Swanson and others calling to preserve rule for borrowers' rightsby Jessica Mador, Minnesota Public Radio
St. Paul, Minn. — Minnesota Attorney General Lori Swanson has added her name to those calling on the Federal Reserve to preserve a rule giving borrowers the right to undo a home loan if the lender fails to make proper disclosures.
The 1968 Truth in Lending Act gives borrowers the "right of rescission," within three years of a loan closing if the lender failed to disclose terms including the loan amount, interest rate and repayment terms.
The new proposal from the Federal Reserve would require that a borrower first pay off the remaining principal before the lender gives up that security interest.
Attorney General Swanson said this change would be bad news for borrowers.
"So we are asking that the Federal Reserve get rid of and withdraw these proposals," Swanson said. "Now is not the time to be putting the interests of financial institutions ahead of homeowners and we need to be doing more to protect homeowners in this country, not less."
The fed's proposal would also change the rules around reverse mortgages for senior citizens.