Mortgage firms are pressing the Federal Reserve to curb homeowners’ right to invalidate loans based on flawed documents — a right consumer groups say is one of the few weapons borrowers have to battle unfair lending.
Consumer groups and industry lawyers say a rule under consideration by the central bank would make it harder for borrowers to exercise their right of “rescission,” which forces a lender to relinquish a lien on a mortgaged property. They said the number of rescissions has grown in recent years as a result of the foreclosure crisis and allegations that mortgage documents were fabricated or processed improperly.
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