Product: Mortgage

We were struggling with a lot of credit card debt and had decided against the personal loan route because of interest rates in the double digits when we received a mailing from our current primary mortgage lender, Freedom Mortgage, alerting us to the potential of additional equity in the house that we could borrow against. We already had a home equity loan from a few years back when we renovated the entire basement so I wasn't sure of the options but decided to at least inquire. I received a call from XXXX XXXX that same day, XX/XX/XXXX ; he said we would have to refinance the entire primary mortgage and pay off the home equity loan/ second mortgage along with our credit cards, it would be a 5.75 % interest rate, and the only choice he gave me was between our existing term of 22 years and a new term of 30 years. 

I made it very clear that I am a person who likes all the information and told him I had to take the day to ponder and crunch numbers because we would be giving up a 3 % interest rate on our primary mortgage. After discussing in great detail and going over our existing monthly payments versus what our new budget would look like we did decide to move forward because we would in turn also be paying off our credit cards which have interest rates between 23 and 29 %. I called him back the next day, and confirmed we did want to proceed, at which point he re-stated the interest rate of 5.75 % and said that it was now locked. 

A few weeks later, when reviewing the Loan Estimate worksheet I questioned a few things : the XXXX re-inspection fee being listed as {$300.00} when the VA fee schedule shows a XXXX of {$150.00}, the {$400.00} we had to prepay for the appraisal not being reflected, as well as what they called 'Origination Charges ' being 4.9 % as I knew that what the XXXX XXXX XXXX ' fees are maxed at 1 % for VA loans XXXX XXXX said the numbers on this worksheet were just placeholders and the final closing worksheet would be the final and correct numbers, and as far as the Origination Charges ' being 4.9 % he gave me the reasoning " that the 1 % cap is only for new purchases and not for cash-out ''. We did e-sign it because he insisted it was ( just like everything else ) 'time sensitive ' and needed to be signed immediately to prevent delays in the processing of the loan, but I still wanted to confirm with a VA contact since I could not find that differentiation in my research, so I found an online resource where I could ask general questions, and sent them an email. 

We were able to get the required repairs from the appraisal completed and for the appraiser to come back out within the week which moved our loan through underwriting and to get scheduled for closing before I received any responses to my email. The next morning I received a response from a VA representative stating 'the maximum origination fee for a purchase or cash-out is 1 % of the loan amount ' so I immediately contacted Freedom Mortgage to speak with someone to try and clarify the different information I was being given. I was transferred to the closing department where I spoke with a representative who said the 'origination fee ' is just the 'points ' we are paying to get a lower interest rate, which I was very confused about since I was only given one interest rate the entire time. She then said she couldn't give me any other information since she wasn't licensed and I had to speak with the loan officer. I was obviously uncomfortable considering at this point he had essentially misled me at least twice, but she said we had to speak with the designated loan officer and could or would not provide the name of a supervisor.

When I spoke with XXXX his response was " most borrowers don't want to hear about a higher interest rate '' and his apology was " I'm sorry I didn't discuss that with you and just went the route most borrowers want to go, the lower interest rate ''. I asked how it didn't also come up when I specifically asked about that line item and he simply repeated " like I said I do apologize '' but it didn't feel sincere. This wasn't a simple oversight ; it was intentional lack of disclosure. Otherwise, when I inquired about it he would have been the one to tell me those were points to buy down our interest rate, if he had honestly forgotten to mention it the first time, and he wouldn't have fabricated some story about the reasoning being the type of financing we were pursuing or insisted that " most borrowers don't want to hear about a higher interest rate '' if this wasn't his intention all along. For XXXX to insist he is doing his customers a favor by only disclosing the lower interest rate without discussing what you have to pay in exchange is ridiculous. On the contrary, showing borrowers all of the information up front and exploring the option to lower that in exchange for points with them would allow the loan officer the opportunity to show them potential savings over the life of the loan, and if they choose to go that route, would make them feel better about the lower rate. For them to only present the most advantageous route for their company, to receive one lump payment rather than wait several years for the interest to trickle in, without knowing or exploring with the borrower their plans, such as how long they plan to stay in the home, if they are planning a refinance before the break-even point, etc. is an unfair trade practice. For some borrowers several extra XXXX dollars at the time of closing to go towards debit with higher interest rates may outweigh the savings of getting to the break-even point. Not to mention the fact that I had to do my own research to find the information to even weigh the options ; borrowers should be better informed and be given the opportunity to make an educated decision and for everyone to be on the same page from day one to avoid feeling yanked around and/or taken advantage of. In addition to that, some borrowers may be shopping around for rates, and it could be the critical difference in deciding which company to go with.

We had to pay out of pocket for half of the appraisal up front, which says on the cover page that it is prepared specifically for this company, so we feel like we have to continue moving forward with them and not waste the money to redo that part again for another company, but it is very upsetting to think that by doing business with them we may be condoning their behavior.

Lastly, while I know the disclosure of 'this call may be recorded ' every time you call doesn't guarantee there is a recording, I hope Freedom Mortgage will at least check and properly investigate this claim rather than allowing their loan officers to decide the structure of a proposed loan and ignoring their ethical obligation of full disclosure to their clients.