In a Federal District Court somewhere in Illinois, The Madison County Record reports:

• A class action lawsuit has been filed against three financial corporations, including banking giant Wachovia, alleging Illinois homebuyers were forced into negative amortization after the banks deceived them when they issued option adjustable rate mortgages. Lead class plaintiffs Michael and Jayme Brunkhorst claim the lenders and brokers that sold them an option ARM mortgage […], touted the minimum payment and downplayed or failed to disclose the negative amortization that could result from making such payments, according to the suit filed Feb. 17 in U.S. District Court.

***

• “Option ARM loans have been called ‘the riskiest and most complicated home loan product ever created‘ and have been termed a ‘neutron bomb’ that will kill all the people but leave the houses standing’ by an economist at the Ford Foundation,” the suit states.

For more, see Home owners file class action against Wachovia over option ARMs.

For other posts on homeowners using state & federal law to try and undo bad mortgage loans, Go Here, Go Here, and Go Here.

(1) Among other remedies, the Brunkhorsts and the putative class are asking the court grant equitable relief to restructure their loans through rate buy downs, principal reduction and conversion into conventional fixed rate loans.