Legal Question in Real Estate Law in California

Negative Amortization Loans

My elderly parents were sold a neg. am. loan without fully understanding the implications. Do they have any recourse with the broker or mortgage holder?


Asked on 3/16/07, 10:24 am

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Negative Amortization Loans

Brokers and lenders do have a professional responsibility to disclose all the terms of a loan, and to make some effort to explain the consequences of those terms. On the other hand, in many cases a negative amortization loan is the appropriate loan for an elderly couple, while a 30-year fully-amortized loan would be inappropriate. Consider, for example, that elderly persons with low fixed incomes are frequently well advised to use the ultimate in negative amortization loans - the reverse mortgage.

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Answered on 3/16/07, 2:34 pm


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