Centex Home Equity Mortgage is a modern-day version of an old time loan company that operates "just inside the law, " but in reality, is an uncaring vulture that says one thing to get one's business and then does another. Moreover, it is ALL LEGAL. While "technically" they may operate legally, they are, at best, unethical in both their business practices and in contracting those who prepare the deceitful loan documents and close their loans.
Last year (summer 2003) we refinanced our home with this unscrupulous lender. The loan originator told us that the 2/28 program (2 years at a fixed rate, then 28 years at an adjustable rate) could be refinanced ANYTIME in those first two years - after the sixth payment. We were also assured and reassured that there was NOT a prepayment penalty associated with this particular loan. Nothing could have been further from the truth. The loan originator lied and added the wretched credit life insurance AFTER I told him that I did NOT want it, ignored my request to set up an insurance escrow account, and would not give me a copy of the appraisal I paid for. To add fuel to the fire, the closer was 2 hours late for closing.By the time she got there (8:00 P.M.), she had to rectify the issues I raised about credit life, the escrow account, appraisal, etc.
When I asked about confirming, there was no prepayment penalty, she looked over the mountain of paperwork and replied, "there is no prepayment penalty, " and we began what turned out to be one hour of signing marathon. We have closed many mortgage loans, but never signed our names for one solid hour - she even remarked about the enormity of the stack of papers. But there is a method to Centex Home Equity's madness - the reason for such a stack of papers is it certainly discourages one from the tedious reading of copious pages and encourages questions in the essence of time - particularly when the closer has an hour and a half drive back to the law firm in another town.
It took me until December to get an escrow account set up, and I found out last week that they took my money, but never set up the escrow account, nor did they attempt to contact me - yet I paid them the $1000 required to get the account established. They were very efficient in adding the prorated amount to my January payment though. I found this out recently when I received a notice from my insurance company that the account would soon to be in default.
Much to my dismay, when I attempted to refinance our loan after the seventh payment, I was told that I had to have 1 year of payments "logged in" before that could be done. Not what I was told originally and I was angry, but it was close to the one-year mark. After the 12th payment was "logged in, " I called to start the refinance process. I got all the paperwork they required and faxed it to the office. I asked what interest rate I would get to which I got the reply of, "7.9% fixed rate over 30 years." When I questioned this, and told him I could get a much better rate locally, the new loan originator replied that was the best they could do. My payment was automatically drafted each month and 7.9% was the BEST they could do??? I told him to stop the processing immediately and I got a much better rate locally - by 2%. The fly in the ointment? When my new mortgage company got the Centex Home Equity payoff, they added a 5% prepayment penalty - something the I was assured by their originator and the closing attorney that the Note did NOT contain.
I called Centex and the only reply I got was "You signed the papers, " which is true; however, it was an attorney who told me "No prepayment penalty." The Note says "may, " charge, not will charge, so it is at the discretion of the lender.in addition, I was told that this prepayment penalty is for 5 years - something I would NEVER have signed last summer for any reason! I would have walked away from the closing and never looked back. Unfortunately, I was lied to by their attorney who had a long drive home and a 2-inch stack of papers waiting be signed.
Centex has a racket going - a 2 year fixed rate with a 5 year prepayment penalty - if one refinances with them, they reward good customers with a 2% higher interest rate than market on a fixed rate loan OR one can let the loan convert to an ARM. But watch out for their fixed rate loan - it carries hidden deep in its paperwork 29 years and 11 months interest and a balloon note on the 12th payment for the entire original principal leaving one either having to refinance again OR Centex repossessing the home for non-payment. Shoddy loan practices at the very best. Just how ETHICAL is that?
Beware - if it sounds too good to be true, it is - especially if Centex is involved.
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