Mortgage Forum

Mike

By Moe Bedard Will the Truth in Lending Act (http://predatorylendinglaw.org/2007/...nding-act.aspx) be the law that saves the American consumer from foreclosure and financial death? Will attorneys finally get a clue and learn this area of ”mortgage law (http://www.predatorylendinglaw.org/)” and start the massive wave of class action lawsuits that have yet to make noise in our Federal Court system? The facts are that this law is very uncharted territory and it is a new and exciting frontier for those of the legal cloth that wish to explore this potentially lucrative area (suing lenders). This law is exciting and should be used to its full capabilities, so it can be used to protect borrowers who are in toxic mortgages and or facing foreclosure. I thought I would start a series of articles going into the history of the Truth in Lending Act starting with its origins. The federal Truth In Lending Act was originally enacted by Congress in 1968 as a part of the Consumer Protection Act. The law is designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement and all costs. The law was simplified and reformed as a part the Depository Institutions Deregulations and Monetary Control Act of 1980. The Truth in Lending Act is important for Banks and Lenders involved in consumer credit transactions or consumer leasing. Capital Times: (http://www.madison.com/tct/opinion/277413)Most people remember the late U.S. senator from Wisconsin, William Proxmire, for his monthly “Golden Fleece” awards, which he used to cite government programs for their colossal waste of taxpayer dollars. Proxmire made consumer protection his mission when he was elected to the U.S. Senate, taking the seat held by the censured and expired Joe McCarthy. He believed that the financial industry was frequently misleading borrowers about the true cost of credit on everything from mortgages to auto loans. During the 1960s he and a handful of fellow members of Congress introduced a number of reforms. Getting them passed took a while. The financial industry fought tooth and nail against them. There were some small gains, like giving a borrower a window to get out of a loan on second thought. Finally in 1968, Congress passed Proxmire’s Truth in Lending Act, a major piece of legislation that for the first time required lenders to make the interest rate and total cost of a loan absolutely clear. That act produced what today we know as the APR, the annual percentage rate that takes into account both the interest rate and any fees that the lender may tack on. The Capital Times goes on to explain that this law may have a profound affect on lending institutions and investors, if a particular class action case is allowed to proceed in the Federal Courts of Milwaukee. My opinion is that this is only a logical conclusion and ending of a lending world that was not clear on the mortgages they sold to consumers. The terms were a far cry from ”absolutely clear.” In fact they were ”absolutely unclear, unfair and deceptive.” Not only did the consumer get unfair and deceptive treatment from the lenders, they also got it from the Realtors, the appraisers, title agents, investments brokerages, and I can go on and on. Now lets use this law and other consumer laws to protect the American people. The time is now and the fight is starting. Get on the legal gloves and do something! Capital Times:Interestingly, Proxmire’s act may figure prominently in the current subprime mortgage crisis, which has many home buyers feeling betrayed by their financial institutions. Milwaukee Journal Sentinel reporter Carey Spivak reported recently on a Cedarburg couple who filed a class-action suit against Washington, D.C.-based Chevy Chase Bank. The couple had refinanced their home with the bank for what they thought was a 1.95 percent interest rate for five years. Turned out, though, that the couple was stunned to learn that the 1.95 percent was a “teaser” rate for just one month. The mortgage industry is worried that if the lawsuit is allowed to proceed as a class action, rather than people being required to sue individually, the door could be opened to several other large suits, adding to the financial misery that the industry is already suffering. No matter which way the courts rule — whether the suit can proceed as a class action or the couple must sue as individuals — the basis for the suit is that 1968 Truth in Lending Act, which requires lenders to leave no ambiguity about the true interest rate. Proxmire’s trailblazing efforts are still serving to protect consumers some 40 years later. From Moe's Blog (http:///2008/03/17/in...olutely-clear/)