ING Slashes Mortgage Rate, Jacks Fees, Leaves Me Out Cold

As complaints about mortgage companies go, Chris’s gripe about ING Direct isn’t something that will bring tears to your eye, but it does work as a fair word of warning for those considering refinancing with the e-bank. He says the bank slashed its interest rates but more than tripled the closing costs. He writes:

I am a avid consumerist reader and wasn’t sure who to send a interesting consumer story to so I hope you may be interested.

I transferred my mortgage from GMAC to ING Direct in September 2008 because they had a great rate of 5.5% for a 5/1 ARM (which at the time was 0.5% below many lenders). Also the fees were very low. In the terms there was an option to change the mortgage at any time in the future to any current offering that ING Direct had for mortgages for only $750- no other fees, valuation etc. This sounded great- and I noticed today that the rate now is 4%, so I called up to see if I could get it, which I could, BUT the fee was now $2500. Still a good deal but seriously- the fee is increased 3x?

I find this ludicrous as:

1. Even though the mortgage agreement states that fees are subject to change- 3x the original fee?

2. No notice was given to existing mortgage holders- I have no doubt why. I wouldn’t have minded if it had gone to, say $1000, but surely such a huge increase deserves some notification?

The guy was quite nice on the phone and I asked to put in a formal complaint about this, which he did. But no wonder banks get a bad rap!

The deal makes more sense for you the longer you intend to take paying off your mortgage. Current and prospective homeowners, what’s the hottest refinancing option you’ve noticed?