Skip to content
BOL Conferences Top Gun 23
Thread Options
#411688 - 08/22/05 07:57 PM Extending a Payment
Jan94 Offline
Platinum Poster
Joined: Mar 2001
Posts: 828
USA
The bank is considering a program whereby some of their consumer customers will be granted the opportunity to extend their December payment. There will be a list of qualifications the customer must meet to obtain the extension (i.e. non-real estate, must be current).

This offer will be made by mail to those that meet the qualifications and is limited to those loans that will mature within 5 years or less.

The bank also wants to charge a $35 fee for the extension. It already permits extensions under loan policy so I am not sure I see what benefit this will provide the bank by extending a December payment.

Since this will be a "special offering", would this be considered a change in terms for these customers? Thank you.

Return to Top
Lending Compliance
#411689 - 08/22/05 08:21 PM Re: Extending a Payment
Anonymous
Unregistered

Quote:

The bank also wants to charge a $35 fee for the extension. It already permits extensions under loan policy so I am not sure I see what benefit this will provide the bank by extending a December payment.




I'm not sure I see the benefit either. Why would this "special extension" be considered special if your current loan policy already allows this? Isn't it just like any other extension you would offer in the normal course of business?

Return to Top
#411690 - 08/22/05 08:30 PM Re: Extending a Payment
Skittles Offline
10K Club
Skittles
Joined: Sep 2002
Posts: 13,964
TN
Customers will jump at the chance to defer their payment, even if it costs them $35.00 - especially around Christmas time. The bank will reap lots of income with these charges.

Generally, the bank will also require the payment of accrued interest.
_________________________
My Opinions Only

Return to Top
#411691 - 08/22/05 08:44 PM Re: Extending a Payment
Jan94 Offline
Platinum Poster
Joined: Mar 2001
Posts: 828
USA
Yes the bank is concerned about that last payment and I explained that they need to be sure that they explain this carefully to the customers so there is no misunderstanding. Since these are existing customers, is there anything that needs to be disclosed especially as it relates to the $35 fee or will the letter that is being sent suffice? It will be the customer's decision to accept the offer. Thank you.

Return to Top
#411692 - 08/22/05 08:49 PM Re: Extending a Payment
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,030
Bloomington, IN
Quote:

Since these are existing customers, is there anything that needs to be disclosed especially as it relates to the $35 fee




This will be a state law issue. Can you charge it, are you limited to how much you can charge, etc.?
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#411693 - 08/22/05 08:59 PM Re: Extending a Payment
Anonymous
Unregistered

Also, in your letter, as with any extension, remember to notify the customer that any credit life/A&H attached to the loan will not extend to the new maturity date.

Return to Top
#411694 - 08/22/05 09:00 PM Re: Extending a Payment
HRH Okie Banker Offline
Power Poster
Joined: Jan 2003
Posts: 3,070
Oklahoma
Sorry, that was me on the credit life. Forgot to sign in.
_________________________
Just working here until I get my letter from Hogwarts.

Return to Top
#411695 - 08/22/05 11:34 PM Re: Extending a Payment
Rocky P Online
Power Poster
Joined: Jun 2003
Posts: 7,460
Florida
Besides Okie's answer, if it is real estate secured, make sure you have the flood notices "Cannot make extend or renew. . .", also, if you are going to extend and the note/mortgage has a final maturity on the document, the extension would make the maturity date incorrect. You may want to check with your legal on the best way to proceed.

Return to Top
#411696 - 08/23/05 01:21 AM Re: Extending a Payment
Richard Insley Offline
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,097
Toano, VA
Quote:

Customers will jump at the chance to defer their payment...costs them $35.00 - also requires the payment of accrued interest.



In some cases, customers will pay almost as much as a regular payment in order to "skip" a regular payment.
_________________________
...gone fishing.

Return to Top

Moderator:  Andy_Z