One year ago (October) we had to get a mortgage on our home in order to take care of business debts due to economy slow-down and bad debts. This was our first mortgage.
We knew, due to poor credit arising from the business problems, that we would be paying a higher interest rate than ordinary mortgages were costing at that time. We also knew about pre-payment penalties, but had no idea that there was any "normal" amount and time above which they would be considered predatory lending.
The lending rate we were given was 9.37%, with a three-year, 5% of balance pre-paid penalty. The mortgage broker we were using gave us no indication that that was abnormal. The brokerage company was Fidelity Mortgage.
We are in the process of re-financing in order to lower our monthly payments. We have spoken with two different brokers who told us that what Ocwen did was predatory lending, in that the guidelines for prepayment penalties are for one year and about 2 to 2 1/2 % of the balance pre-paid. They also were of the opinion that the interest rate was pretty high, considering that our home appraised for $475,000.00 and we were only borrowing $356,250.00.
Now, in order to re-finance and lower the payments from $2967.00 to $1880.00 (going up to $2234.00 in two years) we have to add onto our mortgage the pre-payment penalty to Ocwen of almost $18,000.00.in other words, we lose $18,000.00 in equity.
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