12-26-2007, 05:58 PM
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#2 (permalink)
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Join Date: Aug 2007 Location: Southern California
Posts: 16,887
Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0 | Re: Possible TILA violation?
Yes, that can very much be in your favor. I would say that is a violation based on how the law reads. Here is a copy of a Truth in Lending Act article written by an attorney here. The notice of right to cancel is perhaps the most straight forward requirement of the creditor set forth by TILA, yet the most commonly violated in predatory lending. It seems apparent from reading TILA, Regulation Z and the associated commentary, that Congress was concerned with two aspects of the creditor/borrower relationship. First, they wanted to make sure borrowers received as much disclosure as practical so that they can make an informed decision. Second, they wanted to make sure that borrowers had ample time to consider this decision after being presented with all the details. The three-day right to cancel is intended to accomplish this second concern. The law is very clear on what is required when it comes to the notice of right to cancel. Each borrower, must receive two notices of right to cancel which clearly and conspicuously disclose: (1) the retention or acquisition of a security interest in the consumer’s principal dwelling; (2) the consumer’s right to rescind the transaction; (3) how to exercise the right to rescind with a form for that purpose, designating the address of the creditor’s place of business; (4) the effects of rescission; and (5) the date the rescission period expires (Regulation Z § 226.23(b)(1)(i-v)). In an effort to assist creditors, Regulation Z even includes a model form showing exactly what must be disclosed. 12 C.F.R. § 226 App. H. Unfortunately, creditors often leave the completion of these forms to the closing agent or notary public. Given the recent rise of “mobile notaries” or “loan document signers”, the environment is fraught with negligence when it comes to this duty. To understand how this negligent disclosure occurs, it is important to understand how the loan signing is conducted in practice. After loan documents are generated and issued by the lender, they are sent to an escrow company designated often times by the mortgage broker. Typically the loan documents are transmitted via email but regardless of the form, the escrow company prepares the loan document package, including the lender documents with documents prepared by escrow. The notice of right cancel is one of the documents provided by the lender, however since the lender does not know when the borrower will ultimately sign the documents, they typically leave certain fields on the notice blank, specifically the date the rescission period expires (see item #5 above). The documents are then presented to the borrower, often in the comfort of their home with a “mobile notary” present to notarize the requisite documents and direct the signing. The notary public will usually present the borrowers with a “copy package” of the loan documents that is an exact duplicate of the ones to be executed and returned to escrow. This is often where the problem arises. A prudent lender will put sufficient copies of the right to cancel in the loan documents when they deliver them to escrow. In a transaction with a husband and wife this usually means a total of five (5) copies, two per borrower as required by statute, and one to be acknowledged by the borrower and returned to the lender. However the notary will often presume that the copy package contains all necessary paperwork for the borrower(s) and proceed to have them execute all notices and retain them in the package. When the lender receives five notices they logically presume that the borrower is in possession of a copy package and thus the remaining four are redundant. The problem is that the notary never opened up the copy package and properly completed these notices and thus, the borrower never received adequate notices of right to cancel. This scenario has numerous variations but the result is that many borrowers were never properly given their notice of right to cancel, and as such, are entitled to rescission pursuant to TILA.
__________________ Moe Bedard
Founder LoanSafe.org "America's #1 Home Loan Forum" LoanWorkout.org "America's # Loan Modification Blog"  Get My FREE Loan Modification E-Book | Please donate to LoanSafe.org | Loan Modification Training For Attorneys | Rate Your Mortgage Servicer The comments by me and the materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. Most of the information you find here is easily available on the internet. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney. Please Read our Privacy Policy and Legal Disclaimer Here. |
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Possible TILA violation? 
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