According to Barry Ritholtz of Big Picture, an article written for the AP wire service (for which he was interviewed) hasn’t gotten enough notice- yet. Maybe it’s too dangerous, and it’s been suppressed!
No, seriously, this item apparently contains a pretty cool angle that bisects the industry’s slant, pretty much reminding us we have a law about how any mortgage, even a sub-prime mortgage, can be rescinded- transforming the lender into just another creditor (not the primary).
The pump-and-dump near-boiler room nature of most sub-prime mortgage brokers probably means loans were often rushed into being, without proper documentation. This just might be the saving grace for some grieving “homeowners” who are upside down. As we now know, many do regret ever taking on that nasty, vicious, landed-serf retro death-stalking sub-prime mortgage.
Hell, there might even be an escape from a conventional mortgage, considering the Truth-in-Lending Act (TILA) is really quite clear about disclosure, for all types of loans.
As home values plummet, it is natural to expect that some people might want to consider consulting with a legal professional with expertise (since they didn’t read their contract in the first place), ascertaining if this enhances their position- and packing a parachute for later use, should their loan obligation becomes too onerous.
Maybe paralegals can take on some extra work; who knows, this might even become a growth industry over the next few years.
This article hasn’t appeared yet in any of the news sources I frequent (e.g. Yahoo), but since it is AP it’s bound to appear sooner or later. I’ll keep an eye and an ear open and link to it when it does.
This was a public service announcement.