Long Island Homeowners Fight Back: How TILA Violations Are Becoming a Powerful Defense Against Foreclosure in 2024
When facing foreclosure on Long Island, many homeowners feel powerless against lenders who seem to hold all the cards. However, you might be able to challenge a foreclosure if your mortgage lender used predatory lending practices when you took out the loan. One of the most effective weapons in this fight is identifying violations of the Truth in Lending Act (TILA), which can provide crucial leverage to defend your home and challenge foreclosure complaints.
Understanding TILA and Its Protective Power
Congress enacted the Truth in Lending Act (TILA) in 1968 to inform consumers about the cost of credit so they can make informed credit decisions and to protect them against unfair credit practices. It was passed to remedy fraudulent practices in the disclosure of the cost of consumer credit, assure the meaningful disclosure of credit terms, ease credit shopping, and balance the lending scales weighted in favor of lenders.
TILA is a federal law designed to protect consumers against deception, fraud, and predatory lending practices by banks and other lenders. The law requires lenders to provide specific disclosures about loan terms, and when they fail to do so properly, borrowers may have powerful defenses against foreclosure.
How TILA Violations Create Foreclosure Defenses
A TILA violation may be used by a borrower as a defense in a foreclosure action. The two main types of TILA violations that can provide relief to borrowers when a creditor doesn’t adhere to the law are violations for damages and violations that allow rescission. Rescission is a remedy that might help if you’re facing foreclosure.
When lenders fail to provide proper disclosures, the right to rescind the loan continues for a three year period which begins on the date on which the loan was made. This rescission right can be particularly powerful because under the provisions of TILA, they were able to rescind the loan which transformed the purchase money loan they received from a loan secured by their home to an unsecured debt.
The Critical Three-Year Window
Long Island homeowners must act quickly when considering TILA violations as a foreclosure defense. TILA can only be raised as a defense to foreclosure within a three year period which begins on the date the mortgage loan which violated TILA was received by the borrower. This three year period is not a statute of limitations, but a statute of repose, acting to bar any claims arising after three years, and is not subject to equitable tolling or the discovery rule.
Predatory Lending and New York’s Strong Protections
In New York State, predatory lending defenses are particularly robust. In New York, predatory lending is a complete defense to foreclosure litigation. Courts have dismissed foreclosure actions upon finding that the lender engaged in predatory lending tactics.
New York Banking Law Article 1, Section 6-l prohibits lenders from engaging in certain behaviors involving “high-cost home loans.” For example, “ballooning” mortgages are illegal unless the term of the loan is over 15 years, and the scheduled payments of such loan may not exceed twice the average payments over the course of the loan’s lifetime. Further, high-cost home loans may not contain provisions that increase interest rates after default or acceleration of the mortgage note, and “loan flipping” is strictly prohibited.
Real-World Success Stories
One of our clients was able to avoid foreclosure because TILA requires that lenders must have borrowers sign an acknowledgement that they have received written notice of their right to rescind a mortgage loan they received at the time it is received. Because of the apparent negligence of the mortgage lender, our client had never been asked to sign the required acknowledgement. Thereafter, our client experienced serious debt problems and was threatened with foreclosure. Under the provisions of TILA, they were able to rescind the loan which transformed the purchase money loan they received from a loan secured by their home to an unsecured debt.
The TRID Complications of 2024
Recent regulatory changes have created additional opportunities for TILA violations. In October 2015, the Consumer Financial Protection Bureau’s integrated the disclosures required by TILA and RESPA, known as “TRID” for short. Unfortunately, Congress mandated the combination of the TILA and RESPA disclosures, but it did not amend TILA or RESPA to clarify the liability for violations of the new disclosures. Because TILA generally permits private suits for violations of its mortgage disclosure requirements but RESPA does not, this silence raises concerns regarding the manner in which borrowers can sue lenders for TRID violations.
Why Professional Legal Help Is Essential
Successfully using TILA violations to challenge foreclosure complaints requires sophisticated legal knowledge and experience. This disclosure, along with the final settlement statement and the Right to Cancel Notice, are the key elements in a foreclosure defense, when arguing a TILA violation. If we discover violations through a loan audit, you may have legal grounds to sue your lender and possibly rescind the loan – which means your loan is voided in its entirety.
The Law Office of Ronald D. Weiss, P.C., located in Melville, New York, has been supplying expert bankruptcy, foreclosure defense, and debt negotiation services since 1993. We offer practical, compassionate solutions customized to each client’s financial situation. We handle the complicated foreclosure cases that most law firms struggle with – cases with complex situations, tough legal problems, and long histories of court motions. We take pride in turning around cases that have faced delays, setbacks, and frustrations by bringing a fresh, creative approach that finds new legal arguments to help our clients.
For Long Island homeowners facing foreclosure, time is of the essence. If you suspect your lender may have violated TILA or engaged in predatory lending practices, seeking experienced legal counsel can help you Stop Foreclosure and protect your most valuable asset – your home. If you are unable to pay your monthly mortgage, it is important to speak with a skilled greater Long Island and New York area foreclosure attorney who can review your individual situation based federal and New York laws and determine if any TIL or RESPA violations occurred, perhaps providing you with a foreclosure defense.
Don’t let foreclosure proceedings move forward without exploring every possible defense. TILA violations and predatory lending claims have helped countless Long Island homeowners successfully challenge foreclosure complaints and save their homes. With the right legal strategy and experienced representation, you too can fight back against unfair lending practices and protect your family’s future.