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  1. #1
    Join Date
    Jan 2010
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    florida keys
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    6

    Default Tricked By Borrower Into Charging Usurious Interest Rate

    My question involves collection proceedings in the State of: Florida

    Any thoughts on points of law that could be used to defend and get this thing dismissed? I would appreciate your help. My guys are pretty good; but, no one thinks of everything all the time and your input would be valued.

    A "friend" of 20 years comes to me and asks to borrow $50K in order to buy a house he desires in Palatka, Florida. He says if I help him out he is willing to pay me 20% interest. I tell him that's not necessary and he can just pay the rate I would pay. He says he'd be happy to pay 20% in the short term as he needs the money immediately and that he wouldn't be able to get it otherwise from usual sources because his debt/income ratio is maxed out. He was due to receive some money from an inheritence of a deceased aunt and would pay me back plus the interest as soon as possible.

    He comes to my house with a balloon promissory note created by his own hand. Something he copied off the internet with the loan amount and the 20% interest notated. We both sign it.

    I give him the $50K check drawn from my Home Equity LIne of Credit and off he goes. He buys the house and closes in about 30 days. He pays me back the principle of $50K plus $6,927 interest in four installments from Dec.2005 to March 2006. All is well in both our worlds.

    He has now filed a law suit claiming that I bilked him out of the money illegally as the 20% is two points higher than allowed by Florida law and in doing so I now owe him back an amount equal to TWICE the interest he paid.

    He approached me for the money, volunteered to pay the 20% figure on his own accord, wrote the promissory note by his own hand, delivered the note to me personally at my home, gained a benefit by using the loaned funds to purchase a home and now FOUR YEARS later wants to sue me for this. I was the Patsy to his scheme. SCUMBAG!!

    My attorney is going to move to dismiss. The guy and / or his attorney is using this new motion to harass and / or cause unnecessary burden because they are about to lose on the quit-claim lawsuit. If he had never approached me I would have never given him money, if he hadn't offered 20% I would never have asked for that amount, if had never written and presented a note for 20% I would never have signed it - in other words he entrapped me in to this scenario and is now using it against me to his gain. I am not a banker, accountant, lawyer etc. and had no idea 20% was an illegal rate to ACCEPT. Hell, credit card companies charge more than this.

    THE PROMISSORY NOTE:

    Paragraph Two: Plaintiff's TYPO!! The payments were to "begin 12.30.05 and continue until 12.30.2005 (the DUE DATE) : also- looks like his calculation for unpaid P&I due in full is wrong at $55K (should have been $60K?), but hard to read on copy. Could this typo be used in way of a defense? By his typo he defaulted on his own loan note.


    Plaintiff made one payment on 12.31.05, then the rest in 2006 : Plaintiff IMMEDIATELY defaulted on the terms of the loan that he created ( because of his TYPO) ; Defendant never sought full BALLOON payment for FAILURE to meet the DUE DATE.

    Plaintiff DIDN'T PAY WHEN note WAS DUE!! Hence as per the note he's liable for all attorney fees "WHETHER OR NOT A LAW SUIT IS COMMENCED"

    Plaintiff didn't pay 20% - That would be $10,000 due on the due date of DEC. 30, 2005 - Plaintiff DEFAULTED ON HIS DUE DATE and Plaintiff only paid $6927 which is only 13.85% in total. Defendant never sought any other monies. When figured on an annual basis the $6927 come to 18.4% ( a lot closer to the legal limit of 18%). Also, Plaintiff did all the calculations as to the amount of interest he was to pay. Defendant never presented him with any sort of amortization schedule. Plaintiff did the whole thing himself.

    Defendant never asked for 20%, it was volunteered, defendant didn't ask for specific performance when the DUE DATE was not met. Defendant allowed Plaintiff to pay at will after FAILING TO MAKE THE DUE DATE and until the note was paid in full as of March 2006

  2. #2
    Join Date
    Jan 2010
    Location
    florida keys
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    6

    Default Re: Self Inflicted Usury Ii -Patsy for Scheme

    I asked the above and have found this:

    A approaches D for a loan of $50K and volunteers to pay an interest rate of 20% to D for short term use of the money. D does not have $50K personally; but, has access to and may borrow the funds on behalf of A.

    D, using the open Home Equity Line of Credit from PNC Bank and secured by his primary residence, borrows the $50K at a rate of 8.5%. D loans the funds to A at the 20% rate A initially proffered by A. A, creates a Balloon Promissory Note by his own hand and with A's own terms for the amount borrowed from D. A delivers the Note to D at the time D provides the funds to A by check drawn on HELOC. Both parties endorsed the Note. A, then benefits from use of the funds by purchasing and closing on a house in about 30 days.

    A, repays D all principle plus $6,927 within six months of the initial transaction.

