World Savings advertised a 1.95% refinance rate for the 1st year, 2.95% for the 2nd, and 3.95% for the 3rd, the floating the 4th and thereafter. But the loan statement failed to disclose that the real rate is 4.85%, and the 1.95% is portion of this real rate. The difference
of 2.9% will be deferred and added to the principal balance of the loan! And the interest rate changes every month! So in the 2nd month, the difference has been increased to 2.925%, and keeps adding to my balance.
The disclosure statement is devised to mislead any consumer by listing an estimate of monthly payment in 30 years. It never mentioned the deferral of interest!
The 4.85% real interest rate is disclosed as a default rate which is to be applied if we can not make a payment in time. How can World Saving charge 2 interest rates in one loan? One to mislead the borrower, and the other to charge the borrower?
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