The option adjustable rate mortgage (ARM) starts out with temptingly low minimum payments.  Several years ago, it was sold as a way to refinance and reduce monthly payments on an existing mortgage, or way to buy a home with affordable monthly payments.  Many of the option ARMs taken out in 2004 and 2005 are resetting at much higher payment schedules that many borrowers cannot afford to pay.  Option ARM's low payments are only temporary and may result in a situation in which the borrower cannot afford the increased monthly payments, but also, cannot refinance, due to lost equity.  Under California law, Mortgage brokers owe a fiduciary duty to their clients.  Mortgage loan brokers have an obligation to make a full and accurate disclosure of the terms of a loan to borrowers and to act always in the utmost good faith toward their principals. The law imposes on a mortgage loan broker the same obligation of undivided service and loyalty that it imposes on a trustee in favor of his beneficiary. A mortgage loan broker is charged with the duty of fullest disclosure of all material facts concerning the transaction that might affect the principal's decision.  The use of misleading sales tactics may violate this rule, giving the borrower valuable legal rights against the broker.

If you have questions about Option Arm Loans, please feel free to give us a call at 1-800-306-6010 or contact us online.