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Fed Trying to Make It Harder for Homeowners to Fight Mortgage Fraud by Gutting Truth In Lending Laws
As reported by the Washington Post, the Fed turned a blind eye for years and allowed massive fraud in the mortgage market.
After Alan Greenspan changed his mind and admitted that financial players commit fraud unless laws are enforced (see this and this), many hoped that the Fed would start cracking down on fraud a little bit.
Unfortunately,
the Bernanke Fed is continuing to try to sweep fraud under the rug. As
just one example, the Fed has been consistently trying to downplay the
significance of mortgage fraud, claiming it's not widespread and that
nothing much really has to be done about it.
Now,
the Fed is proposing a change to the Truth in Lending laws which would
make it harder for homeowners to fight mortgage fraud. The Fed's
proposal can be read here, starting on page 58541.
As McClatchy noted yesterday:
The
Federal Reserve is considering making it much harder for homeowners to
stop foreclosures and escape predatory home loans with onerous terms.
The Fed's proposal to amend a 42-year-old provision of the
federal Truth in Lending Act has angered labor, civil rights and
consumer advocacy groups along with a slew of foreclosure defense
attorneys, [who point out that] any future changes to the law [should
not be proposed by the Fed, but should instead] be handled by the new
Consumer Financial Protection Bureau, which begins its work next year.
***
"At the depths of the worst foreclosure
crisis since the Great Depression, we are surprised that the Fed has
proposed rules that would eviscerate the primary protection homeowners
currently have to escape abusive loans and avoid foreclosure: the
extended right of rescission."
[T]he public comment period on the Fed's proposal is still open until Dec. 23 ....
***
Since
1968, the Truth in Lending Act has given homeowners the right to
cancel, orrescind illegal loans for up to three years after the
transaction was completed if the buyer wasn't provided with proper
disclosures at the time of closing.
Attorneys at AARP have
used the rescission clause for decades to protect older homeowners
stuck in predatory loans with costly terms. The provision is also
helping struggling homeowners to fight a wave of foreclosure cases in
which faulty and sometimes-fraudulent disclosures were used.
The
violations must be of a material nature to invalidate a loan under the
extended-rescission clause. To do so, homeowners — usually those
facing financial problems or foreclosure — hire an attorney to scour
their mortgage documents for possible violations regarding the actual
cost of the loan or payment terms.
If problems are found, a
notice of rescission is sent to the creditor, which can either admit
to the alleged violation or contest it in court.
Creditors that end up rescinding a loan are then required to cancel their "security interest," or lien, on the property.
Once
that occurs, the homeowner must then pay the outstanding loan balance
back to the lender — minus the finance charges, fees and payments
already made.
Dropping the lien provides homeowners with a
defense against foreclosure and allows them to refinance to pay the
outstanding loan amount.
Critics say the proposed change
by the Fed would render the rescission clause useless. The Fed proposal
would require homeowners who seek a loan rescission through the
courts, to pay off the entire loan balance before the lender cancels
the lien.
"This, of course, would be almost impossible for
most consumers to do because they can't come up with the money until
they get out of the loan. And they can't get out of the loan until the
lien is released," said Barry Zigas, director of housing and credit
policy at the Consumer Federation of America. "None of us are quite
sure what purpose is being served by this proposal or what prompted
it."
***
Requiring homeowners to pay what remains of the original
loan before a rescission can proceed is tantamount to a "verdict first,
trial later" philosophy, Keest said.
You can submit a comment opposing the Fed's proposed change to the Truth In Lending Act by clicking here.
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minute 5:00
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The law says in a few words that the lien is removed as a matter of law once the consumer notifies the creditor, in the age of securitization the trua creditor, the investors, are unknown, the law has been rendred useless by deregulation, fraud and concealment.
The law says that the creditor has 20 days to acknowledge the receipt of your rescission notice and they have 60 days to remove the lien. If the creditor does not acknowledge and shows up to your home to engage in tender negotiations, they lose claim to the goods, the money and everything else.
The bankers either send you letter telling they decline your request to rescind. There is no such a thing under the law. You rescind and they have to cmply with the statute. in over 15 years of Mortgage auditing and analysis working for consumers and lawyers, I heve not seen the first bank or creditor that complies or at least tries to come up to the borrowers home to negotiate. To them you the borrower, are full of crap and deserve to eat S&*t and die.
They will come to court and tell the judge they have been harmed and that you are a dead beat borrower trying to get out of a "legitimate" contract.
The same story always!.
"The Board does not believe that
Congress intended for the creditor to
lose its status as a secured creditor if the
consumer does not return the loan
balance"
So now the Board is playing legal psyquic?
