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Re: Usery Laws

Posted by Rick Harmon on May 10, 2002 at 10:39 PM

In Reply to: Usery Laws posted by greg on May 10, 2002 at 10:17 AM

Greg, I have occassionally seen private money trust deeds having terms with interest rates which increase upon default. Most of these were 2nd TD's written by hard money brokers/lenders who were trying the take advantage of the situation. While these loans were not usurious per se, the foreclosure trustee industry frowned on them heavily because of the increased chance of litigation from trustors and the perception of the lender being an opportunist. Recent legislation in CA (and perhaps some case law) has put such activities in the category of the predatory lender practices. If you are a lender/beneficiary of such a mortgage in CA, I'd suggest that you avoid trying to enforce this provision on any defaulting borrowers. If you're a trustor or property owner one of these loans, I'd challenge the lender. Which side would you rather be on in today's consumer advocative court? RE: clever loan terms, "When in doubt, leave it out."


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