WaMu Option ARM Mortgages
- The loan documents listed a monthly payment amount that was based on a low “teaser” interest rate when, in reality, this “teaser” rate lasted only one month and, after the first 30 days, the interest rate charged was much higher; and
- The companies misrepresented that negative amortization (i.e., an increase in the principal balance of a loan caused when the borrower’s payments do not cover the interest due) was a “mere possibility” when, in reality, negative amortization was “absolutely guaranteed to occur” when class members followed the contractual payment schedule in the loan documents.
According to the settlement terms, the amount paid to class members varies based on several factors, including the original loan balance and the length of time that the company owned the loan. Each class member is estimated to receive between $239 and $716. (Peel et al v. BrooksAmerica Mortgage Corp. et al, Case No. 11-cv-79, C. D. CA.)
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