Possibly Usury and Malpractice

[Nyc2DR]

What is the name of your state (only U.S. law)? New York

I provided a hard money loan in New York. My attorney handled the entire transaction including preparing the mortgage, note, and negotiating the interest with the borrower. The negotiated interest was 18% per annum. The borrower is now claiming usury and is refusing to pay. Is this in fact usury? Is my attorney liable? If so what are my options at this point? Thanks.

 

[Ohiogal]

What is the name of your state (only U.S. law)? New York

I provided a hard money loan in New York. My attorney handled the entire transaction including preparing the mortgage, note, and negotiating the interest with the borrower. The negotiated interest was 18% per annum. The borrower is now claiming usury and is refusing to pay. Is this in fact usury? Is my attorney liable? If so what are my options at this point? Thanks.

Why would your attorney be liable? Why would that be usury? 18% is less than some credit cards.

 

[Nyc2DR]

According to New York Usury Laws | Usury

usury is 16% in NY.

 

[latigo]

Ohiogal:

Before responding you might have first considered reading the complicated usury laws as set forth in NY Code - General Obligations (GOB) Title 5 Rate of Interest – Usury Forbidden Sections 5-501 et seq. and the related penalties provided under New York’s penal code

And also New York Bank Law Section 14(a):

“1. The maximum rate of interest provided for in section 5-501 of the general obligations law shall be sixteen per centum per annum.

7. Nothing contained in this section nor in any other provision of this act whereunder this section is added to the banking law shall be deemed to prohibit the charging of interest at the rates provided or permitted by United States Public Laws 96-161, 96-221 and 96-399, where applicable. “

 

[You Are Guilty]

The "good" news is criminal usury doesn't kick in until 25%. So at least you got that going for you.

 

[Nyc2DR]

Thanks...
Im not sure what the difference here is and what the penalties are between criminal usury and the latter.

 

[FlyingRon]

Thanks...
Im not sure what the difference here is and what the penalties are between criminal usury and the latter.

Criminal usury means you get charged with a crime and can go to jail for your loan sharking. Civil usury just means that your excessive interest rates can't be collected upon. Your lawyer indeed screwed up royally if he drafted an illegal contract for you.

 

[Nyc2DR]

Thanks for the clarification Ron. Am i correct to assume that I cannot collect on the interest, however, the borrower is still liable to pay the original mortgage amount.