Just when we thought subprime could not get uglier, one of the world’s largest banks has found a way to usurp U.S. government regulations. High-Rate, High-Fee Loans HOEPA/Section 32 Mortgages and how to get around the regulation seems to be the newest and latest marketing ploy.
“As a current employee I am appauled to see Beneficial and HFC’s latest trick which seems to be avoiding federal caps on interest rates. As of May 5th they rolled out their new pricing sheets with rates set above the maximum Sect 32 rates set by the goverment. How can they do this? Simple, force customers to take “advantage” of their Pay Right Rewards system that lowers your interest rate by a whole .25% every year that you pay on time. This allows them to magically show you a much lower APR than the true rate you will be paying.
The APR they show you assumes you will be keeping the loan for the full 30yrs and getting all 12 of the rate reductions. However, in reality most customers only have to suffer on the books with us for an average of 36 months before they wise up and find another lender or get foreclosed on.
I’m currently searching for a new job and will hopefully not have to live my life ashamed of what I do for a living for much longer. In the almost 10yrs I have worked for this company I have unfortunetly seen examples of almost every other upset employee’s post on this site and have had enough.”
We thank this employee for the informaiton. To see more about High-Rate, High-Fee Loans (HOEPA/Section 32 Mortgages) see the FTC guidelines.