I do not know if the answer to this may vary according to state laws, but as an example, consider a nationally known bank which has mortgage operations in several states, and is an originator as well as a purchaser of secondary market mortgage loans. For their mortgage loans, interest on the monthly payments is calculated on a 30/360 basis, which I tend to think of as the "traditional" way in which most mortgage loan interest is computed. If interest has been calculated and applied on regular payments in such a manner, is it legal on a payoff if the calculation base is changed to actual number of days in the year? Even if it is legal, is it not inconsistent to do so? In the particular case with which I am working, the borrower was paid ahead by several months and was due an interest refund. The fact that the calculation base was changed for purposes of the payoff calculation has resulted in the borrower being "shortchanged" in the amount of interest refunded, because obviously the per diem is going to be less if you divide by 365 instead of 360. In this case we are talking a little over $50 total...which may not seem a lot to some people, but yet it seems to me that the bank is being "unjustly enriched" as a result of this arbitrary change in the interest calculation method. Pardon the pun, but even though this involves interest, in fact it is the principal of this matter that I think is important here. Your thoughts? Thank you for your input.
"When you believe He's all you need,that will be your defining moment." [from "Defining Moment" Newsong, Sheltering Tree CD]