Predatory Lending Claims Available to Borrowers in Foreclosure

In handling mortgage foreclosure cases around the country, attorneys and paralegals should be aware that in addition to your state mortgage foreclosure laws, which is the main statute that is relied on by attorneys defending a foreclosure suit, a variety of defenses exist at both at federal and state levels. These statutes, however, focus more on the lending practice of the lender rather than on the ability of the client to pay. Volunteers should therefore pay attention to the nuances between laws listed below and figure out whether the mortgage company has engaged in illegal lending practices.

The available federal and state statutes are:

Truth in Lending Act (TILA). This Act attempts to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms and avoid uninformed use of credit. It also aims to protect the consumer against inaccurate and unfair credit billing and credit card practice.

Home Ownership and Equity Protection Act (HOEPA). This Act is an amendment to TILA. It is enacted to deal with substantive abuses of creditors offering alternative, typically high interest rate, home loans to residents in certain geographic areas. It purports to afford consumers most vulnerable to abuse a safety net without impeding the flow of credit altogether.

Real Estate Settlement Procedures Act (RESPA). This Act aims to effect more effective disclosure to home buyers and sellers of settlement costs. It also seeks to eliminate kickbacks or referral fees and reduce the required amount to be put in escrow by homeowners to insure the payment of real estate taxes and insurance.

Equal Credit Opportunity Act (ECOA). This Act is created to prohibit discriminatory treatment by lenders. Its credit notification provision protects consumers from bait-and-switch tactics.