"Some consumers burdened by escalating sub prime mortgage payments are finding a way out. A growing number are suing lenders over inaccurate disclosure papers, and if they win they get to rescind the loans."
What happens if a lender fails to comply with the TILA [Truth-in-Lending Act] rules? The borrowers are allowed to RESCIND THE LOANS AND VOID THE MORTGAGES ON THEIR HOMES. The mortgage lender is then just another unsecured creditor, who must get in line behind everyone else who may have filed a lien on the property. Who ever files first (Credit card, auto finance, doctors, etc.) has first priority.
Given the number of sub-prime borrowers who claim they were never told the full potentially negative ramifications of the garbage loans they signed on for, this tactic could pay off for some consumers, and prove quite troublesome for mortgage lenders looking to recoup their losses.
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