The Truth in Lending Act (TILA) gives home loan borrowers a three-day right to rescind, or cancel, a loan transaction. For these first three days, this right is unconditional, without any caveats. After the three days run out, there is a catch; the borrower has the right to rescind only if the lender has failed to satisfy TILA’s disclosure requirements. Even if the required disclosures are never made, the right of rescission will expire after three years; thus, straying from the pack.
If you are not familiar with it, during each episode a panel of celebrities would try to correctly identify a contestant with a special talent. The contestant was mixed in with two impostors who pretended to be the contestant.
Now the contestant was sworn to tell the truth, but the two imposters were allowed to lie, in order to confuse the celebrity judges. At the end, after the celebrities all voted , the host would ask, “Will the real [person’s name] please stand up?”
It seems everytime I walk into court, I end up playing “To Tell The Truth”, with the banks playing the role of the contestant. Except in this version (perhaps I should call it To Tell The Truth, Foreclosure Edition) when it comes time for the real lender to ‘please stand up’, no one does!
It is as if all the ‘contestants’ are imposters. An example of this twisted game show is now playing itself out in a Palm Beach County courtroom.
In 2009, HSBC Bank brought a foreclosure action against Abby Lopez. But Bank of America has also claimed to be the lender in this case. Bank of America was the company that included email exchanges between bank representatives about who was the lender of the loan and how to proceed with the foreclosure case.
And yet, Bank of America is not named as a plaintiff in Lopez’s case, only HSBC is.
When Bank of America realized that it should be the plaintiff, it tried to request the foreclosure be changed to show the correct plaintiff. Yet they ultimately decided that the best route would be for HSBC to proceed with the foreclosure and just quit-claim the property to them after the foreclosure was complete.
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For 5 years now we’ve been a huge champion of the short sale. We’ve been banging and banging away at the banks because they didn’t share our opinion.
There has long been an institutional reluctance among our nation’s lenders to embrace the short sale, but it appears they are finally coming around.
According to Corelogic’s most recent numbers, short sales accounted for 9 percent of all residential transactions last November.
In January of 2008, they represented only 2 percent. That’s a 350% increase in the amount of homes sold at short sale.
It may have taken them a while, but the banks are finally letting go of the arcane notion that foreclosing on a delinquent borrower is always the best option for them.
The short sale has and will always be a much better alternative for the banks. In many cases, when modification isn’t an option, a short sale is better for the existing homeowners as well.
It’s good for the banks because it’s the fastest way to bring down their massive backlog of foreclosures.
Now that more and more foreclosures are lingering in the courts, banks now realize its the simplest way to get these homes back on the market, sometimes in just a few months.
They may not get back the full value of the home but their losses are about 15 percent less than if the home was foreclosed on, according to Bloomberg News.
It’s good for the borrower because they can walk away, legally, with little or no debt at all. Some banks are even offering cash incentives, as much as $35,000 in some cases, to entice homeowners to sell back their homes.