Is this lender practice legal ?

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So, I financed a loan through Citi. State is Texas. Closing was June 14.

They are giving me some credits towards closing (because I selected a higher rate). At the time of closing, they did a principal curtailment because I got too much credit (per their system). So this curtailment amount (~$1500) got applied towards principal on the date of closing. However, the partial month interest was calculated on the pre-curtailment amount. So, in effect they charged me interest on the ~1500 even though I never borrowed it.

Also, I was charged prepaid interest based on when they prepared the CDF which was the 9th. even though they wired the money only on the 13th (with closing on 14th). I always thought that interest was to be charged from the day of closing.  Is this allowed and if so, how many days ?

The reason I did not make a stink was I had no option on the 9th and I did not want to miss out on the deal.

Cheers!
Michael
 

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These days an awful lot of agreements prohibit class action so they can't be called to account on stealing a little from... (more)

LorenPechtel (Sep. 08, 2016 @ 3:04p) |

How do you determine when they started charging interest? Just from the prepaid days?  On mine the prepaid days equal'd ... (more)

Bend3r (Sep. 08, 2016 @ 3:10p) |

^^^ All the dates are in the documents. The payoff doesn't necessarily make it to the lender on the closing date, so the... (more)

scripta (Sep. 09, 2016 @ 2:40a) |

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Regarding partial month internship for $1,500 it's about $4 for 30 days total at 3.5%. Not sure on the other 4days interest. Need to know the loan amt. iMO, not worth your time. Now of you want to fight on the principle, that's a different story.

Save all your paperwork and get in on the forthcoming class action lawsuit.

Its more on the principle.  Including the 4 day interest, I lose about $165 - just the interest on $1500 is about $5, slightly less.
However, multiply that by the amount of people Citi is gouging and this will be tens of millions of dollars.

I recently learned that in CA there is a specific disclosure talking about the interest that may be charged to you between a previous business day (Friday) and Monday (or Tuesday if Monday is a holiday) if you actively elect to close on a Monday (or Tuesday if Monday is a holiday). Don't know if TX has a similar disclosure requirement, but all of these numbers should have been in your docs in advance, not just popping up last minute.

Your logic about the partial interest makes sense to me. What did your mortgage broker at Citi say when you asked them?

scripta said:   What did your mortgage broker at Citi say when you asked them?
  Why should OP ask them, we got FW members ready to jump on the first question that's posted. Due diligence is just a suggestion 

@Veekay - I would like to know what kind of due diligence would you be doing when you receive closing docs 2 days before closing !! Anything before that is only an estimate - and they always say its an estimate. The estimates are always conservative and usually do not go up. So, charging an extra 4 days of interest on the estimate is ok but on the final closing is not.
When I talked with the loan officer, I was told it is what it is - he could not change them. That is how Citi calculates. Don't think the loan officer has too much leeway.
I had the option of walking out of the loan, which would mean I would lose the money for appraisal, inspection and my earnest money
 

Slightly unrelated, but how did you research your options in the first place? I'm surprised that you went with Citi, considering that I've never seen their rates and fees to be competitive.

scripta said:   Slightly unrelated, but how did you research your options in the first place? I'm surprised that you went with Citi, considering that I've never seen their rates and fees to be competitive.
  I refi'd with Citi once via a mortgage broker several years ago. At that time, they had the lowest no points/no closing cost refi rate out there (except for a couple of no name folks).

I did. They were giving me the best rate. Plus a lot of lenders won't do out of state purchases (I live in CA). The rates and fees disclosed by Citi were the best.
Overall, it is still ok - its this sneaky fees that are irking me.

It might get caught in the post closing review. I think they have 30 days to recon the fees actually paid vs the CD so its possible you might get a refund yet. The process changed in Oct so I am not that familiar with the new one.

Personally I would close on it and file it away in a safe place.  Then if the crap hits the fan and I need to invalidate it for some reason I can prove it was not lawful therefore should be voided.  4 days of interest is nothing for that ability IMO

oh and for the guy who voted red I suggest you go read about our case where in 7 days we will begin to prove hundreds of thousands of mortgages are not lawful therefore could be voided by the property owners if they so wished and of course they could also prove damages thus receiving compensation.  

mikef07 said:   Personally I would close on it and file it away in a safe place.  Then if the crap hits the fan and I need to invalidate it for some reason I can prove it was not lawful therefore should be voided.  4 days of interest is nothing for that ability IMO
  Yeah try this tactic in a place like Lee County, FL.  Great way for the judge to speed up your foreclosure sale date. 

Your lender might require that you put some percentage down, such as 5%. So lets say you put 5% down but get 6% back in credits, your lender isn't gunna be too happy about that. So your lender might have to take back some of the credits or otherwise your lender won't move forward without you having the requisite skin in the game.

@Mikef07: Good odea. I will definitely save all correspondence and documents on this transaction.
@OIiverQuackenbush : We are talking about closing cost credits only - I put down about 25%, so that angle is definitely ruled out.
 

GrooteM said:   @Mikef07: Good odea. I will definitely save all correspondence and documents on this transaction.
@OIiverQuackenbush : We are talking about closing cost credits only - I put down about 25%, so that angle is definitely ruled out.

  Take notes and write down who and when you spoke to them.  Print out email correspondence and print out phone records of when and what number you called.  Recalling information years after it happens is very hard.  Don't just print and put in a folder.  Write on the actual paper why you printed it out and the significance.

GrooteM said:   @Veekay - I would like to know what kind of due diligence would you be doing when you receive closing docs 2 days before closing !! Anything before that is only an estimate - and they always say its an estimate. The estimates are always conservative and usually do not go up. So, charging an extra 4 days of interest on the estimate is ok but on the final closing is not.
When I talked with the loan officer, I was told it is what it is - he could not change them. That is how Citi calculates. Don't think the loan officer has too much leeway.
I had the option of walking out of the loan, which would mean I would lose the money for appraisal, inspection and my earnest money

  
OP did not mention that you clarified with the loan officer. So you did your due diligence (or at least how much you could in the time-frame you had), and based on the opportunity cost you decided to take the option you took. 

Now look at the same opportunity cost of trying to recover the four days interest. You can start barking up the tree of Citi to see why it was not disclosed until closing. They may pull up some document to show a fine print that it was disclosed or refund you.  

I wonder what city and state you are in. Some states and municipalities have laws on this?  Also, I might recomend a call to an agency in the state if I know which state. 

Should have taken the lower rate instead of the $1,500.

donotdrinkPBR said:   Save all your paperwork and get in on the forthcoming class action lawsuit.
  
These days an awful lot of agreements prohibit class action so they can't be called to account on stealing a little from a lot of people.

scripta said:   I recently learned that in CA there is a specific disclosure talking about the interest that may be charged to you between a previous business day (Friday) and Monday (or Tuesday if Monday is a holiday) if you actively elect to close on a Monday (or Tuesday if Monday is a holiday). Don't know if TX has a similar disclosure requirement, but all of these numbers should have been in your docs in advance, not just popping up last minute.

Your logic about the partial interest makes sense to me. What did your mortgage broker at Citi say when you asked them?

  How do you determine when they started charging interest? Just from the prepaid days?  On mine the prepaid days equal'd days in month past funding day (9/6), not my closing date (8/30).

^^^ All the dates are in the documents. The payoff doesn't necessarily make it to the lender on the closing date, so they might ask for a buffer, just in case. You would then get a refund for overpayment.



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