Carboni

In this case we consider whether a secured note providing for interest at a rate of 200 percent per annum is unconscionable. In the circumstances presented here, we conclude that it is.

I

Facts

The evidence at trial established that on July 27, 1988, George Arrospide, Jr., signed a $4,000 note and deed of trust on behalf of his father, Jorge Arrospide, Sr., as his attorney in fact. The note was made in favor of Michael Carboni, a licensed real estate broker. It carried an interest rate of 200 percent per annum, was due in three months, and was secured by a fourth deed of trust on a residence owned by Jorge Sr. located at 36 Alexander in Daly City. The loan documents indicate the security had a value of $250,000 with existing encumbrances of $193,000.

The parties originally intended thé note would be paid off in a single lump sum payment of $6,000 after three months. However, over the next four months, Carboni continued to make cash advances to Jorge Sr. which were secured by the original note and deed of trust. By November 25, 1988, the principal amount of the note had ballooned to $99,346, all of which was carried at an interest rate of 200 percent per annum. At the…