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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Legal
Satisfied Customers: 110506
Experience:  JA Mentor -Attorney Labor/employment, corporate, sports law, admiralty/maritime and civil rights law
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We built a home in 2008 with a construction loan from an investment

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We built a home in 2008 with a construction loan from an investment company for 860,000. When the house was complete, the jumbo loans were not on the market, so the investment company offered to leave us in the construction loan at 11% interest. Over the last few years, they have adjusted the interest down, but once a year they add finance fees, etc to refi the loan. Earlier this year they came to us and offered to create a new loan at a grand total of 960,000 for a house that was appraised at 600,000! We of course said no, so they foreclosed on us. A few months later, they came to us and said they would sell it back to us for 820,000 and give us a 3/30 term loan, so that when our foreclosure was off of our credit we could refi! This really made no sense because the house would be worth no where near that amount in 3 years. This was a tough decision since this was our dream home we had built. At this time, we are renting the house from them month to month wondering what might happen next? Is there a law against price gouging on a home loan? Or are they just smart business people?
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes.

This sounds like potentially a predatory loan, which would be against the law as predatory lending is illegal. However, to make any determination on this for certain, you have to take your loan documents to a local consumer protection law attorney for a "forensic loan accounting" to look at the terms and interest and make the decision as to whether or not the loan would indeed be predatory (it certainly from your description sounds like it would be).

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