Author Topic: Mortgage principle paydown clusterf*ck  (Read 5403 times)

Melisande

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Mortgage principle paydown clusterf*ck
« on: June 24, 2016, 08:46:48 AM »
After much debate (on this forum and IRL), my husband and I decided to aggressively pay down our mortgage principle. Our plan: Make a one-time extra payment of $20,000 on July 1st (when the mortgage payment is due), then a recurring additional pay down of $700/month starting in August. Now, how difficult could this possibly be? Well, I started the process on June 9th and I am still holding the bank's hand as it were, doing my very best to keep them from screwing up yet again!

Timeline:

June 9th: I go to our local branch office (same bank that holds our mortgage, but different division). I tell the branch manager our plan. She says I should write down our request along with all the required information, then she will fax it to the other branch and they will set the payments up for us. So, I craft this letter, being very sure that I am crystal clear as to what I want. (I specifically say that the $20,000 is a one-time only extra payment and the $700 is a recurring payment, for example. I also leave a phone number where they can reach me if there is any problem.) I asked the branch manager to read it over herself to see if it was clear enough. "Perfect!" she said.

Well, ha ha ha!

June 16th: I go back to the bank to make sure that everything has been set up correctly. Nope! Someone has made the $20,000 a recurring monthly paydown. (Yikes! If we had that kind of money, we'd just pay off the mortgage right away and have done with it!). Nothing at all had been done with the $700. So, she suggested I go on-line myself and just set it up the way I want it to be. So, with her looking over my shoulder, I changed the $20,0000 monthly pay down to $700. I figured one thing at a time. Get the recurring extra payments set up first. Then try to do the one-time thing.

June 23rd (i.e. yesterday): We had been away for a week and as I was going through the accumulated mail, I saw a letter from our bank dated June 10th stating that an additional $20,000 will be paid toward the principle on July 1st. I assumed that since the letter was dated before I made the change on June 16th that everything was probably still OK. (I was still a little miffed though that the letter from Suntrust did not specify that this $20,000 was to be a recurring charge.) Well, just to be on the safe side, I thought I'd check the on-line account we'd set up for me last week. And guess what? The $700 recurring charge that I had put in had disappeared. At least they hadn't put the $20,000 back. That would have been worse. But still it was disconcerting enough that I called the mortgage division of our bank directly to see what was up.

The women I spoke with said that the $700 recurring charge had been cancelled because "just today we received a letter with conflicting instructions from you." Me: "What do you mean, just today? I faxed that letter over to you two weeks ago and in fact received a letter from you dated June 10th that the requested changes had (supposedly) been put into effect?" Well, never mind that. Let's just set up the recurring $700 extra payment again. So, we go through the appropriate menus together until I get to a menu requiring me to enter the routing number for my bank, my account number -- all that jazz. "Wait" I said. "I didn't have to do all of this last week (when I originally set up the extra $700 payment online). The rep: "Well, you don't have SurePay set up" (SurePay is their automatic bank withdrawal/mortgage payment program). Me: "Yes, we do! We've had it for years!" The rep: "No, you don't!" At this point I officially lost it and I started ranting at this poor woman on the phone (I apologized later when she did her best to straighten it out). Me: "What is going on here! This is absolutely and totally screwed up! This is entirely your (i.e. the bank's) responsibility and you (i.e. the bank) are going to fix it! And now!" She tried to explain that when there was this supposedly conflicting information they just cancelled everything including the already set up normal automatic payment for our mortgage. So, if I hadn't check the situation (for the 2nd time!) we would have been late on our regular mortgage payment since we thought we had SurePay when we actually did not. I told her that this was an incredibly stupid policy (particularly since they did not bother to notify us of the fact).

It turns out that she couldn't actually re-set up the SurePay for me (although it is the same bank and theoretically she has access to my account information). Besides, I thought it was probably best to do it myself or else it would probably be all screwed up again. So, I did that. Then she suggested that I go ahead and make the 1 time payment of $20,000 over the phone then and there. I went for it because at that point I just wanted the whole thing over and done with.

But now I am starting to worry again. Let's say they do make the $20,000 payment as requested, but then go ahead and take out a second $20,000 on July 1st as originally requested in the letter they now have in their possession. How do I make sure that they are really disregarding this letter now? Should I go back to the bank and fax another letter specifically asking them to disregard the first one (or part of the first one). Or with this just create more havoc (i.e. screw up the recurring extra $700 charge I've set up twice now)? Or maybe I should just log in to my account every day from now to July 1st to make sure things look OK. The whole process seems very opaque to me.

Suggestions?

BTW, it would not be a total disaster if they did withdraw $40,000 instead of $20,000 since we have about $83,000 in cash. It would just be scary, frustrating and uncomfortable. (I'd be really worried about what would happen in August, for example).


