The 9th Circuit Court has ruled that Quicken Loans violated state law in California by improperly overcharging on mortgage interest. The company according to the ruling may be required to repay millions of dollars to customers for mortgage interest that it charged illegally.
Quicken executives say they will look to appeal the case to the Supreme Court or ask California lawmakers to change the laws retroactively. That has to make you feel good that the company breaks the law and then wants to change the laws so they do not have to pay a penalty.
California law used to bar lenders from charging interest more than one day before mortgages were recorded in county offices, a process that could take weeks.
The law was changed in 2003 to let interest accrue one day before a lender disburses loan proceeds.
California, however, argued that Quicken had received interest payments that violated the earlier law. It sought refunds as far back as Oct. 14, 1999.
The appeals court panel rejected Quicken’s argument that the state statutes were pre-empted by federal law, and amounted to an unlawful taking that violated the U.S. Constitution.
Quicken said it made $500 million to $745 million of mortgage loans in California in 2001 and 2002, court papers show.
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Interest Only Loans allow you the flexibility of investing your money where you wish, not just in your house. During the first five years of your loan you can either pay interest only, or include whatever amount of principal you wish, even a large principal prepayment if desired. After five years your loan will require monthly payments of both principal and interest.
If you have enough equity in your home, you can refinance and borrow more than the current loan balance. With the extra money, you can pay off high interest debts such as credit card balances or installment loans. This refinance loan may be tax deductible under certain conditions.