I have a 'simple interest' second mortgage from HFC. At the time I took out the mortgage I was not warned by the loan officer about how HFC uses (abuses) the 'deferred interest' feature of a simple interest loan.
I have accumulated $1,552.78 over the last three years in deferred interest on a $30,000 loan. A portion (approximately $900) of that was due to being late by only a matter of days on three occasions. While I am not happy about that I do accept that I incurred the extra interest because my payments were late.
The rest of the amount (almost $600) is because I paid my loan early on multiple occasions in an attempt to put more towards the principle. I could not understand why on my next statement I was charged deferred interest and no portion of my payment was being applied to the principle owing on the loan.
After many phone calls trying to get an explanation of what was going on I was finally directed to a local HFC office and was able to speak to someone who could at least explain it - sort of. Apparently even though my due date is the 25th of each month they were readjusting my due date every time I made a payment early and then charging deferred interest beginning on the 31st day after whenever the last payment was made.
For example, in June I made my payment early, on 6/18. In July I made my payment on the due date documented in my loan agreement - 7/25. Because I made the payment on 7/25 (when it was due according to my agreement) instead of 6/18 - thirty days after my last (early) payment - I was charged 8 days of 'deferred' interest which will be tacked onto the end of my loan.
This is unbelievable! The loan officer tried to convince me that everything will come out even in the end but I quite frankly don't believe it and from what a hard time he had justifying it I don't think he did either.
This entire company is a scam and should be put out of business. If anyone has any suggestions on what to do about this I would love to hear them.
Hamburg, New York