Slee_stack

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Re: Mortgage principle paydown clusterf*ck
« Reply #1 on: June 24, 2016, 08:59:01 AM »
Sounds like traditional desk monkey incompetence.  What do they care, its just a job right?

Your post does illustrate how annoying transactions can go (or not go) when you rely on mouthbreathers.

Its a shame that lump sums and extra principal payments couldn't have been completed entirely via a website.

Good reminder that it is never safe to trust other people to do their job.  Always verify.

neo von retorch

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Re: Mortgage principle paydown clusterf*ck
« Reply #2 on: June 24, 2016, 09:08:35 AM »
So glad I was fortunate enough to stumble upon PSECU (credit union) way back in 2001, and now use them for my loans and mortgages.

I'm not 100% but I believe with most "simple interest" mortgage loans, paying $20,000 on June 30th will negate the interest on that amount for your normal July 1st payment, where as paying on July 1st will mean you pay interest on the full balance for the previous 30 days. Something to keep in mind if you have the option (and can get your bank to cooperate.) Of course, your mortgage might not work that way, considering all the trouble you have to go through to make extra payments. (Ideally, it really is all online, click, type, click, done. How is this not a thing at some banks in 2016?)

homestead neohio

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Re: Mortgage principle paydown clusterf*ck
« Reply #3 on: June 24, 2016, 09:24:05 AM »
But now I am starting to worry again. Let's say they do make the $20,000 payment as requested, but then go ahead and take out a second $20,000 on July 1st as originally requested in the letter they now have in their possession. How do I make sure that they are really disregarding this letter now? Should I go back to the bank and fax another letter specifically asking them to disregard the first one (or part of the first one). Or with this just create more havoc (i.e. screw up the recurring extra $700 charge I've set up twice now)? Or maybe I should just log in to my account every day from now to July 1st to make sure things look OK. The whole process seems very opaque to me.

Well, your written instructions are for a one time payment of $20k on July 1.  They should not be doing a recurring $20k based on those written instructions, and if they do, you have a case that it was done in error.  So I wouldn't worry about Aug 1.  If you really want to be sure they don't take an additional $20k out on July 1, you can fax a new letter saying to cancel the prior written request as you were instructed by their staff to make the one time payment over the phone on June XX, which you did.  It seems like they are more likely to cancel all your payments rather than take extra ones, and more instructions might further confuse them.  I'd check your account every day you expect a payment to be made for the next 3 months to make sure the right amount is coming out at the right time and it is repeatable. 

When will your mortgage be paid off assuming the 1 time $20k and additional $700 monthly?  Paying off all debt prior to FIRE is a goal we have, but it is most likely still 5 years away.  Congratulations on making this happen.  Not having to think about debt is bad-ass.

Melisande

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Re: Mortgage principle paydown clusterf*ck
« Reply #4 on: June 24, 2016, 01:40:24 PM »
But now I am starting to worry again. Let's say they do make the $20,000 payment as requested, but then go ahead and take out a second $20,000 on July 1st as originally requested in the letter they now have in their possession. How do I make sure that they are really disregarding this letter now? Should I go back to the bank and fax another letter specifically asking them to disregard the first one (or part of the first one). Or with this just create more havoc (i.e. screw up the recurring extra $700 charge I've set up twice now)? Or maybe I should just log in to my account every day from now to July 1st to make sure things look OK. The whole process seems very opaque to me.

Well, your written instructions are for a one time payment of $20k on July 1.  They should not be doing a recurring $20k based on those written instructions, and if they do, you have a case that it was done in error.  So I wouldn't worry about Aug 1.  If you really want to be sure they don't take an additional $20k out on July 1, you can fax a new letter saying to cancel the prior written request as you were instructed by their staff to make the one time payment over the phone on June XX, which you did.  It seems like they are more likely to cancel all your payments rather than take extra ones, and more instructions might further confuse them.  I'd check your account every day you expect a payment to be made for the next 3 months to make sure the right amount is coming out at the right time and it is repeatable. 

When will your mortgage be paid off assuming the 1 time $20k and additional $700 monthly?  Paying off all debt prior to FIRE is a goal we have, but it is most likely still 5 years away.  Congratulations on making this happen.  Not having to think about debt is bad-ass.

I called the mortgage department's 1-800 number. The rep was very confused at first, but we finally figured out that the original request had been faxed to the SurePay department which *only* handles recurring extra payments. So, that's why they set it up as a recurring payment. Anyway,  the rep advised, as you did, that I make up a letter negating the original request of the $20,000 additional paydown on July 1st and gave me the appropriate fax #. So, I went back to my local branch in personal with my new letter, the fax number as well as the June 10th letter from the bank. The bank rep. called the department in question (which does not deal directly with the public, as it turns out) had a little chat and reassured me that everything was taken care of. I asked for written documentation and she said that I'd definitely be receiving the appropriate letter in the mail. In fact, it had already been sent and the person see was speaking with was looking at the letter on her screen. She would not send the fax.

