Posted by John Merchant on January 01, 2005 at 15:13:18:
In Reply to: Create a second to stop foreclosure? posted by John on October 26, 2004 at 17:30:21:
Careful! You're treading on quick-sand here, as it's been held by more than one court that such a loan is usurious.
Usury is illegally high interest rate, and if a loan is held to have been usurious, the lender not only does not get his money back, he may have to pay 3x damages, court costs, all attorney fees, etc.
Not a pretty scenario.
Here,I'd doubt that a loan of more than 12% would be legal to a homeowner in any state or situation, as such a rate on a personal or consumer loan would be per se usurious.
Some financiers have even gone to the length of having the homeowner (HO) deed the house to the Fin'r, and then doing a Lease-Option with that HO, with enough built in profit, should the HO actually exercise his/her option, to make a high yield.
Those fin'rs were thinking that such arrangements would avoid the illegal usurious loan issue.
Wrong!
Some of those Fin'rs have been busted hard by the courts, saying that those sales with L/Os were but thinly disguised and illegally usurious loans...that were then denied and the fin'r ended up getting nothing but lot of expense for his trouble.