Smart Borrower Blog

Here come the predatory lenders…I mean lawyers.

Nov 28th, 2007 @ 9:53 PM by MortgageMentor

I knew it was going to happen sooner or later.   Today on the radio I heard an advertisement for a law firm informing listeners that federal law requires mortgage lenders to give borrowers a three business day right of rescission on refinances.   In other words, all refinances have a three day cooling off period in which the borrower can change their minds. I bet you haven't seen this fact mentioned in all of the media horror stories about so-called predatory lending.

The advertisement went on to say that if you felt you were duped by your mortgage lender to give the law office of Scum Sucking Lawyers a call.   The ad basically inferred that if lenders didn't inform borrowers of this three day rescission period and that the listeners may be entitled to all of the interest paid on their loan plus fees.  

Naturally, this advertisement is fishing for clients who may be in financial trouble and this may be an out for them to justify not paying their mortgage.  I can see it now – "Your honor, I know I have never paid anything on time including my mortgage, nor did I purposely blow all the money on my last cash out refinance on a new car.   It isn't my fault that I am behind on my mortgage payment and on the brink of foreclosure.   I was taken advantage of by the lender."

Of course, this three day cooling off period is nothing earth shattering and is standard on every refinance.   There is no way a borrower would not know they have three business days to back out of a deal unless they are deaf, dumb, and blind.    At the refinance closing I attended this morning, there were four disclosures requiring borrower signatures that clearly says there is a three day rescission period.    In fact, the only refinances that don't have a three day rescission period are for investment properties.  

I simply want to know how the attorneys plan on proving these borrowers were taken advantage of when there is signed documentation in EVERY loan package saying they had three days to back out of the refinance.   Refinances don't even fund (go into effect) until this three day period is up.   Not to mention all kinds of disclosures pointing out adjustable rates and other terms of the mortgage.  

Since asbestos litigation is drying up, I guess mortgage lenders are next in line for the trial lawyers given the media attention.   Let the fun begin…