So, if I don't receive the letter by the end of next week, I'll deal with this some more, but it's probably solved.

According to the new plan we're set to pay off the mortgage almost exactly 7 years from now. Depending on my sense of how the markets will do we might pay it off even more aggressively. One reason we chose to pay it off instead of invest the extra cash is that I had a strong hunch that the next 5 years or so are not going to be great ones for the stock markets. If the situation looks increasingly glum (more instability in Europe, slowing growth elsewhere, oil glut, etc.) there would be even more incentive to put the savings toward the mortgage.

JoJo

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Re: Mortgage principle paydown clusterf*ck
« Reply #5 on: June 24, 2016, 05:54:41 PM »
weird.  I just always put extra with my monthly payment (sometimes $20K +) and mortgage balance was reduced by the extra amount.

Trudie

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Re: Mortgage principle paydown clusterf*ck
« Reply #6 on: June 24, 2016, 08:45:47 PM »
In general, I think banks are a little more than useless... but this is why I like my local one.

PhysicianOnFIRE

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Re: Mortgage principle paydown clusterf*ck
« Reply #7 on: June 24, 2016, 08:53:31 PM »
How bizarre. I prefer online banking. No explaining, no middleman / middlewoman to misinterpret what was written or said.

Punch in the numbers, click submit, and the mortgage shrinks.

marty998

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Re: Mortgage principle paydown clusterf*ck
« Reply #8 on: June 24, 2016, 08:57:00 PM »
Your bank needs to be dragged kicking and screaming into the 21st century.

My loans... all online, and I can make extra repayments whenever I want through the app on my phone by transferring to and from savings/transaction and offset accounts.

Choices

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Re: Mortgage principle paydown clusterf*ck
« Reply #9 on: June 24, 2016, 10:06:50 PM »
How frustrating!

In a perfect world, this could all be done online. But since Suntrust seems to have a knack for screwing things up, have you considered actually writing and mailing extra checks each month with "principal only" in the memo line and wrapped in neon paper with the words "principal only" written on that too? With as much as they'd messed up so far, I'm not sure I'd want them to have access to my checking account anymore.

I had to do this with my student loans. I'd make a payment, they'd apply it incorrectly, and I'd have to call and then they'd fix it. Every Single Month. Argh.

But it sounds like you're on track to pay off your mortgage and be done with them forever very soon!

Taran Wanderer

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Re: Mortgage principle paydown clusterf*ck
« Reply #10 on: June 24, 2016, 10:35:28 PM »
How strange. Our mortgage payment is deducted automatically every month. When I want to pay extra, I write a check (yes, I'm old fashioned), write the amount in the "extra principle" line on the coupon, and send it off. Every month we match to the penny. Doesn't matter whether it's a few hundred dollars or $10,000, it works every time.

Then again, my bank's name isn't Suntrust.

FIRE me

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Re: Mortgage principle paydown clusterf*ck
« Reply #11 on: June 25, 2016, 11:16:42 PM »

Suggestions?

Consider refinancing to a different bank.

I was very happy with BB&T. I had a conventional 30 year fixed rate mortgage, and payment by coupon books. I paid every month, in person, at the bank. The coupons had a space to write in extra principal.

Two or three days after I made a payment, I logged on to their website to make sure the extra payment was properly applied. The extra payment varied, never below $360, but sometimes was as much as two thousand dollars. A new teller messed it up once, but I guess that wasn't too bad as it was corrected in a few days without me having to call them. I paid the 30 year mortgage off in 6.5 years.

The BB&T website would have a link to a updated amortization table, so you could see how much your extra payments were lopping off the end of the mortgage. 

If there is no BB&T in your area, Chase has the best website of any bank I've ever had an account with. I'm sure it would be no trouble to track you mortgage, and most likely make extra payments on the Chase site.

If you do refinance make sure that your mortgage won't be sold to a third party, then extra principal payments can get even worse than your current bad situation. 

mnsaver

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Re: Mortgage principle paydown clusterf*ck
« Reply #12 on: June 26, 2016, 06:33:00 PM »
Weird, I have Suntrust and pay my regular payment and extra online every month (I also use the one time payment option). It lets me enter the regular amount and then the additional principle amount.

Melisande

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Re: Mortgage principle paydown clusterf*ck
« Reply #13 on: June 28, 2016, 07:51:46 AM »
Weird, I have Suntrust and pay my regular payment and extra online every month (I also use the one time payment option). It lets me enter the regular amount and then the additional principle amount.

Yeah. Suntrust has a very good reputation around here and we've never had any problem with them in the past, which is why I was so frustrated with this problem.

