Skip to content
BOL Conferences
Learn More - Click Here!

Thread Options
#2243032 - 09/24/20 03:20 PM Mortgage Loan Simple Interest
swiggles Offline
Power Poster
swiggles
Joined: Aug 2001
Posts: 7,351
We have an unhappy mortgage customer who is challenging the terms of his mortgage loan. I want to make sure I'm not missing anything. I have combed Reg Z and the Texas Finance code....nothing.

The loan is a portfolio loan and under the terms of the loan, it is simple interest, 365 accrual method, no odd days, no PMI. Evidently, this customer was several days late on consecutive months and so now, his entire monthly payment will go all to accrued interest.....may not completely cover the interest due. The loan was prepared by attorneys who prepare all of our mortgage promissory notes....all the same way. The customer said that we should have provided him with some sort of disclosure about what would happen if the payment was late and that what we are doing is illegal. He says that the note should be under an amortization schedule where the interest is divided equally amongst all the payments.

Like I said, I just want to make sure I'm not missing something before I advise the loan officer how to respond.
_________________________
The more you sweat in training, the less you bleed in battle.......

Return to Top
#2243036 - 09/24/20 03:35 PM Re: Mortgage Loan Simple Interest swiggles
JWills, CRCM Offline
Diamond Poster
JWills, CRCM
Joined: May 2013
Posts: 1,781
The Mitten State
I've seen this happen as well, when the customer pays several days late, but on the upside, if he pays when his payment is due for the next month, more will be applied to principal.
_________________________
Nonsense wakes up the brain cells.

--Dr. Seuss

Return to Top
#2243040 - 09/24/20 03:42 PM Re: Mortgage Loan Simple Interest swiggles
swiggles Offline
Power Poster
swiggles
Joined: Aug 2001
Posts: 7,351
So nothing illegal about this?.....no missed required disclosures? I actually thought that portfolio mortgages were typically prepared as simple interest / 365.
_________________________
The more you sweat in training, the less you bleed in battle.......

Return to Top
#2243044 - 09/24/20 03:53 PM Re: Mortgage Loan Simple Interest swiggles
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,220
Galveston, TX
Being several days late is causing negative amortization? Maybe the first time, but if I pay 10 days late this month and 10 days late next month, only 30 days of interest is going to accrue between the first and second payment.

The real secret is that they need to make their payments on time. If the note is a simple interest note - it is not the bank's problem.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top

Moderator:  Andy_Z