That would be nice if it worked that way, but the lender might put up something of a fight
With a way better-funded legal team than what most homeowners are able to access. As I’ve thought more about this, I found myself wondering if this was what was called a 3/1, 5/1 or even 10/1 loan. Those first numbers represent the number of years the loan would stay fixed, but after that time it would adjust every year to the given market rate. Some loans were marketed very heavily with that up front fixed rate, but the loan docs would have clearly stated it was an adjustable rate loan. That’s not something the lender could fudge on – both state and federal law regulate what the lenders must disclose, and this fixed-to-adjustable aspect is one of them. The docs would have clearly stated that the loan would start to adjust on X date, and the amount by which the loan rate could go up or down. One or two percentage points was typical but there were loans out there which didn’t have floor/ceiling rates and/or adjustment limits. If the whole neighborhood’s rates shifted after being fixed for a long time, I’ll bet this is why. If the loan docs say the loan could adjust after that X amount of time, there’s very little the homeowner can do at that point – they signed it and it was their responsibility to understand it. The document where that is all laid out is a single page document in either 10pt or 12pt print, so it would be hard to miss. If, on the other hand, the loan docs “hid” that in some kind of fine print, or never disclosed it, then the lender broke the law. Period. At which point the homeowner would have options under the various predatory lending programs which came out a few years ago. There’s just no wiggle room on stuff like this. Where most homeowners fall down on stuff like this is that they don’t hire attorneys to go after the lenders, because they’re trying to make that huge house payment and they don’t have money left over for legal counsel. That’s the gamble the lenders take, and they often win that gamble.