(Via the Big Picture)It appears that failure to disclose loan terms according to the Truth-in-Lending laws can change the loan status.

It turns out that there is a provision in the Truth-in-Lending Act that allows debtors to rescind their loan and void their mortgages if the terms of the loan are not clearly spelled out.
You still owe the money, but they are now just another creditor, at the back of the line, and protections from homestead provisions and bankruptcy would still apply.

One wonders how *chough* Alan Greenspan ignoring the Fed’s role in mortgage lending *cough* the lenders could have screwed up so badly on something that was both cheap and easy.