The federal Truth in Lending Act (also known as TILA) provides borrowers with powerful tools to help rescind mortgages which violate federal law. Every lender providing a mortgage must give to its borrowers certain material loan disclosures and two copies of a "notice of recission" at the time of the loan closing. If the lender fails to provide these notices and disclosures, the borrower can rescind, or cancel, the loan within 3 years of the loan closing.
Rescinding the loan generally means that the loan mortgage must be discharged and the loan proceeds must be returned to the lender, minus any fees, charges, or payments made by the borrower to the lender during the time period the loan was in effect. There are also other statutory damages and attorneys fees which can be collected from the lender. The benefit of recission to the borrower is that it can allow the borrower to refinance for less money in the future, sometimes saving tens of thousands of dollars.
Our office is studying the loan closing documents from our clients or prospective clients to deterimine if TILA violations occurred, and if so, whether the borrower may benefit from declaring a loan recission. Sometimes the loan recission is best initiated as part of a bankruptcy case, although the borrower may find significant benefits from declaring a recission without filing bankruptcy. We look forward to reviewing your loan documents to see if we can assist you in protecting your legal rights under this important consumer law.