HSBC $13,000 early payoff penalty for $79,000 mortgage in Ohio
CM in Ohio said: “We have struggled in our life with money alittle. We were able to refinance with HSBC in 02 on our home amount of $79,000.00 payments of $787.14 a month. Now things are looking up for us and we are refinancing our home with Fifth Third Bank in Ohio. Our payoff with HSBC we thought was around $75,000.00…..NO! There is deferred interest of $13,000.00 on top of our $75,000.00 So to pay them off we have to pay them $89,000.00 which is more then we borrowed in the first place.
It is hurting use really bad. We have the money to do the full $89,000 but we are not happy about it. We told HSBC we did not know anything about it. HSBC informed us that it was on our statement each month….which we do not receive at all. We have asked and asked for a statement and never have had one. So how we are taking this is as an Early Payoff Penalty which we never knew about? We have tried so hard to get ahead, now that we are getting it done, here is HSBC taking us right back down. If we can’t get this new loan, we are going to just give up our home because with these people (HSBC) we will never own our home. Thanks for your time.”
Editor’s Note: We have written statements from HSBC employees, homeowners, and personal experience that testifies to the fact that some items are overlooked or never mentioned at the closing table. $13,000 as an early payoff? No printed statements? Let’s assume you got a copy of your contract and other papers at closing. Was your loan set up through a mortgage broker? Is the early payoff penalty on the original documents? Is the good faith estimate anything like the final figures? Send all of this to the OCC and your state attorney general. Ohio is already worried about blight, foreclosures, and the rust belt. Good luck to you.
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hfc/bfc no longer charges prepay penalties on existing loans deferred interest is due to missed payments by the borrower ,,just request a payment printout from the branch where loan was obtained
I love how customers are surprised by deferred interest. What did you think was happening all of those months you skipped your payments? Oh my, you mean the company actually expects you to repay your debts? What did you think, the loan was for free? There is no ppp on a loan that old. They should charge a stupidity penalty for people who are allowed to make complaints like this.
ten bucks says this customer had a past bankruptcy. in most bankruptcy cases liens against the home are exempt or unaffected by the bankruptcy. this is to allow the debtor a chance to wipe away personal debt while still holding on to his/her most valuable asset, the home. bankruptcy protection laws, however, prevent lenders from making any attempt to collect debt after a bankruptcy discharge. what this means, is that if you had a bankruptcy and chose to keep your home it is ILLEGAL for your mtg company to send you a statement because a statement is a written attempt to collect payment for debt. your mtg company does, however, have the legal right to foreclose on your home even after a bankruptcy has been discharged. mtg companies lose lots of money when they have to foreclose on homes so they would much rather that an individual who declared bankruptcy keep their home and continue to make payments. no matter how many times the customer may request a statement the mtg company is LEGALLY PREVENTED from sending one. also, the pre-payment penalties at hsbc/hfc are only 2yrs. deferred interest is a COMPLETELY different concept than a pre-payment penalty. DUH! deffered interest occurs when a customer falls behind on their payments and as a FAVOR to the customer the mtg company allows the customer to skip payments or make partial payments until they can get caught up. these missed payments are not just forgetten about. that is still debt that is owed. the mtg company just puts it on the back end of the loan. if you have accumulated $13k in deferred interest than you have had a VERY BAD payment history—you must have missed lots of payments and made lots of late payments etc..etc.. you should be glad that the mtg company didn’t foreclose on your home!!!
Almost every mortgage company in the United States puts this on their statements: “If you received a bankruptcy discharge this statement is for informational purposes only…” –so you call yourself ‘learn the truth’ and then you say it is illegal to send a statement. You are a joke and you don’t know what you are talking about. You must live at home or in an apartment or you could look at your own statement to learn the truth. Your comment is filled with supposition and indicative of the uninformed. I certainly hope you are not representing your experiences as a mortgage professional or you need to find a different job.
So now we have two replies to two different questions, both of which pertain to statements, and both are wrong. One person said a statement is only a courtesy and there is no requirement to send a statement, which is incorrect and violates FDIC law. The other, seen above, said no matter how many times the customer may request a statement the mtg company is LEGALLY PREVENTED from sending one, which is totally untrue. This goes back to leadership and proper training, or lack of it. Branch managers and supervisors need to train personnel on all aspects of the law. Clear policy should be issued by the company’s legal department. Defending a company or bank based on uninformed incorrect supposition serves no purpose. The truth is HSBC employees said the same things back in 2005, thus one must think that leadership failed to correctly train those who say the same incorrect things two years later. That’s why you have a legal department.
live.phone thank you for your response. you actually made me question myself so i went ahead and looked up the bankruptcy laws to get the real truth. i was slightly off before. After you file bankruptcy all of your creditors are mailed a Notice of the Bankruptcy. Once your creditors receive this notice they are prohibited from contacting you to request or demand payment, this includes sending you your monthly billing statement. Your creditors CAN still give you information about your account if you call them, but they cannot call you. If you wish to keep your home, you should continue to send in your monthly payment as usual. Often, after awhile, the mortgage/finance company will ask you to sign a reaffirmation agreement which is a contract you sign after you file Chapter 7 bankruptcy that legally binds you to the original terms of the contract. If you sign this then you are once again bound to the original terms of your mtg/loan and your billing statements will resume. You do not, however, HAVE to sign the reaffirmation agreement, you can normally just continue to pay as usual. If you do not sign the reaffirmation agreement then there is no binding loan agreement between you and the mtg company. in other words, you are not obligated to pay your mtg/loan. remember, however, that the mtg company DOES have the right to foreclose on the home. mtg companies lose money when they foreclose so this is usually a last resort. the mtg company would much rather have you keep paying on your mtg after a bankruptcy. I do want to correct my previous statement where I said that it was ILLEGAL for the mtg company to ever resume sending statements no matter how many times the customer requests. Here’s the real truth—The mtg company IS prohibited from sending a statement after they receive Notice of the Bankruptcy, BUT….if the customer continues to make payments AND asks the mtg company in writing to resume monthly billing statements then the mtg company can resume mailing statements. Keep in mind, however, that the mtg company is not REQUIRED to resume sending statements until or unless the customer signs the reaffirmation agreement. Without signing the reaffirmation agreement the mtg/loan is NOT a binding contract between customer and lender.
This sounds to me like you are all on the wrong page. Deferred interest on this case sounds like a negative am loan. This is a very bad habit that alot of lenders started a few years back to intice loans at a lower rate. Actually, the borrower was charged the higher rate and the “deferred interest” that they chose to not make the full payment was tacked on to the end of the loan. I own a mortgage brokerage business and will not allow anyone to do a negative am loan. I have lost alot of business due to this, but at the same time, I have gained alot when the client realized that they owed alot more than they ever borrowed. Negative amortization loans should be illegal.
The simple answer on this is the customer has a simple interest loan. Meaning interest is charged on a daily basis. If the customer is not making payments approx every 30 days as stipulated in the contract and they are waiting longer between payments a standard payment may not be enough. With a simple interst loan it is imperative that a customer maintain a payment plan. Whether its monthly, weekly, biweekly… the key to a simple interest loan is getting on a schedule and sticking with it. For customers who do that, simple interest is a great loan.
HSBC no longer writes simple interest loans. My guess is because for the average consumer the concept is very difficult to grasp. The mortgage loans written by HSBC now have a schedule to schedule interest. This limits the benefits of biweekly payments, but makes the loan overall simpler to comprehend from a consumer stand point.