This is the type of attitude that have made the bankers and investment firms think and affirm that there are no consequences to their actions, and that there are nolaws on the books that can make then act in a civilized fashion. That is why they faked millions of affidavits, that is why they foreclose on millions of homes wiithout regard to legal Standing, that is why they have been able to create a Servicing Predatory industry without regulations.
That is why over 43,000,000 are on food stamps and over 20,000,000 homes will be foreclosed. It is their perenial F*&%$ you America, we are the priviledged banker class and you all minions work for our benefit. It is the new slavery system.
Believe me I love free enterprise, I owe to this great nation my success because its free enterprise system allowed me to use my talents and succeed. However, I have played by the rules. These people are free to lie, cheat and steal and when there is a law that makes the unconfortable, they call their uncle Ben and they just rewrite it without going through congress, or having the people vote on it.
just in case I bought a jar of vaseline for those who chose to keep getting the Wall Street Fraud Shaft!
I really get some what confused when these poeple and lawyers act as if the people in congress are fully unaware when the laws are written, discussed, agreed upon and signed into law by the President.
When they state in their proposal that Congress did not intend to do this or that just does not make sense. TILA has been in the books since 1968, of course they did intend for TILA to be enforced as written.
By changing the spirit and dimension of the protections of the law, only gives the thieves and crooks and lazy, corrupt judges more force to quash the middle class and those who for sheer ignorance or who were totally unaware of all the fraud being perpetrated against them. This move can only make things much worse!!
The Federal Reserve must be reformed or terminated. They have never stopped a single bubble or financial crisis since their creation, they continue being a monday morning quater back, and still act as it the American people are guilty of what the priviledged patricians of this nation do.
HELL WITH THEM as far as I am concerned.
Thanks for the comment link.
"never borrow, lever lend, never make an enemy, never lose a friend." -- william shakespeare
why do people NEVER learn?
http://covert2.wordpress.com
History teaches us that we can never learn from history.
+1000 This has been the guiding principal of my life!
I've posted this various places before but I love Lincoln's Lyceum Address and how applicable it is to our times - it is in response to incidents of mob rule and lynchings of random people and Lincoln's argument for the virtue of the rule of law....if you substitute lawless banksters, which govt does not protect people from, for "mob rule", the speech will resonate....
A particularly applicable section is:
here's something else to support. It was introduced nearly two years ago and has gone absolutely nowhere (which is a sure sign that's it's an essential bill for the people rather than special interests):
Produce the note act
http://www.opencongress.org/bill/111-h1123/show
Fema camps are in our future.
Send a postcard, will ya?
Since I've read nowhere the _specific_ portion the Fed proposal document to complain about via public input, here it is:
Pages 58547 - 58548
"Rescission process in a court
proceeding. The Board proposes to use
its adjustment authority to ensure a
clearer and more equitable process for
resolving rescission claims raised in
court proceedings. The sequence of
rescission procedures set forth in TILA
and the current regulation would seem
to require the creditor to release its
security interest whether or not the
consumer can tender the loan balance.
The Board does not believe that
Congress intended for the creditor to
lose its status as a secured creditor if the
consumer does not return the loan
balance. Therefore, the proposal
provides that when the parties are in a
court proceeding, the creditor is not
required to release its security interest
until the consumer tenders the principal
balance less interest and fees, and any
damages and costs, as determined by the
court. The Board believes this
adjustment would facilitate compliance
with TILA. The majority of courts that
have considered this issue condition the
creditor’s release of the security interest
on the consumer’s proof of tender."
the rule of law is no longer......no one should ever honor a judges ruling ever again
Thought For The Day
The FED has figured out that their very existence depends upon the outcome of the Mortgage crisis.
If the Law prevails (as it stands now) they are finished.
AND THEY KNOW IT.
so true
"If the Law prevails"
It hasn't for anyone other than us peons for many, many years.
GW, thank for the info BTW, I clicked to comment and it said something about FOIA request....is this the right link?
MM,
Yes, at the bottom it says "Comment on Proposal: Regulation Z - Truth In Lending Act [R-1390]"
okay, that was the one I did...thanks again... I really want to know about CFPB responsibilty in this area...I suppose even if it is eventually theirs, they have not staffed up to assume this yet
MM, I edited the main post to address this:
How much more proof does anyone need that government of law is over in the US?
Drag out the tumbrils!
Welcome to the United States of Mendacity, not that we ever weren't, just that in the past it was more discrete, now it's in our face and tough shit about that. Where is the will for change? I'll tell one place it ain't - Washington, D.C.
Citizens Arrest Squads, would do a couple of things:
1) It would show we're serious about enforcing the LAW and
2) It would show who is on the side of the people, ie. the police, politicians, lawyers, military.
The sooner we start assembling teams the better.
