California usury laws and lending directly to homeowners

[Rav Ram]

Hello,

I ran into a homeowner who borrowed $160,000 by a private lender, with supposedly a 9% rate and somehow after 3 months if they didn't pay back the loan, there would be a $40,000 baloon!!!  The lender "bailed them out of a foreclosure" from another traditional lender and now they have a different problem to deal with this guy.

I have a contract to buy the property for $175K and this lender is manipulating the situation and i believe is highly unethical given that title says they only wired $160K into escrow.  The homeowner does not have the original note, and the only thing that the lender is providing is a payoff statement showing the original note being $160,000 with a sum of $202,000 owed!!!  That's $40,000 in interest in 3-6 months??? That's definitely usury...

Are there usury or other lending laws that this person is violating that i can threaten them with or call the authorities on? If he has done this with this home-owner, i'm sure there are others. This is a way of forcing the home-owners to come and give up their property.

Any links or people i can call will help regarding california law.

Thanks!

[Account Closed]

Hey, this is California, there are laws against everything:

Usury, as you mentioned.

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The Covered Loan Law.

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Under the Foreclosure Consultants Law the lender can actually do time for this act.

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Possibly Regulations of the Bureau of Real Estate.

Good luck.