Fed wants to strip a key protection for homeowners
Posted on Wednesday, December 1, 2010
By Tony Pugh | McClatchy Newspapers
WASHINGTON — As Americans continue to lose their homes in record numbers, the Federal Reserve is considering making it much harder for homeowners to stop foreclosures and escape predatory home loans with onerous terms.
The Fed’s proposal to amend a 42-year-old provision of the federal Truth in Lending Act has angered labor, civil rights and consumer advocacy groups along with a slew of foreclosure defense attorneys.
They’re not only asking the Fed to withdraw the proposal, they also want any future changes to the law to be handled by the new Consumer Financial Protection Bureau, which begins its work next year.
In a letter to the Fed’s Board of Governors, dozens of groups that oppose the measure, including the National Consumer Law Center, the NAACP and the Service Employees International Union, say the proposal is bad medicine at the wrong time.
“At the depths of the worst foreclosure crisis since the Great Depression, we are surprised that the Fed has proposed rules that would eviscerate the primary protection homeowners currently have to escape abusive loans and avoid foreclosure: the extended right of rescission.”
Because the public comment period on the Fed’s proposal is still open until Dec. 23, a spokesman declined comment on the matter.
But in a September passage in the Federal Register, the Fed said the proposal was designed to “ensure a clearer and more equitable process for resolving rescission claims raised in court proceedings” and reflects what most courts already require.
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