Tag Archives: Ginnie Mae

Is your lender collecting too much?

I recently had this happen with a lender who I have done a lot of business with in the past.  A number of my past clients were refinancing their VA home loans and paying off this lender with my new VA home loan from a different lender.

The old lender was trying to collect extra interest until the end of the month when we are paying them off between the first and the 14th of this month.  The correct way is to do a daily proration of the interest until the day the old lender receives the payoff.  They are not due any interest from the client as per the note they signed.

When the first of the VA loan clients were paying off their loan, the numbers didn’t add up to what we had set up.  I got to digging into the closing numbers and noticed the payoff amount was several hundred dollars higher.  After checking with the Escrow Officer to see it that is what she had been given, she said the lender stated they don’t do daily prorations of interest.  I immediately called the lender for an answer as to why they are over charging my clients.  It took several phone calls and voice mails, but I got an after hours call back.

The lender’s representative stated first that their systems didn’t calculate daily interest.  I stated there is nothing in the note that says a client is responsible for a whole months interest when they payoff before the end of the month.  After reviewing the clients note, the lender’s agent said she would manually calculate a payoff for the expected date of funding.  She also said that the loan had been placed with Ginnie Mae, a buyer of government insured notes and that GNMA demanded a full month’s interest on any note paid off.

That is their problem, not my clients.  The client didn’t take the loan with the understanding they would be charged for a full month.  It would have been different if it was a term agreed to upfront, but it wasn’t.  The lender has to pay this, not my client!

Now, there are loans that this is disclosed on, FHA loans are not daily prorated for interest due.  As a result, we try to close those towards the end of the month to best benefit the client.

I have a feeling that this lender knew what they are doing is not allowed, but doing it anyway to avoid paying out the extra interest.  They got caught, and I telling my fellow Loan Officers and Realtors about this.  I can’t imagine how many home owners have been overcharged in the past.

 

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