Mortgage interest rate fee mess

Seven On Your Side
July 14, 2011 1:56:48 PM PDT
Sometimes when an offer seems too good to be true it often is.

A local man learned that the hard way.

He thought he had a great deal that would save him money on his mortgage.

But, he was shocked to find out that it really wasn't much of a deal.

"I love to grow this at home," Deng Liau said.

From growing Chinese vegetable instead of buying them, to driving his vintage car, retired research scientist Deng Liau likes to save money, so when he got a letter offering to pay less interest on his mortgage, he jumped at the chance.

"It's going to be paid off in 23 years instead of 30 years, and it looks like Citibank," Liau said.

But looks can be deceiving; the letter was not from his lender:

"It actually wasn't from CitiMortgage, but you know they put that at the top of the letter that's the confusing part, so I didn't think there were any issues when I saw this letter," said Kevin Liau, Deng's son.

Kevin Liau now regrets that he didn't examine the letter and offer more thoroughly, after seeing "no up-front fee"

He told his dad to go ahead and sign up.

"Approved by son unfortunately," Liau said.

When a bank error led to a missing mortgage payment, Kevin got suspicious, did some research, and tried to cancel the program.

That's when he learned a $1,600 set-up fee was part of the deal.

"Do you think there's a difference between and upfront fee and a set up fee?" Eyewitness News' Nina Pineda asked.

"No, I mean a fee is a fee so that's just semantics in my opinion, upfront and set up usually occurs before you start something," Kevin Liau said, "It's basically a bait and switch!"

But his Dad had e-signed the contract, and they were told the fee, already being deducted from his automatic mortgage payments would not be refunded.

"That was the fee we were totally unaware of until we tried to cancel," Kevin Liau said.

7 On Your Side appealed to the company Nationwide Biweekly Administration.

A spokesperson said even though they had disclosed the fee to Mr. Liau on the phone, a week later:

"Good news, thank you, oh you did a good job, thank you so much," Deng Liau said.

Mr. Liau was e-mailed a letter, refunding the fee and releasing him from the contract.

Nationwide Biweekly Administration said in a statement Mr. Liau would have saved $70,000 in interest if he stayed with their interest minimizer program.

He is going straight to Citibank, which has a similar biweekly program and only charges $350 not $1,600 to sign up for it.