Quote:
Originally Posted by mikester
From the article:
"n their 2005 lawsuit, the couple said the loan's interest rate had more than doubled by their second monthly payment from the 1.95 percent rate they thought was locked in for five years. The interest rate rose well above the 5.75 percent fixed-rate loan they had refinanced to pay their children's college tuition. The Andrews filed the case seeking class action status; and in early 2007, U.S. District Judge Lynn Adelman ruled that the bank had violated the Truth in Lending Act, or TILA, and that thousands of other Chevy Chase borrowers could join them as plaintiffs."
Apparently it was supposed to have a fixed rate for a period of 5 years (Common I believe - my dad had one but got out of it as planned) but the rate still went up before the end of that 5 years. Since the judge has ruled on it - I think we can consider that it happened (proven guilty).
Also, I'm not saying they weren't dumb I'm just saying it is possible to be both dumb and right.
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Yes, I read that part. But the reporter totally ignores what the TIL actually said. My guess, if it was a 1.95% start rate, is that the loan was an MTA (monthly treasury average). While they may have been allowed to pay the lowest possible rate for the first five years before having to start paying all the negative equity they would have amassed, the rate, as the name implies, changes monthly, sort of like a COFI or COSI loan. I don't buy at all that a bank just arbitrarily decided to change the loan terms.