Lender charging incorrect interest rate

[rburt]

What is the name of your state? ND

3 Years ago I got a 30 year fixed mortage through a large bank for 6% interest for $120,000. I recently got my payoff and found it to be $125,000 so I got a payment schedule and noticed that my entire $793 payment was going to interest. In addition, at the end of each year they were charging around $1800 in an "adjustment". I called the bank and they acknowledge the error saying that they incorrectly had the interest at 6.75% so my $793 wasn't even covering intersest, much less principle, and therefore the current principle is higher. In addition, it was set up as a 15/30 balloon payment loan, not a 30 year fixed (we did do an 80/20 to avoid PMI, and the 20% portion was a 15/30 ballon at a higher interest rate of about 8%- actually classified as a home equity loan, but not this one).

The woman was going to have her manager send a detailed letter about how they planned on "fixing this". I'm wondering how much I'm entitled to. I'm assuming that they'll fix the previous payments and back-apply the correct amount to principle, as well as wiping off those "adjustment payments", so my principle should be LESS than $120k.

However, what about my income taxes? I claimed incorrect amounts in mortgage interest - should they be liable for those fees?

This was a very emotional ordeal for a couple days as we tried to get ahold of them, and though maybe somehow we'd gotten screwed over into an interest-only loan (although I know I'd never have done that, when something like this happens to begin to lose your reasoning)

Are they liable for anything else?

Thanks for any responses I receive,

 

[seniorjudge]

What is the name of your state? ND

3 Years ago I got a 30 year fixed mortage through a large bank for 6% interest for $120,000. I recently got my payoff and found it to be $125,000 so I got a payment schedule and noticed that my entire $793 payment was going to interest. In addition, at the end of each year they were charging around $1800 in an "adjustment". I called the bank and they acknowledge the error saying that they incorrectly had the interest at 6.75% so my $793 wasn't even covering intersest, much less principle, and therefore the current principle is higher. In addition, it was set up as a 15/30 balloon payment loan, not a 30 year fixed (we did do an 80/20 to avoid PMI, and the 20% portion was a 15/30 ballon at a higher interest rate of about 8%- actually classified as a home equity loan, but not this one).

The woman was going to have her manager send a detailed letter about how they planned on "fixing this". I'm wondering how much I'm entitled to. I'm assuming that they'll fix the previous payments and back-apply the correct amount to principle, as well as wiping off those "adjustment payments", so my principle should be LESS than $120k.

However, what about my income taxes? I claimed incorrect amounts in mortgage interest - should they be liable for those fees?

This was a very emotional ordeal for a couple days as we tried to get ahold of them, and though maybe somehow we'd gotten screwed over into an interest-only loan (although I know I'd never have done that, when something like this happens to begin to lose your reasoning)

Are they liable for anything else?

Thanks for any responses I receive,

Look on your copy of the promissory note and on your copy of the mortgage (deed of trust or whatever they call it where you are).

Are the terms the same as you listed above in your post?

 

[rburt]

Yes, the terms are not at issue anymore (US Bank agrees that they screwed up) - what is at issue is how to fix it and how far do I go in my requests to them? I don't want to push them to pay back the taxes that I incorrectly wrote off if I have to right to do so. I also don't want to just let them pay back the principle that they incorrectly took as interest when they should be making things right (in my mind).

The way I see it, any problems I have financially with this screwup - principle amounts, backtaxes, accounting fees, etc. should be paid by them. But, legally, that may be asking too much.

 

[ice5146]

Look at the Note you signed on both 96,000 1st mortgage and then again at the Note on the 24,000 2nd mortgage.

See if both rates are 6.75% and 8%. According to my calculations, you are paying 6.75% on the 1st, amortized over 360 mos (30 years) on a loan amount of 96k. The Principal + interest = 622.65

Loan amount on your 2nd is 24k at 8% amortized over 360 mos (odd especially for this small of a loan amount) = monthly payment of 176.10 principal + interest. 798.75 total for both. Your post states you pay 793.00 and that didn't even cover the interest.

I think you need to look at the Notes and see if the the rates are 6.75 and 8%. If so, you got screwed at the Settlement Table thinking you were Financing a 30 yr Fixed at 6% as opposed to a 30/15 Balloon. It happens all the time.

Now the flipside to light at the end of your tunnel....

If the Lender/Broker Disclosed RESPA Documents to you with a rate of 6%, A Truth-In-Lending Statement showing a 30 year Fixed, a Finance Agreement for the state property is in showing 30 year Fixed and they DID NOT re-disclose the higher rate or the new loan program being a Balloon, that is a RESPA violation. The Lender/Broker will have to refund your fees to include Origination Fee, Broker Fee, Processing Fee, Yield Spread (premium of the Lender to Broker for charging you the rate they did) and possibly Application and Admin Fee.

Your existing loan will then be bought back from Lender by Broker more than likely and new terms will apply as originally signed for on Disclosures provided to you.

Hope this helps..good luck.

Sounds to me like your Note and loan docs are in fact higher rate and a Balloon but if they didn't re-disclose, turn them into the Department of Banking. Your situation will be corrected in a heartbeat.

 

[rburt]

Here's where I'm at now (8 calls, and 5 hours on the phone with them later):

It is a 15 year ballon ammortized over 30 (I was wrong).

However, they did have the interest rate wrong (had it at 6.75, should have been 5.95) so all of my payments were (incorrectly) going to interest. They are going back correcting all the payment schedules now, but I'm worried about back-taxes, etc...

They also charged me $4,000 in flood insurance that they shouldn't have (are fixing that as well - but it was just one more thing in this whole mess).

What are they on the hook for (charging me wrong interest - never notified me because it was a true mistake, actually never noticed until I had them on the phone)?

Thanks so much for any help - this has been a very emotional ordeal.

 

[m1babar]

Lender Charging wrong interest rate.

I live in Oregon and just found out today that my lender has been charging me an interest rate of 3.75% instead of the 3.5% listed in the mortgage documentation. This has been going on for about 2 years. I understand that this is illegal. What are my options?

 

[TheGeekess]

I live in Oregon and just found out today that my lender has been charging me an interest rate of 3.75% instead of the 3.5% listed in the mortgage documentation. This has been going on for about 2 years. I understand that this is illegal. What are my options?

We'd appreciate if you didn't necropost. If you have a question, please start your own thread.

 

[Banned_Princess]

I live in Oregon and just found out today that my lender has been charging me an interest rate of 3.75% instead of the 3.5% listed in the mortgage documentation. This has been going on for about 2 years. I understand that this is illegal. What are my options?

Your option is to START YOUR OWN THREAD.