Homeowners Invoking "Truth In Lending" Rights To Back Out Of Bad Loans

CBS5 in San Francisco, California reports:

• "This may be the life preserver for homeowners about to sink-- a way to strike back at shady loan brokers who mislead people about the true cost of their mortgage loans."
• "Federal Truth in Lending documents that are required with every refinanced loan give homeowners a greatly expanded right to cancel if the documents are not exactly right."
• "How much extended time? Try three years from the date of the loan."

In this report, attorney William Purdy from the Santa Cruz law firm of Simmons and Purdy, who reportedly with his law partner have hundreds of cases of Truth in Lending violations, is interviewed.

Also covered in the report is another case where The Fair Housing Law Project of the non-profit agency The Law Foundation, which provides free legal services to Silicon Valley individuals in need, is suing a broker and lender on behalf of a consumer borrower for Truth In Lending violations.

Purdy says the Truth in Lending Act is not a way of getting out of debt -- but it can be a way of getting out of a bad loan, and it essentially depends on whether the lenders got sloppy with the right-to-cancel document required to be given to refinancing homeowners. (The part of the law being enforced in these cases only applies to homeowners who are refinancing; it does not apply on purchase transactions.)

To watch the report, by CBS5's Tony Russomanno, see CBS5 Video - Bay Area Homeowners Backing Out Of Bad Loans, (then, click "Play") or

Go here for the text of the story - Bay Area Homeowners Backing Out.

For a related article, see Finding a legal escape clause (Attorney rescues homeowners from loans they can't afford)

For a story involving law firm Simmons & Purdy that resulted in the arrest of mortgage broker Altaf Abdulrehman Shaikh (alias Zak Kahn) for allegedly ripping off homeowners in mortgage transactions, see DA: Scammer sought to bilk homeowners.

Go here for more posts on homeowners who have refinanced into bad mortgage loans and are now using the Federal TILA to try and undo the bad loans.

Editor's Note

Using the Federal Truth In Lending Act is also being used by financially strapped homeowners to void sale leaseback, repurchase option deals entered into with foreclosure rescue operators. See, for example,

• Foreclosure Rescue Operator Violates Federal Law, State Usury Law, and
• Michigan Federal Judge Orders Return Of Home By Foreclosure Rescue Operator. undo mortgage loans TILA alpha