BigClassActions.com
Advertisement

Wachovia Faces Home Owner Mortgage Class Action

- by

Banking giant Wachovia and 2 other financial corporations are facing a class action suit brought by home buyers who allege that they were forced into negative amortization as a result of deceptive business practices around the promotion and selling of the plaintiffs' adjustable rate mortgages, or ARMs.

Michael and Jayme Brunkhorst, lead plaintiffs in the suit, allege that the lenders and brokers who sold them their ARM played up the benefits of an ARM, focusing on the minimun payments, and downplayed or failed to disclose the negative amortization that can result from making minimum payments. Consequently, the plaintiffs chose to make the minimum payments, under the mistaken belief that they would be reducing both the principal and the interest due on the loan.

"Defendants, through the standardized loan contracts they created and supplied to Plaintiffs, stated that negative amortization was only a mere possibility," the suit states. "Defendants also failed to inform the Plaintiffs and the Class Members that when the principal balance increased to a certain level they could no longer select the minimum payment option."

The suit further claims that ARMs are often promoted to home buyers because they are so profitable to the companies that sell them.

"Under generally accepted accounting principles the entire interest payment due could be booked as income even when only the minimum payment was made," the suit states. "This accounting practice enabled lenders to use Option ARM loans as a means to generate phantom profits, thereby boosting their stock price."

As a result of these practices, the Brunkhorts and other class members allege they were not only incurring more debt than originally disclosed, but also put at increased risk of losing their homes through foreclosure.

The Brunkhorsts and the putative class are seeking unspecified declaratory relief, compensatory damages, rescission, restitutionary disgorgement of all profits the banks obtained, plus costs, interest, attorneys' fees and other relief the court deems just. They are also asking the court grant equitable relief to restructure their loans through rate buy downs, principal reduction and conversion into conventional fixed rate loans.

Wachovia Mortgage Home Owner Class Action Legal Help

If you or a loved one has suffered damages in this case, please fill in our form on the right and your complaint will be sent to a lawyer who may evaluate your claim at no cost or obligation.

Add Your Comment on This Issue

Please read our comment guidelines before posting.


Note: Your name will be published with your comment.


Your email will only be used if a response is needed.

Request Legal Help