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Getting Out of a Painful Mortgage

by Gabriel  Traverso
Mortgage Directory Columnist

The news is full of stories about homeowners who can no longer make their mortgage payments as adjustable rate mortgages (ARMs) and other alternative home loan interest rates drive the payments higher. The foreclosure rate is up in many areas of the country and consumers are looking for relief.

A Legal Escape Clause for Mortgage Refinance Customers

If you refinanced your home loan in the past few years and chose an ARM or similar loan, you might be in the same boat: rising payments you can't afford to make. If you're in this position, you might be interested to hear about how Pamela Simmons, a lawyer in the small northern California town of Soquel, has been helping many of her clients. "I used to do one of these cases every three months," said Simmons to the San Francisco Chronicle. "Now, it's all I do." She is referring to the clause she found in many of her clients' home loan documents that have allowed them to cancel their mortgage.

Truth in Lending

The federal Truth in Lending Act was enacted in 1968 and many are unaware of how it can be used to protect consumers who have refinanced their mortgages. The statute indicates that a mortgage lender must provide a form that tells borrowers they have three days in which to review the loan and cancel if they wish. It's called a right-to-cancel form and if it isn't properly filled out, if the beginning and ending dates aren't clearly indicated, then a borrower may actually be able to cancel the loan for a period of up to three years, depending on the violation. Additionally, closing costs and other fees might be deductible from the balance.

Refinancing Your Mortgage

If this situation applies to you, you need to seek legal counsel to find out whether you can use this tactic or not. If you find, however, that your loan documents are similarly incomplete or missing you would still need to refinance your mortgage and find another home loan.

Sources:

The San Francisco Chronicle

About the Author
Gabriel Traverso is a freelance writer, independent musician, and artist. He resides in Reno, NV.

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