or are part of a family tree where members die in the same city they were born… then the homebuyer tax credit is probably a nice break for you if you are considering buying your first home. However, taking advantage of the Housing and Economic Recovery Act’s first-time homebuyer tax credit may not be worth it to a number of people. The credit amount can be as high as $7,500 for homes purchased between April 9th, 2008 and July 1st, 2009, for first-time home buyers.

Some may not realize that there is still a catch in this case, and the “credit” is not actually “free money”… but rather acts more as a loan. The IRS will assume repayment over the next 15 years. The IRS, however, is not charging any interest, and the payment amount is divided equally among the years.

Aside from the attractiveness of paying off an instant benefit slowly over the course of many years (at zero interest,) making use of the credit may still be a bad decision. After all, it is arguable that people buying homes that they simply weren’t ready for was the cause of the housing crisis as it is today. Also, for those in the military, expanding companies, or in any other position or lifestyle that requires relocation in the next 15 years, the sale of the home will throw a wrench into your repayment plans. The law requires that the entire amount of the loan becomes due following the sale of the home.

So, unless you are confident you can sell a home for more than the purchase price, in this market, or are sure you would be residing in it for the next 15 years, you should think long before acting on the homebuyer tax credit availability.

When fighting foreclosure, the last thing you need are scam artists taking away the very home you’ve been struggling to keep. That’s exactly what happened to Gerthy and Lesly Alexandre when they dealt with AFG Financial Group in Garden City, L.I. As the couple was trying to stop foreclosure of their West Brighton Home, AFG presented them with an attractive option: refinance the mortgage and put someone else’s name on the deed. This was supposed to be a temporary measure until the couple could get their financial status in order. Little did they know they had just signed away their own home to another. Read more

New York foreclosure rates rose 67% in July 2008 as compared to figures of the same month last year according to Gothamist intensifying New York’s statewide foreclosure crisis.

The New York Post reports that Queens foreclosure rates represented half of the total number of seized houses in the city with 178 homes foreclosed. This figure represents an 81% increase in the foreclosure rate year over year. Brooklyn followed with a 63% increase, a 16% rise in Bronx, 7.6% in Manhattan and lastly, a 215% leap in Staten Island.

The rising foreclosure rate, combined with a low number of houses being sold, have sent the median sales prices in New York plummeting.

Meanwhile, the New York court system has been looking to different ways to help the homeowners that are having a hard time keeping their homes. This, combined with New York’s newly-enacted law requiring 90 day’s advance notice of foreclosure auctions, may provide some measure of temporary relief to homeowners at risk of losing their homes to foreclosure.

Still, most homeowners facing foreclosure are unaware that valid foreclosure defenses exist. New York homeowners may contact me or call toll-free to 800-497-5717 to set up a free, no-obligation telephone consultation to discuss their options.