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Foreclosure Defense under TILA

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Many homeowners lose their homes to foreclosure because they are not aware of their rights under the law. They presume that lenders have dealt with them in a legitimate matter, and that they are entirely to blame for not making their monthly payments. The fact is some loan contracts are not strictly on the up-and-up, and may not be in compliance with the Truth in Lending Act (TILA). This may be the basis for a viable foreclosure defense.

The main purpose of TILA is to ensure consumer protection by requiring lenders to be transparent about the conditions of the loan. This includes the term of the loan, the payment schedule, and the rate of interest and how it is calculated. This provides consumers all they need to comparison shop and make an informed decision. Any violation under TILA gives a client in default and in danger of foreclosure to get some breathing space and the opportunity to get a better deal.

An example of a loan contract that violates TILA is one with an attractively low teaser rate of interest which will rise sharply at a certain point and a penalty for prepayment. It would have blank spaces for crucial sections in the mortgage note itself, longer-than-necessary amortization (which means more interest payments) and unreasonable balloon payments. Such agreements make it difficult if not impossible for the homeowner to get a reasonable payment arrangement, and often results in default.

Using TILA as foreclosure defense is not a simple matter, however. The regulations of TILA can be obscure for lay persons even with staff commentary, and not all lawyers will be qualified to represent homeowners in imminent danger of losing their homes. For Iowa homeowners, it requires the skills of an experienced Cedar Rapids foreclosure defense lawyer with an intimate knowledge of TILA to pull it off successfully.

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