Legal Question in Banking Law in California

Can a lender charge interest on funds not dispursed?
I had a construction loan, obtained thru a California broker, and the lender was out of state. The lender was in the State of Washington. (Bismark Mortgage)
This lender is a Federally backed lender. At the close of the construction loan, the bank financed $ 360,000 to build my home. As in all construction loans, interested begins to accumulate as money is drawn from the bank and is paid to the builder in small dispursements. Ex: builder builds the frame, draws $ 50,000 and the interest begins to accrue on the $ 50K. (similar to a line of credit)

My problem is this:
This lender, from day one the loan closed, has been charging me interest on the entire balance of the construction loan, whether dispursed or not...and while all the funds remain with the lender. This bank is earning % in their own bank and charging me % on the same funds. Is this legal? How can a bank charge % to a consumer, when the consumer doesn't have the funds in possession?

I've lost over $ 100K in interest charges due to delays in construction and I had to pay the bank at the time of the sale of the home.

Please advise me... I feel robbed by the bank.
They are earning double interest on the same funds. Something isn't right here.

Asked on 5/02/06, 6:11 am

Michael Stone Law Offices of Michael B. Stone Toll Free 1-855-USE-MIKE

0 users found helpful

0 attorneys agreed

Re: Can a lender charge interest on funds not dispursed?

You would need to sue the bank in federal court. You need to consult an atty and bring all contracts and paperwork. Let me know if I can help.

Answered on 5/02/06, 1:44 pm

Keywords

Match Any Match All

Country

State

Area of Law