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Funds possibly misused

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krb_49

Junior Member
What is the name of your state (only U.S. law)? CA
We built our house through a low in come housing program. The total estimated cost was going to be $201,000 the bank would only lend us $186,000. The company we were working with wrote up an agreement for a secondary loan through them for $15,000 that had a list of rules that bind us to the home (we cannot move or rent the property out without paying it off) and it accrues interest of 2% for 10 years. After building was complete we were told there was around $20,000 left over and they were going to apply it towards the loan. Instead of paying off the unnecessary secondary and eliminating the binding contract and saving us the interest on that loan the company decided to pay it towards the primary loan. So now we are stuck, unable to refinance our house because of the secondary and I feel they made these decisions with their best interest at heart. They are making interest off of us and we weren't given the decision what to do with that extra money that we borrowed and we are having to pay off. Is there anything I can do about this? Is this Considered a misappropriation of funds? I just want to be able to refinance my house or be able to move without paying these huge amounts of money plus interest..
 


Zigner

Senior Member, Non-Attorney
What is the name of your state (only U.S. law)? CA
We built our house through a low in come housing program. The total estimated cost was going to be $201,000 the bank would only lend us $186,000. The company we were working with wrote up an agreement for a secondary loan through them for $15,000 that had a list of rules that bind us to the home (we cannot move or rent the property out without paying it off) and it accrues interest of 2% for 10 years. After building was complete we were told there was around $20,000 left over and they were going to apply it towards the loan. Instead of paying off the unnecessary secondary and eliminating the binding contract and saving us the interest on that loan the company decided to pay it towards the primary loan. So now we are stuck, unable to refinance our house because of the secondary and I feel they made these decisions with their best interest at heart. They are making interest off of us and we weren't given the decision what to do with that extra money that we borrowed and we are having to pay off. Is there anything I can do about this? Is this Considered a misappropriation of funds? I just want to be able to refinance my house or be able to move without paying these huge amounts of money plus interest..
Whether or not this was allowable we be determined based on your contract with them. I suspect it is perfectly allowable, but I suggest you thoroughly review your contract, perhaps with the assistance of an attorney.
 

FlyingRon

Senior Member
Not only may it have been allowable, it may have been required. Mortgage lenders are fussy about such things and the rules for subsidized programs is even trickier.
 

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