The Federal Reserve Board is proposing changes to Truth in Lending mortgage regulations that some consumer groups say would hurt homeowners facing wrongful foreclosure . Currently homeowners have the right to undo illegal mortgage loans for up to three years after the loan was signed. But the proposed changes to the regulations would require homeowners to pay the entire amount demanded by the creditor before the creditor is required to cancel the security interest in the home.
“Instead of informing consumers about the terms of their loans as Congress intended, these proposals would allow broad misstatements of loan terms through new tolerances that are without statutory authority,” the Consumers Union, National Consumer Law Center, the Center for Responsible Lending and a dozen other advocacy groups wrote in a letter to the Fed.
The new change would make the law regarding undoing illegal loans completely useless because homeowners facing foreclosure for the most part cannot afford to pay off creditors. When the Federal Reserve was asked a about why they were considering the change to this provision of the law, they said so that they could reduce the cost and time expenditure for creditors going through the foreclosure process.
It’s not surprising that the Federal Reserve is moving to make it easier for mortgage companies to move forward on foreclosures even if it is possible that the foreclosure is illegal due to an illegal loan. The mortgage industry is facing lots of financial troubles and any delay in the foreclosure process can be costly for them. Reducing or preferably eliminating foreclosure delays will benefit banks’ bottom-line.