Goebel v. First Federal Savings and Loan Association of Racine

Goebel and other borrowers (plaintiffs) signed a 1964 note and 25-year mortgage with First Federal Savings and Loan (defendant) at 6 percent interest with $110 monthly payments, under a note permitting First Federal to increase monthly payments only if the borrowers took future advances or First Federal made necessary cash expenditures connected to the loan; nine years later, First Federal raised the interest rate and suggested borrowers either increase their monthly payment by $7.49 or extend the loan two years, but the plaintiffs did neither and kept paying $110. After learning hundreds of other borrowers had been paying increased amounts to cover the rate hike, the plaintiffs brought a class action arguing First Federal lacked authority to increase payments or extend the loan term to cover the increased interest.