Three years ago, I purchased property for $155k. Just recovering from a business loss and the ensuing credit smear, my broker arranged a loan in the secondary market with First Franklin. My original payments were $1237. After one year, FF raised those payments without explanation, to $1600. A year later, I was paying $1789 per month.
In three years, I have been out over $55k in mortgage payments and now my outstanding balance is $162K! Never missed a payment, btw.
I finally arranged a loan through another Mortgage Company. When we got down to actually making it happen, FF told the new lender that I had pre-payment penalties and that they would need $170K to release the lien?
When I pulled out my contract, I called FF, and they denied having said anything about pre-payment penalties. Every time I've called them to find out why, in this 6% economy, they felt compelled to raise my rate, I get no straight answers. (They did it because they could). Though I value my credit and reputation, I have arrived at the conclusion that it is foolish to spend $55K and not have any equity on a note barely 3X that amount.
Lenders like FF are part of the reason for our current credit and housing crunch. If this type of operation is allowed to continue, our economy has little chance of survival and the only winners will be those pocketing the quick cash from legal theft.
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