The Fourth Appellate District reversed a judgment. The court held that borrowers who took option adjustable rate mortgage loans adequately alleged that the lender fraudulently failed to disclose that they would suffer negative amortization if they made only the minimum monthly payments.
Clarence and Shirley Boschma refinanced their existing home loan with an option adjustable rate mortgage loan (Option ARM) from Home Loan Center, Inc. (HLC). Sharon Robison also agreed to an Option ARM with HLC. Both Option ARMs carried a discounted initial interest rate, that is, a “teaser” rate, for a limited number of years that allowed the Boschmas and Robison to pay the minimum amount required to avoid default, which amount was insufficient to pay off the interest accruing on the loan principal.
