If you're being threatened with foreclosure, and you want to stop the process almost immediately, and very cheaply, then be aware that you can do so by using the Right Of Rescission, which is a part of the Truth in Lending Act.
Not every kind of mortgage is covered by the act, but if yours is, then read on.
The right of rescission covers home-equity loans, home-equity lines of credit, and refinances of existing mortgages in which the refinancing is done with a lender other than the current mortgagee.
Most people understand the right of rescission to mean that they have a three day cooling off period during which time they can change their mind if they don't like something in the contract, and that is the exact meaning of the law.
What only a few people know however is that there is an 'extended right of rescission' which can last up to three years, if the original paperwork was in some way inaccurate or misleading.
It's estimated that about 95% of loan contracts contain information that can be construed as misleading or inaccurate, but you'll most likely need to have a lawyer, an accountant, or a good real estate agent locate the inaccuracies for you.
As soon as your contract has been checked and some errors found, the next step is to send a Notice of Rescission to the lender.
This action instantly removes all obligations in relation to the loan, and according to federal law the lender has to remove the Trust Deed from the home within 20 days.
Without a trust deed, the lender cannot foreclose the property!
Bingo, and if you think that sounds great, then just get a load of this!
The letter of rescission doesn't just mean that the foreclosure process stops immediately, it also means that the lender is required by federal law to return all monies received in connection with the loan.
"All monies", means exactly that.
All mortgage payments, the original deposit, and closing costs too.
After the borrower receives the money, he or she then has the choice of giving the lender the property, or its reasonable value in cash.
Moreover, the lender is forbidden from adding anything negative to your credit report because the loan and note were rescinded, and this means that you'll most likely be able to get an excellent refinancing deal should you want one.
You can take the cash and use it to buy another property, or finance the house with a new loan,.
If the lender doesn't return the money within twenty days as required by law, and most don't, then they are also required to pay all attorney fees, meaning that the whole process ends up costing you nothing.
Most lenders will resist paying you the money without some kind of fight, but while they're waiting at least several months for the courts, they won't get a dime, and you won't get anything negative on your credit report.
As soon as the notice of rescission is filed, the lender finds himself in an extremely difficult position. He doesn't get mortgage payments, he can't foreclose, can't evict, and if he doesn't return your money, then he'll end up paying all the legal fees too.
In practice, this means that the borrower will be offered all kinds of enticements to try and persuade him to sign a new contract.
A hefty loan modification, a lower interest rate, reduced mortgage payments, a reduction of the principle balance owed, loan reinstatement, the inclusion of loan assumption language, or waiver of 'due on sale' clause.
You'll be truly amazed at what you'll be offered, and instead of being foreclosed, you'll get lots and lots of goodies and choices, just by hiring a lawyer, an accountant, or a good real estate agent for a few hours, and then sending out a notice of remission.
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