“We’re trying for a loan modification, but may consider a short sale if that doesn’t work. We were really misled about how our loan could change and reset. What is the responsibility of loan brokers and/or banks who lied to their clients about the type of loan they were getting?”
Unfortunately the loan brokers who misled their clients typically say everything was disclosed in the mass of loan documents signed in a rush at the last minute, even if it’s not what they told you it would be.
But all those pages are too much for a mere mortal to read and understand. You and everyone naturally relied on what your loan broker told you.
Unfortunately, I don’t know of anything you can do about it unless your lender gave you something different in writing. You should check with an attorney, but you probably have no recourse.