The Fourth District Court of Appeal in Santa Ana has published a new case allowing homeowners who obtained “Option ARM” adjustable rate loans, which had negative amortization, to sue the lender for misrepresentations and failures to adequately disclose that negative amortization would occur if the borrowers only made the minimum payments. In the case of Boschma et. al. vs. Home Loan Center, Inc., which was filed as a class action, the loan documents contained various disclosures about the adjustable rate and possible negative amortization, but did borrowers only made the minimum payments allowed, that negative amortization would definitely occur. Although plaintiffs alleged that they had suffered damages in the form of lost equity due to the negative amortization, the court noted that it may be difficult for them to prove they could not have avoided the negative amortization simply by paying more each month after they discovered that the minimum payment resulted in negative amortization. There are many similar class action lawsuits filed against similar lenders across the nation.