How many citizens with balls do we need per arrest? Where do we take them to be incarcerated? Is it legal to arrest officials if there is proof crimes have been committed?
What steps do we need to take to keep it legal?
BTW: Cheney should be booked on a flight going to Nigeria, No?
This is a fantastic idea. Where do I sign up?
How many citizens with balls do we need per arrest? This depends on the crime we're talking about. Probably between 2 and 5 for your every day stuff. That is what they do in my hood anyway.
Where do we take them to be incarcerated? Any space lacking exits that is also cold, dark and uncomfortable.
Is it legal to arrest officials if there is proof crimes have been committed? Legality seems to be in the eyes of the enforcer these days. We the people have delegated our power to enforce the law. We may need to take that power back.
Well, everything else in the world is backwards by now, why not add this to the mess?
thanks GW. keep up the good fight.
This is a last ditch effort to save BAC; the wikileaks expose will finally inter the zombie; it's already dead, even though the transfusion from the FED goes on.
Drip..
Drip..
Drip..
CODE BLUE: FLATLINE!!!
Doesn't this area of regulation now fall under the new CFPB? I know Warren and her staff are willing and capable to improve mortgage disclosures, as I have heard speaking about improving the likes of Good Faith Estimates etc..
Because the FED recieved an enormous part of their budget (12 precent) to supposedly police this sort of fraud and they did NOTHING with said power and money, despite the pleas of local, state and consumer protection org's, this budget was instead transfered to CFPB, scissoring the consumer protection function of FED and many other agencies and putting it into the CFPB.
Congresswoman Kaptur has called for an addition of 1000 FBI agents just to go after mortgage scammers, but she has gotten little support.
The average consumer has more safeguards when buying a used car than when doing the biggest financial transaction of their life, financing a house. Of course they should have option of recision if fraud proven. Its not like the mortgage lenders have no protections, the homeowner has to go to court, present evidence and judge has to find with them.
And no, people indvidually should not have to get a PhD in financial matters to be protected, that is what we have a freaking govt for, just like most of us are not trained in car chase, forensic analysis, or subduing subjects, thats what we have our local police dept for...
Putting the FED in charge of enforcement of financial fraud was like asking Congress to police itself...puh-leeze. Good, clean govt is all about checks and balances...the FED should have no involvement in mortgage regulation, because they have done nothing anyways.
A govt that does nothing for its people will have not friends, will have no support...this is the trick bag they have us in, they take our tax dollars, use the power of state against us or simply do nothing to protect us from thugs, insiders, thieves, corrupt overlords. Then people get the idea we are better off with any govt which is exactly what the thugs and thieves want the most, so there is NO limits on them, no taxes on them.
It's exhausting trying to keep up with the frenzied pace of liberty-crushing bullsh!t vomiting forth from the halls of power and influence in what was once a great Republic.
Tyranny, like the Kraken in Greek mythology, has been unleashed upon the United States. We need to find Medusa's head quick.
Admire your wordsmanship.
End the Fed.
Throw everyone in it into a deep hole -- every one of them.
Cover the hole with dirt and walk away.
Start enforcing the law.
We should welcome the open Fascism now on display. It will force people with conscience to take action, at some point. I think.
unfortunately, history shows people will put up with an amazing amount until it hits the fan
I don't think we should hold our breath. Already been wating a very long time, and it just keeps getting worse...with no perceptible reaction where it counts.
The Fed answers to nobody.
They are not Federal and they don't have Reserves. They are the biggest farce and insult to Americans around and part of the reason a dollar in 1914 when it was formed is worth under 5 cents today.
part of the reason
Part? of the reason? The Fed Reserve is the sole cause of decline, erosion and putrefaction in America.
There is nothing left to work for in America because for every $1 you earn you have to pay out $2 in fuel/energy costs, interest, tax, asset depreciation, insurance, scam artists (the "fuck fee"), legal fes, inflation, repairs/QC, wage/margin compression, opportunity loss and costs associated with finding honest friends.
Please take my citizenship. I surrender it.
it's a perverse, destructive fantasy of money for nothing.
here's an odd take on all this: http://www.ctheory.net/articles.aspx?id=652
The fact that nobody has done so yet continues to encourage this kind of shit from the Bankstas
Someone needs to arrest Bernanke.
I think the entire Fed has become a national security issue. If ever an empire has declined it has always been because their currency has been debauched. If the MIC is willing to allow this then their parasitic existence is in jeopardy also. I am not mentioning what would happen to the people of an empire in hyperinflation b/c frankly no one of policy decision making power cares. But if it hurts the different industries, we'll see what happens.
Third.
Make it easy, just put him in front of a wall and administer frontier justice. It's coming...
It needs to hurry up.
I second the motion..