Legally right but morally reprehensible

Several months ago I got a solicitation to refinance a mortgage. The offer appeared to be too good to be true: "1.95% payment fixed for 5 years.'

Wow, 1.95 percent! If this holds, I can send extra each month and really build up equity.

I called and we started the process, got the papers, signed everything, even sent money to the appraiser until... a few weeks ago we got the final truth in lending and realized that the interest rate was variable. And it could change every month!

So I called the manager there and he was trying to say that the variable was cheaper as far as payment - it started even lower - but I insisted on a fixed rate. OK, he would take care of it.

Now, after I complained to the owner, the manger is telling me that the "fixed" refers to payment not to interest rate. This means that if I want to keep paying, say $750 a month for five years, I will actually lose equity.

He said that these wordings were approved by the CA Dept. of Real Estate.

Perhaps. But after telling him to scrap everything out, I added that perhaps the letter is legally right but is morally reprehensible

I think that I am still going to register a complaint with the BBB and with the CA Dept. of Real Estate.

I am really really mad. I had so many conversations with the two of them and never never was the distinction made between a "fixed interest rate" and a "fixed payment." And now he says: oh, did you really think it was a fixed interest? Yes, I replied angrily and finally hung up on him.

A negative amortization loan can be a bad thing.

You may have up to 4 payment options on that loan. If you don't then call back and find out what the index and the margin is on the loan.

index + margin = fully amortized rate

Find out what the actual thirty year fixed rate on the mortgage are and then pay that payment. You might find that it's below the current 30 year fixed rate.

Everything said and done though, those jerks should have educated you in what you were actually getting.

Yes, a letter to the BBB is in order.

Preys on people. Contact your congressman-state and fed - this should be against the law.