Is my mortgage illegal? What can I do?

Question

I was given a 1st and 2nd position mortgage by 2 "private lenders" who were individuals on my owner occupied property.

They did no credit check or income check and just gave me the money to buy an owner occupied property (Lender 1) and to refinance an extra $30k (Lender 2).

From what I have been reading, individuals are not allowed (without a lending license) to finance owner occupied homes without doing income and credit checks.

Does anyone know if my mortgage is not "legal?"

Thank you

Wayne Brooks · Answer

Well.....you found two people willing to give you exactly what you wanted.....now you're trying to find a way to get out of it.  Don't know if these loans fall under fed reg.s or not, just deal with it and solve the problem the best way you can without blaming others.

Alexander Felice · Answer

you did a potentially illegal deal, because you were self admittedly desperate, now you're trying to dump on the guy who charged you an 'illegal' rate, and then you come on the internet and admit full guilt.  Well, I would love to see the transcript of this mess after your partners find this thread and it inevitably goes to trial.

Looks like you only have a few options:

1. Go to a bank and tell them to refi your deal.

2. Go to lender 1 and have him refi out the 2nd

3. Pay the terms you agreed to like a normal person

4. Go directly to jail, do not pass go

Jerry W. · Answer

Account Closed, I don't think I am comfortable offering advice here.  There are a lot things we do not know yet.  Based on what you have said, I think you absolutely need to see a LOCAL attorney.  That attorney should know about the usury laws, etc.  Only after you get a true legal update on what is legal and what is not can you make an intelligent choice of what you need to do.  While I am not a fan of entering into a deal then backing out and suing, some of your claims need investigating.  If an attorney knowingly drew up a false contract, he needs to lose his license.  I guess the only advice I have is to do the right thing.  What the right thing to do truly is may be a much harder decision.

Bob B. · Answer

I assume you have a lawyer, what did he/she say?

John Thedford · Answer

Account Closed

Jerry gave you great advice. See an attorney. I highly doubt anyone can bring any action for being 2 weeks late except for demanding payment. Since it appears you don't have a lot of knowledge as a borrower, find a local attorney that can give you the answers. Private or HML lenders are not all bad, but many don't know the laws that govern them being licensed or not.

Matt K. · Answer

wouldn't something as simple as missed payment penalties be covered in the contract you signed? I'd assume lender 2 and you have a contract that states when he can start to foreclose on you should be easy to pull that doc up an review it?

Moshe H. · Answer

It makes sense to consult an attorney. I don't quite understand the people that are jumping to criticize the borrower here. It sounds like a predatory lender who is engaging in potentially illegal practices taking advantage of a naive borrower. That's why they have regulations in the first place. We don't say to the borrowers, too bad so sad... should have read the fine print!

PS: Consulting an attorney is not the same as getting law enforcement involved. What you say to the attorney is privileged. S/he will not report you to the police but will advise you on the best steps you can take going forward.

Bob B. · Answer

I understand your reason for seeking free advice and there are a number of individuals here that are knowledgable and can give you advice.  However it sounds like you will need a real estate Attorney before it's over.  The police won't be able to help you.

Good luck. Keep us posted.

Is my mortgage illegal? What can I do?

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