LOWELL | A Lowell couple is suing their subprime mortgage lender in Hammond federal court in an attempt to rescind their $126,000 home-equity loan, alleging the company did not disclose the terms of the deal.

Kerry and Susan Burke argue the New Century Mortgage Co., which went bankrupt earlier this year amidst the subprime industry meltdown, should have disclosed their mortgage payments were due each month.

The case was filed by Chicago class-action lawyer Daniel Edelman, who said the Burkes and other people in the same situations could have their home-equity mortgages rescinded.

"If you can rescind it, you can have all the payments applied to the principal," Edelman said. "So it could solve your predatory lending problem."

The Burkes' case is based on a legal technicality. Although their mortgage paperwork states at least 11 times that the payments are monthly, a separate form called the Federal Truth-In-Lending Disclosure Statement does not explicitly make that statement.

Rather, the Truth-In-Lending Act form only indicates 360 payments must be made during a 30-year period. Edelman said the case is almost identical to a case he won last week before the Seventh Circuit Court of Appeals in which two Illinois residents sued another mortgage company.

The ability to rescind a mortgage for violating the Truth-in-Lending Act in this way only applies to home-equity loans, not mortgages used to buy new or existing homes.