I was also frustrated because my personal philosophy has been always deal with people when possible instead of doing everything online or with a machine. I hardly ever use the automatic teller and always go into the bank and talk to people there. This has nothing to do with supposed technophobia (heck before I retired I was a "software engineer"), but instead because given the choice I'd rather interact with (competent) people rather than machines and also because I really do think that automation is taking more jobs than it replaces. Sigh. Yes, now I see that it would have been a gazillion times easier just to do it myself on-line and that is unfortunately what I will do in the future.

markbike528CBX

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Re: Mortgage principle paydown clusterf*ck
« Reply #14 on: June 28, 2016, 12:06:12 PM »
I had opposite problem "oh, just do it on line, its easy"  two years running, and now just go down to the branch and sit and handhold a person (who usually hasn't done this before), verify it on-site and then re-verify it online in a day or so.

frugaliknowit

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Re: Mortgage principle paydown clusterf*ck
« Reply #15 on: June 28, 2016, 01:25:17 PM »
I have similar problems with my bank.  They are fine with an automatic extra monthly payment of $XXX dollars per month (which I can do over the phone).  Whenever I request an "off-cycle" additional principle payment (they call it "curtailment"), 50% of the time it is done correctly, the other 50% of the time it either goes into "unapplied funds" or it goes in as next months payment (WTF!).

I spoke with the rep on the phone about this.  She said when I call "auto-pay", they just apply the payment (regardless of whether I say "curtailment"), then it's up to some other department to apply it (correctly or not).  So, apparently I have to make 2 phone calls, one to auto-pay, then a second phone call if it's done incorrectly.

When I have tried the "on-line" payment, nowhere does it say anything about applying to principle.  I called customer service to ask how I specify any on-line payments go to principle, they tell me they're not sure.

The long and the short of it is I either need to:
1.  Only do the same amount of extra principle each month WITH the regular payment.
2.  Verify correct allocation on-line.  If done incorrectly, call a second time.

It just makes me wanna "club this mortgage to death" so I don't have to deal with these Bozos anymore...:)

« Last Edit: June 28, 2016, 01:27:11 PM by frugaliknowit »

Miss Piggy

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Re: Mortgage principle paydown clusterf*ck
« Reply #16 on: June 28, 2016, 01:38:28 PM »
I don't understand the need for all of the pre-planning and pre-arranging. I think you may be making this far more complicated than it needs to be. Why not simply write a check for 20,000 and mail it in, and as someone suggested above, specify that it is to go toward principal?

On a related note, our mortgage was with Suntrust, and we paid our extra payments electronically through Suntrust's website. Never a problem. Ever.

Catbert

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Re: Mortgage principle paydown clusterf*ck
« Reply #17 on: June 28, 2016, 04:53:43 PM »
I don't understand the need for all of the pre-planning and pre-arranging. I think you may be making this far more complicated than it needs to be. Why not simply write a check for 20,000 and mail it in, and as someone suggested above, specify that it is to go toward principal?

On a related note, our mortgage was with Suntrust, and we paid our extra payments electronically through Suntrust's website. Never a problem. Ever.

Even mailing them a check may not work. 

this all reminds me of one of the times I was totally pissed at BoA (unfortunately not the only time).  Normal payments plus a bit extra was set up through auto pay and worked fine.  They I decided to really work on getting it paid off.  To preclude problems and confusion I went into a branch so that the extra thousands would be applied to principle and not future payments.  I was very clear with the clerk and double checked the receipt she gave me which said "principle only payment".  A couple of days later I get the monthly statement which showed that the monthly payment was made out the extra money I'd taken in.  My blood pressure surged (another screw up by BoA)!  As it turned out I could only make an extra payment after   the regular payment had been made.  I could make an extra payment from the 10th to 31st of the month, however, the first 10 days before the regular payment was made the computer wouldn't accept an extra payment.

homestead neohio

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Re: Mortgage principle paydown clusterf*ck
« Reply #18 on: June 30, 2016, 07:17:14 AM »
As it turned out I could only make an extra payment after   the regular payment had been made.  I could make an extra payment from the 10th to 31st of the month, however, the first 10 days before the regular payment was made the computer wouldn't accept an extra payment.

Learning things like this is frustrating.  Did you change your payment date to the 1st?

Catbert

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Re: Mortgage principle paydown clusterf*ck
« Reply #19 on: June 30, 2016, 12:08:05 PM »
As it turned out I could only make an extra payment after   the regular payment had been made.  I could make an extra payment from the 10th to 31st of the month, however, the first 10 days before the regular payment was made the computer wouldn't accept an extra payment.

Learning things like this is frustrating.  Did you change your payment date to the 1st?
)

No, I just remember to wait until after the 10th to make an extra payment.  I only needed to make a couple (5-20K) extra payments to kill it off.  The rule made sense after it was explained to me but frustrating that it wasn't explained to me since I made a point of going into the branch tp preclude screw ups.