Monday, March 2, 2009

Legal Info

*A FEW OF **MANY WAYS** TO DEFEAT FORCLOSURE *

[image: House In Forclosure]

*TRUTH IN LENDING ACT (TILA)*

As part of every loan transaction, the bank must provide the homeowner
correct disclosures at or before the time of closing, like the amount of the
finance charge and APR. If these disclosures are inaccurate, the loan may be
statutorily rescindable under TILA. The lender must also provide a “Notice
of the Right to Rescind.” This is a specific notice that must be provided to
refinance customers at closing. If this form is inaccurate or incorrect, the
loan is rescindable up to three years after the date of closing. Rescission
means the loan is canceled and all money paid to the lender is refunded.
Moreover, if you purchased the property or used the proceeds to refinance
and proper disclosures were not given, then you may also be entitled to
money damages to offset the foreclosure.

*REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA)*

This federal law governs many types of disclosures that lenders must provide
at the time of closing, in addition to prohibiting things like kickbacks and
unearned fees. It enables damages, and sometimes rescission if the error
triggers TILA.

*HOME OWNERSHIP AND EQUITY PROTECTION ACT (HOEPA)*

This is a very powerful federal law governing high cost refinance loans.
Violations here enable rescission and substantial money damages that can be
in excess of the loan’s dollar amount.

*RACKETEERING AND CORRUPT ORGANIZATIONS ACT (RICO)*

A borrower may successfully plead a RICO claim in a yield spread premium
case. The elements of a RICO claim are satisfied where the payment of the
premium was not disclosed and the cost of the premium is passed on to the
borrower in the form of a higher interest rate; and the broker represented
that it would provide the lowest available rate.

*EQUAL CREDIT **OPPORTUNITY** ACT (ECOA)*

Bait-and-switch tactics can state a claim under the ECOA. ECOA provides
private remedies for actual and punitive damages, equitable relief, and
attorney fees.

*UNFAIR AND DECEPTIVE PRACTICES*

Over reaching mortgage transactions can often be challenged under state
unfair and deceptive acts and practices (UDAP) law. Broker misconduct and
yield spread premium, at least without disclosure, may violate a UDAP
statute. There may be licensing violations. Transactions with lenders and/or
brokers who are not licensed, but should be, may be void. It may be a UDAP
violation for a lender to do business with an unlicensed broker. Most UDAP
statutes provide for some combination of actual damages, statutory damages,
multiple damages, attorney fees and costs, and some states, punitive
damages.

*FHA PRE-FORECLOSURE REQUIREMENTS*

FHA requires every lender to mail a booklet called “How to Avoid
Foreclosure” and set up a face-to-face meeting with the borrower before
foreclosing (in most cases). If the lender does not take these steps, then
it cannot foreclose.

*APPRAISAL FRAUD*

Many appraisers inflate the value of a property to help a lender justify a
predatory loan. Sometimes the appraiser does this to please particular
lenders to obtain repeat business from those lenders; other times appraisers
may be colluding with lenders and receiving kickbacks for fraudulent
appraisals. Remedies for appraisal fraud can include actual damages,
punitive damages, and attorney fees.

*BREACH OF CONTRACT*

Just as you have an obligation to pay the mortgage, the lender has a
responsibility not to interfere with your ability to do so – like force
placing insurance making the payments substantially more expensive than they
should have been. In addition, lenders who quietly reward brokers for
brining borrowers to them—and subsequently passing on the cost of that
reward to the borrower—may share liability for the broker’s breach of
fiduciary duty.

*REAL PARTY IN INTEREST*

This is a procedural defense to foreclosure that can be extremely effective
at stopping the lender’s ability to foreclose. It essentially questions the
ownership of the mortgage and questions whether the foreclosing party is, in
fact, the holder of the mortgage and note.

*UNCONSCIONABILITY*

This defense is focused on the events surrounding the creation and closing
of the mortgage loan. A violation here gives the court great leeway in
deciding whether the mortgage should be voided or changed.

*FAILURE TO STATE A CLAIM*

This general defense attacks the lender’s ability to foreclose and is can be
used in conjunction with one of the other foreclosure defenses.

*FAILURE TO ESTABLISH CONDITIONS PRECEDENT*

Want to get a foreclosure action thrown out of court right away? Use this
defense that attacks the lender’s pre-foreclosure processes.

*WHAT WOULD YOU LIKE TO ACCOMPLISH?*

*A. Rescission of the loan.*

*B. Mitigating some of the money you will need to pay the lender.*

*C. Drawing out the process long enough to make other living arrangements.*