Consumer Fraud:
ARM Class Action: Interest Rate Abuse?
Adjustable Rate Mortgage Interest Rates
Consumers who have obtained adjustable rate mortgage (ARMs) may have legal recourse to seek compensation for the interest rate charged under their loans. A recent adjustable rate mortgage lawsuit alleges that certain financial institutions have been abusing the interest rates they charge in association with their adjustable rate mortgages. Although the interest rates for adjustable rate mortgages are periodically adjusted up or down as the economic index changes, banks have allegedly been charging borrowers higher interest rates than what should actually have been applied under the terms of the loan.
If you have an ARM, you may be able to seek compensation for any abuse of the interest rate charged under the loan. To find out if you are eligible, complete our free case review form.
Adjustable Rate Mortgage Laws: Interest Rates
An adjustable rate mortgage is a type of loan with an interest rate that is linked to an economic index. Interest rates, as well as the borrower's payments, are adjusted up and down based on changes in the index. When a borrower enters into an ARM loan, they are informed that their "Initial Interest Rate" - the rate that is charged before any adjustments during subsequent time periods - would be the sum of a specified "Index" and a set "Margin." The index acts as a guide that banks use to measure interest rate changes, while the margin represents the "lender's markup" and typically stays the same during the span of the home loan.
The disclosures and documents provided with the loan imply or state that the rate applicable to the ARM will not exceed the Index plus the Margin. Still, banks have allegedly been charging borrowers an Initial Interest Rate and subsequent interest rates that exceed the sum of the Index and Margin.
ARM Class Action Lawsuit
Potentially, borrowers who were subjected to these allegedly abusive ARM practices may be able to participate in a ARM class action lawsuit to seek financial compensation. If you have an adjustable rate mortgage, complete our free case review form to find out if your interest rate may have exceeded what should have been applied to your mortgage. This online case evaluation is offered at no cost or obligation and can help borrowers determine whether they are eligible for an ARM class action.