Shaffer & Gaier’s clients owned a vacation home on the Jersey Shore since 1989, and in 2007 a mortgage broker qualified them to refinance into an “interest-only, negative amortization loan”. While our clients’ loan allowed them to make “interest-only” payments that were lower than a traditional monthly mortgage payment, the loan was misleading because the balance of the loan increased each month, even though a payment was being made. This is often because the Truth in Lending document does not appear consistent with the true terms of the loan.
These loans are so deceptive for the homeowner that they have been outlawed in many states while many of the big banks have even stopped offering the loans to prospective homeowners. Shaffer & Gaier filed a lawsuit in Cape May County, NJ against the lender and secured a confidential settlement in July, 2012 for money damages which allowed our clients to recoup the amount of interest they had paid since the loan’s inception.