What to do about possible lender fraud?

UPDATED: Jan 12, 2012

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What to do about possible lender fraud?

My 3 year interest only ARM came to term 3 years ago. Since then, my bank has not adjusted my rate but has kept me at my 6.9%. I have asked and asked why this is and they say that my loan does not allow my interest rate to go below 5.1% and they have a margin (I don’t know what that is) of .75%. That does not add up to 6.9% and they can see that so they give me the run around. Now, 3 years later, they still have me at 6.9% and my payment has gone up. I can’t afford it and have fallen behind. Has a fraud been commited? Is there anything I can do?

Asked on January 12, 2012 under Real Estate Law, Illinois


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Fraud may have been committed--it depends on the specific terms of the ARM. The bank is obligated to those terms, since the loan is basically a contract. From what you write, it would seem that they may have kept you at a too-high rate and/or be calculating the payment incorrectly. It would be worthwhile to review the ARM agreement with an attorney, who can read its terms with you and help you understand whether the bank is complying with them or not. If the bank is not, you may have a cause of action.

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