CLAYTON, Mo. (CN) - Chevy Chase Bank increased homebuyers' minimum payments three years before the permissible payment change date they were given at closing, a class-action lawsuit claims in St. Louis County Court.
Lead plaintiffs Kenneth Theiling and Karyn Baumgartner-Theiling say they closed their adjustable-rate mortgage through Universal Savings Bank in November 2005, but it was sold to Chevy Chase Bank a month later.
The payment change date at closing was Jan. 1, 2011, but the Theilings received a letter from Chevy Chase on Sept. 14, 2007 stating that their minimum monthly payment of $2,500 could increase up to $6,000 due to negative amortization.
They got another letter on Nov. 29, 2007 stating that their new minimum payment would be $5,800 as of Jan. 1, 2008.
The plaintiffs say they called Chevy Chase to try to fix the error, but it failed to adequately explain the change, then tried to get them to refinance with options that were worse than their current situation.
The class consists of all borrowers nationwide whose minimum monthly payments increased before the expiration of the fixed pay term on any Chevy Chase Bank-held loan. They are represented by Fernando Bermudez.
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