You guessed it. The option arm that was so highly publicized and criticized has become a favorite for lawyers nationwide. Instead of condemning the program, lawyers are now trying to seek compensation for “damages” as a result of these misleading mortgage programs.
As you probably know, the option arm has been highly scrutinized by such media powerhouses as Business Week magazine, and now all that negative press is resulting in threats of a lawsuit.
Just the other day I heard an advertisement on the radio regarding option arm loans. At first I thought it was just another ad from a mortgage lender suggesting a move out of an option arm into a fixed-rate mortgage. Then they dropped the “L” word and my jaw dropped.
Were You Misled? Probably.
It mentioned that if you were misled or not told all the details about these deceptive loan programs to call now. It sounds like some lawyers are trying to get a class-action lawsuit going to tear some of the profits away from lenders and banks that made a veritable killing on these programs over the last few years.
While I’m not 100% surprised that it has come to this, I am curious to see if a lawsuit will actually be successful. After all, homeowners sign the documents that explain the ins and outs of the program, and if you pay a fraction of your mortgage payment each month, you shouldn’t be surprised when that low payment finally comes back to bite you.
The option arm was never intended to be a way to avoid making your mortgage payment each and every month. It was about flexibility. Of course, many loan officers and mortgage brokers touted the program’s low payment without shedding light on its dark underbelly. But whose fault is that?
At the end of the day, you’re still responsible for what you sign up for, especially as an adult who is ostensibly able to own and maintain a home.
Read before you sign is how I see it. That being said, shame on the banks and mortgage lenders who placed huge incentives on the sale of the option arm. This basically ensured that it would be the most popular choice among homeowners. It was clearly morally wrong, but whether a lawsuit will pan out is yet to be determined.