have usury laws been broken by my mortgage company?

There was a case in my state similar to yours. The lady got behind on her mortgage because of taxes and insurance and her payments raised. Her house was foreclosed on. The mortagage company changed the lock and the judge sided with the mortgae company. The story is in the Charleston gazette paper if you want to read it. The state is WV. KYSIDE38

Usury laws apply only to the interest rate they charge in the contract (and some states don't even have usury laws, like IL).

If your mortgage is an ARM, then it is tied to some index to determine the rate. If the rate falls within the usury limits, they can change your payment amount to reflect a rate increase, if you agreed to it when you got the mortgage.

Mortgage lenders are all licensed, and I'm sure they know what the laws are. I tend to think they wouldn't be blatent about charging illegal interest since they have such a vested interest in the home.

On second glance, it looks like they upped your payment to cover the taxes and insurance. This is legal too. Somewhere in the fine print on your contract, you agreed to keep insurance on the house and pay its taxes. The mortgage company does not want to risk the insurance being cancelled, then what happens if there is a fire? If the taxes aren't paid, the county can put a lien against the house, which the mortgage company doesn't want either. So, the contract usually says if you default in any of those terms, the mortgage co can remedy the default by paying for them for you, and then charge you for it.

This happens with my car loans all the time. Car has a $16K balance, and I get a cancellation from the insurance company for non-payment. You better believe I am not going to let that car go a day without insurance. So I send several letters out, and call the customer, tell them they need to pay their insurance or I have to put my own policy on it.

If the cancellation date comes and they haven't reinstated their policy, then I need to put my own "forced-place" insurance on the vehicle. Insurance company charges me 18% of the loan balance for a 12-month policy, so a $16k policy costs me $2880.00. I add that to the customer's balance, and increase their payment for 12 months to cover its cost. $2880/12 will increase their payment by $240 for the next 12 months. If they still refuse to pay for the insurance, then it is legal for me to reposess the car. Most times, though, I let them keep making their regular payments, and then at the end of the loan I tell them they need to pay for all the insurance before they can get the title.

Since your home is at stake, it may be best for you to consult an attorney. Generally to stop the foreclosure, you would need to pay the full amount past-due. The only other option may be to file a Chap 13 Bankruptcy, which will let you keep the house and give you a plan to catch up on the past-due payments.