The Consumer Financial Protection Bureau, in a March 26 court filing, argued the case for allowing distressed homeowners to more easily cancel some housing debts. The agency contended that borrowers seeking to rescind mortgages based on faulty disclosures should not have to file a lawsuit within the first three years of the loan, but simply provide the creditors with written notice. The action by the CFPB could mean even greater compliance costs for lenders that are already striving to improve their lending and servicing practices. However, consumer advocates say they also expect to see more loan modifications as lenders and homeowners try to hammer out a compromise before initiating litigation. "The consumer's right to cancel gives lenders a powerful incentive to provide the disclosures that consumers need to make good financial choices," said CFPB director Richard Cordray.
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