Novastar Mortgage Novastar Mortgage is a contract breaker refusing conversion from an ARM that was contractually agreed Kansas City Missouri
We signed a mortgage in May of 2003 with Novastar mortgage. It was an ARM with a converion option allowing use to lock in the mortgage and the current rate (7.99%) for $250.00. It also had a two year prepayment penalty. The first two years the rate was fixed at 7.99% and coud go up aterward to a max of 15.99% if the conversion option was not taken.
May 2005 my wife called to exercise the converion option at which time she was told by Novastar that she would have to call back in June because we were not in the conversion time period. She called again in June and was told she could convert but that the rate was going to be increased anyway and would continue until it hit the max of 15.99%. Her responce to them was so what was the converion for? A week later we received a notice that our rate was being raised from 7.99% to 10.99%.
Again she called and was told we didn't have a converion option. She called back to get a different agent who told her that they would review our file and get back to us.
In September we contacted Novastar consumer complaints department and still have gotten no where on our conversion option, but we were informed that the 2 year prepayment Novastar was trying to slip in an unsigned unagreed to addendum uping it to a 5 year. Every page of our contract was singed or intialed but this addendum they later sent us was neither signed or intialed. We asked for arbritration information after advise from a legal friend and Novastar refused even this request for information. They are going to try and raise our rate again in December to 11.99% and a point every six months ther after until they get 15.99%.
We have tried to handle this matter between us and Novastar, but they have so far been unwilling to honor the conversion or the two year prepayment penalty.
I hope to shed some light on this company, NOVASTAR, who doesn't honor it contractual obligations and will most likely end up in court if their "buisness ethics and practices" remain unchanged very much longer.
Matthew
shawnee, Oklahoma
U.S.A.
3 Updates & Rebuttals
Steve
Corona,California,
U.S.A.
Refinance away from them now Matthew
#4Consumer Suggestion
Mon, October 10, 2005
Matthew, I am a mortgage broker in California and here are some questions for you and some advice.
Find out how your prepayment penalty is calculated. Typically it is 6 months of interest, ($150,000 mortgage @ 7.99% x 6 months = $5745.00) Whey they say "Two Year" or "5 year" that is the length of time you are exposed to the penalty, not the amount.
If your credit scores have improved in the last 2 years and you have picked up a little equity in your property, it is highly likely you could benefit from refinancing, even with paying the prepayment penalty. The PPP is 100% tax deductible in the year you pay it, so get it done before 2005 ends.
Stay away from the companies that typically lend to sub-prime borrowers. Names like Ameriquest, Aegis, Novastar, New Century, First Franklin, Fremont, Decision One, HSBC are lenders who primarily do sub-prime mortgages.
My suggestion is to get a recommendation from a friend, family member of a mortgage broker who did a good job for them. Try to qualify for a mortgage that is not "sub-prime". You could try steve at mortgagegroupdirect dot com for a no obligation evaluation Even with not so perfect credit, there are MANY ways to make a loan work, not just the easy sub-prime way.
Good luck on that!
Matthew
shawnee,Oklahoma,
U.S.A.
Novastar update and closer court
#4Author of original report
Mon, October 10, 2005
They sent up paper work to lockin at 10.99% not the 7.99% we were suppose to get back in May when we first contacted them and the refused. Their records show this and note that we called and asked for the conversion in May to lock in our 7.99% (not good but better then 10.99or the 15.99% they were going for). They are also trying to stick with the 5 year prepayment penalty instead of the contracted 2 year we agreed to by signing the page.
What should we do lock it in and turn it over to our attorney. At this point I am feed up with this "company" --bookie, loan-shark.
If I do nothing they are going up in December, but if I lock in now we don't lose even more? If we sign these papers would we have a argument in court to recoupe this maladjustment of the intrest rate?
People beware of this mortage company! they are either morons or crooks. I am still trying to determine which all I know for sure is that no one there is in a hurry to help their customers.
Tom
Gahanna,Ohio,
U.S.A.
they cannot add in an 'addendum' to the note without your consent.
#4Consumer Suggestion
Sat, October 01, 2005
hi guys
my name is tom and i am a state licenced mortgage broker in ohio.
go back to the papers you recieved at closing. Look at the HUD that breaks down your costs.
Then go look at your bank NOTE. your note will specifically outline the terms of your mortgage.
i suspect it is a 2 year prepay.
if that is the case refinance right away .
they cannot add in an 'addendum' to the note without your consent.
dont let these turkeys try scare tactics to keep you in this ridiculous mortgage.