WASHINGTON, D.C. – Following pressure from U.S. Sen. Sherrod Brown (D-OH), the Federal Reserve Board announced that it would maintain critical protections for homeowners outlined in the Truth in Lending Act (TILA). In January, Brown and five of his Senate Banking Committee colleagues urged the Federal Reserve to reconsider proposed rules that would eliminate the ability of homeowners to stop foreclosures and rescind predatory home loans.
“Today’s announcement is a victory for America’s homeowners rather than the Wall Street mortgage servicers who have preyed on borrowers during this time of record foreclosures,” Brown said. “We need greater oversight and accountability in the mortgage market, not less. We need to focus on restoring borrower confidence lost during the mortgage crisis, preserving home values, and protecting county and city budgets that are already stretched too thin.”
The proposed rule would prevent homeowners from cancelling mortgages that violate the Truth in Lending Act. Brown joined five members of the Senate Committee on Banking, Housing, and Urban Affairs in writing to the Federal Reserve Board of Governors in response to a proposal to strip a key provision of the Truth in Lending Act (TILA) – the extended right of rescission. Under TILA, homeowners have up to three years in which to require their lender to cancel a mortgage that violates TILA’s disclosure requirements and then pay off the remaining balance. The Board’s proposal would require a homeowner to pay off the entire mortgage amount before a creditor is required to cancel its security interest in the home, rendering this important borrower right inaccessible to all but the wealthiest homeowners.