Migliaccio & Rathod LLP is investigating whether homebuyers who obtained mortgages through homebuilders or affiliated lenders were misled by advertised interest rates that did not adequately explain temporary rate buydowns, future payment increases, or additional financing costs.
Homebuilders and mortgage lenders may advertise promotional mortgage interest rates to attract buyers to newly constructed homes.
Some promotions involve temporary mortgage rate buydowns, in which the borrower’s monthly payment is temporarily reduced before increasing to the payment required under the mortgage’s actual note rate.
For example, a temporary 2-1 buydown generally reduces the effective payment rate by two percentage points during the first year and one percentage point during the second year. Beginning in the third year, the borrower becomes responsible for payments calculated using the full note rate.
These arrangements can be legitimate financing incentives when their terms are accurately disclosed. However, consumers may misunderstand promotional advertising if the temporary nature of the advertised rate or the resulting payment increases are not adequately explained.
Migliaccio & Rathod is investigating whether homebuyers were given misleading representations concerning the duration of promotional rates, the amount of their future mortgage payments, or the conditions required to obtain advertised financing incentives.
Homebuyers May Have Experienced:
- Seeing advertisements for unusually low mortgage interest rates offered by a homebuilder or affiliated lender;
- Believing the advertised rate would remain in effect throughout the mortgage term;
- Discovering that the promotional rate applied only during the first one or two years;
- Experiencing substantial increases in monthly mortgage payments after the promotional period ended;
- Being required to use a particular affiliated lender to obtain the advertised incentive; or
- Discovering additional fees or conditions that reduced the value of the promotion.
Potential Claims May Include:
- Misleading mortgage interest-rate advertising;
- Inadequate disclosure of temporary rate buydowns;
- Unfair or deceptive trade practices;
- Misrepresentation of future mortgage payment obligations;
- Violations of applicable mortgage advertising or disclosure requirements; or
- Other applicable consumer-protection claims.
Signs You May Be Affected:
- You purchased a newly constructed home using promotional mortgage financing;
- A homebuilder or affiliated lender advertised an unusually low interest rate;
- You believed the advertised rate would remain in effect longer than it actually did;
- Your mortgage payment increased substantially after a temporary buydown period;
- You encountered unexpected fees or restrictions associated with the promotion; or
- You have advertisements, rate quotes, loan estimates, or mortgage documents showing the discrepancy.
If you have encountered these issues, we would like to hear from you. Please complete the contact form on this page, send us an email at [email protected], or give us a call.