Ben Aloia, 53, a Denver policeman for the past 25 years, is a self-described pack rat.

It's a good thing that he has kept every scrap of paper associated with the ARM he got for his Green Mountain home in Lakewood or he would be in an even worse situation than he is now.

And his situation is not pretty.

Aloia, a divorced father, got an adjustable rate mortgage with his eyes wide open. He knew it had a hefty pre-payment penalty of as much as $25,000 for the first three years, but he wasn't worried.

That's all changed now that his loan has jumped to 13.5 percent, more than twice the cost of a market-rate loan. He narrowly avoided foreclosure last year.

His problems started 13 months ago when he received a letter from HomEq Servicing Co. saying that he had missed mortgage payments and they were foreclosing.

After many frustrating hours on the phone, Aloia learned that HomEq had raised his ARM payments without telling him. The company later apologized, acknowledging that it is against the law not to inform him at least 30 days before increasing his payments.

Aloia still had to scramble to raise $6,800 to pay the additional charges and keep his house.

But to do that, he had to postpone paying other bills.

"They literally destroyed my credit," he said. "There are no regulations. They do what they want."

He's approached about a dozen lenders, but none will refinance his loan because of his credit problems with HomEq.

HomEq, which was sold by Wachovia to Barclay Capital, couldn't be reached for comment. A Barclay spokesman said as a financial institution, it has a policy never to comment on any relationship with a customer.

Aloia said Wachovia told him it won't refinance the loan because it would be a conflict of interest given his "relationship" with a sister company.

His monthly payment has risen to about $3,500 from his initial payment of $1,500, and at different times he has received letters from HomEq saying his payment was going to be as high as $6,800.

"Where they got that number, I have no idea," he said.

And in January, the company initially refused his mortgage payment, saying the lawyer Aloia hired to fight them is now responsible for his loan. It took Aloia 90 minutes and a call from his attorney to resolve that issue.

"Six months ago, I was a total wreck over this," Aloia said. "Now, it's almost comical."

Ben Aloia

• Denver police officer

Residence: Lakewood

Problem: An expensive prepayment penalty and a bureaucratic mess

rebchookj@RockyMountainNews.com or 303-954-5207