    Four years later, A claims D committed usuary by charging A an interest rate 2% higher than allowed by Florida law and files a complaint demanding to be paid back twice the usuary rate.

    Since D borrowed the funds and had to pay an interest rate of 8.5% to secure funds then loaned to A at 20% D benefited only at the calculated rate of 11.5%.
    I would argue that the Promissory Note written at 20% can NOT be considered usurious as D did not actually gain the benefit of the full 20% having had to borrow the money from a third party and pay the assigned rate of 8.5%.

    ANY IDEAS ABOUT THIS?

  3. #3
    Join Date
    Sep 2005
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    Default Re: Self Inflicted Usury Ii -Patsy for Scheme

    Your cost in borrowing the money is irrelevant to the interest rate you were charging.

    How are you breaking things down as to what was principal and what was interest? Was it noted on the checks?

    If you accepted payments, you're not in a position to retroactively accelerate the note or call your acceptance of continued payments a breach.

    What about tryingto argue that the note is a nullity, having run from 12.30.05 through 12.30.05, and that the payments made subsequent to that weren't subject to the interest rate described on the note? Then apply either common law interest, if your state permits, or apply the entire payment to the principal balance to determine the balance due. There may also be an estoppel argument you could raise. Talk to your lawyer.

  4. #4
    Join Date
    Jun 2009
    Location
    California
    Posts
    666

    Default Re: Self Inflicted Usury Ii -Patsy for Scheme

    This is not my area, but the uniqueness of the situation interests me, so I checked a little. I found the following pertaining to Florida law with a web search:

    "687.04 Penalty for usury; not to apply in certain situations.--Any person, or any agent, officer, or other representative of any person, willfully violating the provisions of s. 687.03 shall forfeit the entire interest so charged, or contracted to be charged or reserved, and only the actual principal sum of such usurious contract can be enforced in any court in this state, either at law or in equity; and when said usurious interest is taken or reserved, or has been paid, then and in that event the person who has taken or reserved, or has been paid, either directly or indirectly, such usurious interest shall forfeit to the party from whom such usurious interest has been reserved, taken, or exacted in any way double the amount of interest so reserved, taken, or exacted. However, the penalties provided for by this section shall not apply:"

    It seems to me that your description of the situation establishes that you did not WILLFULLY violate the statute which should support your motion to dismiss. -- Take it for what it is worth. To prevail solely on this statute, the plaintiff would have to establish that you willfully violated the statute, which wouldn't be supported by the documentation that you describe.

  5. #5
    Join Date
    Jan 2010
    Location
    florida keys
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    6

    Default Usury Law Exception Looking for Clarity

    Borrower approached lender for loan. Borrower's creates promissory note by his own hand, with own terms of repayment and interest rate of 20% or 2% over state limit. Borrower used loan funds for personal gain in purchase of a house.

    Lender obtains funds to lend through third party loan, HOME EQUITY LINE OF CREDIT on lender's primary home. Unaware of usury limits Lender writes $50K check against his home payable to borrower and lends money to borrower.

    Borrower now, four years after note paid off, files complaint of usury and demands back twice "illegal" interest paid. Amount paid was $6927 or 13.85% total on $50K in 6 months (18.4% annual).

    Since Borrower initiated the entire scheme including an interest rate that was usurious by his own creation. Can usury laws be applied to the lender who loaned funds without willful intent of malice or duress.?

  6. #6
    Join Date
    Jan 2010
    Location
    florida keys
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    6

    Default Business Purpose and Usury Exception

    Borrower initiated a loan with a lender and creates his own promissory note with a usurious interest rate. Borrower now creates a complaint suing for twice the interest paid.

    The borrower them used the funds to purchase aan investment property.

    Most states allow a usury exception when loan funds are used for business purposes.

    Does Florida grant this exception?

    The lender borrowed the funds from a home equity line of credit for his "friend" the borrower. The borrowed funds had an 8.5% rate to be paid.

  7. #7
    Join Date
    Sep 2005
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    Default Re: Business Purpose and Usury Exception

    Rather than asking the same question over, and over, and over again, try discussing what you've been told so far with your lawyer. Your lawyer is the person best situated to advise you.

  8. #8
    Join Date
    Jan 2010
    Location
    florida keys
    Posts
    6

    Default Re: Tricked By Borrower Into Charging Usurious Interest Rate

    Mr. Knowitall,

    Just trying to provide clarity to a not so clear scenario. My attorney dosen't pretend to be God and to "KNOWITALL". If my use of semantics bothers you then please don't bother coming off your pedestal again in order to reply. Thank you for your initial input. If you have more constructive help it would be appreciated; otherwise, help the guy in the next thread and ignore mine. Simple enough it seems.

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