Predatory Lending withheld information

[hardcor80]

What is the name of your state? Minnesota

I am definitely the victim of some predatory lending from a broker. We had searched for a loan that was good for us for quite some time. We were looking for something that was around 1500 or less a month on payments. The lowest we found was around 1600/1650. Then this guy that was referred to us (broker), found us a 5% interest rate libor arm interest only fixed for 5 years. We asked what the catch was, how he got it so low (next closest interest rate was 5.75% or something), and other things. He said no catch, it's the payment we are looking for, it's fixed for 5 years so we don't have anything to worry about. It's just an interest only so we won't be making principal payments. That was fine with us, there was no prepayment penalties, I planned on making extra payments and just needed insurance for lower payments just in case a life changing event happened. I/we had everything planned out.

We signed the application, my friend is a mortgage officer, he looked it over, everything was good and said it was a 5% libor arm. We are 2 1/2 weeks from closing, and received the real paperwork from the lender Bear stearns. We find out that it's an option arm (negative armortization). The APR is 8%, with the option to only pay 5%. We cannot afford this extra % points. Our loan amount will rise significantly, and will cost us 10's of thousands unless we refinance in the first few months, which will cost around an extra 5K just for a new loan. We can try to find a new loan in the short amount of time we have, but it won't be a good deal, and it's not the monthly payments we were comfortable with. We have signed purchase agreements, and arbitration papers for the close in 2 1/2 weeks. We are out $1000 for the earnest money, and appraisal fees, which we never would have went through any of this had we known the truth. I repeatedly asked if there was more paperwork associated with the loan, and the application itself never mentioned anything of the 8% from my memory. We can't do this loan, we have cancelled our utilities, reserved moving trucks, basically flipped our lives upside down and now may have nowhere to live. We don't know if we are bound to the purchase of the home because we are approved at this higher rate. I am wondering what legal consequences there are for us if we don't buy the home and we are approved, and what legal/illegal steps this broker actually took. Thanks for your help.