Just 572 loans are eligible under this class definition. Defendants' Option ARM loan includes a stiff and onerous prepayment penalty making it extremely difficult to extricate from the loans."Īfter the class settled with 1st Lending in May 2013, its makeup was redefined to include only borrowers who took out option ARM loans that EMC bought. Further still, once lured into these loans, consumers cannot easily extricate themselves from these loans. "Further, defendants disguised from plaintiffs the fact that defendants' Option ARM loan was designed to, and did, cause negative amortization to occur. In reality, however, the "plaintiffs were charged a different, much greater interest rate than promised," the said. Like "thousands of other" home owners, the Plascencias allegedly bought optional adjustable-rate mortgages, or ARM, with the promise that the loans had "a low, fixed interest rate."
EMC, as the buyer of the loans that Lending 1st had originated, was later added as a defendant. The class, led by Armando and Melania Plascencia, had filed the 2007 federal complaint against Lending 1st Mortgage. SAN FRANCISCO (CN) - EMC Mortgage can pay $1.7 million to settle claims over mortgage loans with allegedly misleading interest rates, a federal judge ruled.
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