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Mortgage Ruling Could Shock U.S. Banking Industry

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posted on Jul, 2 2008 @ 12:14 PM
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Mortgage Ruling Could Shock U.S. Banking Industry


cryptogon.com

A lawsuit filed by a Wisconsin couple against their mortgage lender could have major implications for banks should a U.S. appeals court agree that borrowers can cancel their loans en masse when their lenders violate a federal lending disclosure law.

The case began like hundreds of others filed since the U.S. housing boom spawned a rise in sales of adjustable rate loans. Susan and Bryan Andrews of Cedarburg, Wisconsin, claimed that lender Chevy Chase Bank FSB had hidden the true terms of what they believed was a good deal on a low-interest loan.

(visit the link for the full news article)




posted on Jul, 2 2008 @ 12:14 PM
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WHOA...This "potentially" could be enormous in implications, if upheld. Is this the first glimmer of hope for the "little people" who have all but been ignored in this fiasco, while Mega-lenders have all been being bailed out?

Something to keep a close eye on!


The judge transformed the case from a run-of-the-mill class action to a potential nightmare for the U.S. banking industry by also finding that the borrowers could force the bank to cancel, or rescind, their loans. That decision was stayed pending an appeal to the 7th U.S. Circuit Court of Appeals, which is expected to rule any day.




cryptogon.com
(visit the link for the full news article)



posted on Jul, 2 2008 @ 12:19 PM
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It seems like web sites are taking a play from the MSM. They aren't including enough details to make an informed judgment.



posted on Jul, 2 2008 @ 12:22 PM
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I would imagine that forcing the bank to cancel the loan would entail paying back the loan amount and any interest owed up to the point of cancellation. No court is going to say that the loan is cancelled the lender losed everything.
Borrowers will still need to get new loans to replace the old ones. The best scenario would be one where the banks rewrite the loans to new terms, the worst case scenario would be that the banks cancel, the borrowers go seek out new loans and can't get them for the same reasons they could only get these b.s. deals in the first place - bad credit, no assets, no income etc.



posted on Jul, 2 2008 @ 12:23 PM
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reply to post by DimensionalDetective
 


I don't know that I would agree with canceling the loans.

That said, I DO think that the rates need to be what they were calculated, any more refunded and any loans that failed, do to the unlawful changes be reinstated.

Also any and all expences that may have been incured do to this illegal action(s) be paid for by the banks as well as all legal costs.



posted on Jul, 2 2008 @ 12:28 PM
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Ummmm....Yeah. This does not make sense what so ever. It is mainly up to the people to read any 'hidden' terms. My parents had a lawyer friend who read the contract before they signed anything. The bankers are in this to make money, the sooner people realize this the more serious they will take borrowing.



posted on Jul, 2 2008 @ 12:37 PM
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Even if the new ruling is pushed through it will only impact borrowers who can prove beyond a shadow of a doubt that fraud was in fact commited...I.E. false documentation being submitted, section 32 violations etc.

This will not apply to people who simply feel they "got a bum deal" This is why your final closing packet on a mortgage loan is 200+ pages of compliance agreements ad nauseum, all signed by the borrower before the loan transaction is funded. Anyone who is truly a victim of a crime deserves to be heard, obviously. And many lenders have already been re-negotiating terms with borrowers who are facing foreclosure, even before this law would take effect.

What people do not understand is the last thing a bank or a lender wants is to foreclose on a note, because they end up losing a ton of money on each loan if they do. They only make money by seeing the loan fully amortize, thus collecting on the interest.

What strikes me as border line hilarious is the claim that these people in the news snippet are trying to state that they believed their loan would be fixed at 1.75% for five years. There is no loan product in existence that would hold an introductory rate that low for five years. Sounds suspect IMO.

The only type of loan that could even possibly carry a rate that low would have been some sort of pay option ARM or possibly an interest only product. In either case the terms would be laid out clearly showing the schedule of adjustment, and the borrower would have had ample opportunity to review that documentation and even have it explained over and over again.

It is impossible for a loan officer to cheat a borrower so severely because, once again, you are shown all of this in plain black and white print not only on your TIL, but in your RESPA packet as well as the GFE, and then again on the final paperwork at closing. If someone didn't review their loan dynamics properly then I find it difficult to blame anyone but the borrower. Read the fine print people, you are signing in most cases a 30 year commitment. Perform due dilligence on your own behalf, do not rely on someone else to do it for you.

The only way these people could have been tricked or cheated is if the loan terms were changed AFTER they signed, which is almost next to impossible without commiting wire and lending fraud, which in either case, yes they deserve to be compensated and the bank rep will likely face jail time.

Please understand that I am not directing any hostility toward people who genuinely are victims of mortgage fraud, but for anyone who wants a new deal simply because they don't feel like honoring the agreements that they have signed and agreed upon, I find it difficult to show sympathy.




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