Posted by Rob on March 24, 2006 at 21:21:18:
All I can think of is that you payed only the interest and nothing toward the principal. If true, you will continue to pay the same amount every month with no reduction in principal.
hard money loan math errors - Posted by Chris
Posted by Chris on March 24, 2006 at 11:45:55:
Hi All, in 2003 I took out 2 HMLs, one for $ 50k and the other one for $ 33,925 and both @15% interest only. for the $ 50k loan, I made monthly $ 625 payments even after repaying $ 10,000. The interest is principal x 1.25% every month - nothign complicated 
But for the $ 50 k HML, the broker who charged thousands could not understand that the interest amount changes with every repayment; first the $ 10k and then every month $ 125.
For the other loan, things are a bit more complicated because I made small repayments every month. To this day, they owe me about $ 1,000 in interest and I am shocked. To get the loan closed, I paid the incorrect final demand amount and never got 1.) an accounting showing how they calculated the interest. E-Mails and calls were ignored. Q: who is regulating this business? This broker had 13 million turnover in the first half of 2005 (newspaper article) and the private lender was being “helped” by the broker.
All it takes is maybe 5 minutes to get the calculations of about 30 payments done. Or they can buy a HP business calculator which is programmed. Multiplying the monthly changing principal x 1.25% is not that hard, is it?
I would hate to sue, but it irritates me thinking how many other clients are they ripping off?!? sheer incompetence might also work in my favor, so I am not buying that. What would you do? Is no one regulating hard money brokers and private lenders?!?