Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Ed Cage

If you intend to make a separate “Principal Only” payment with your regular payment, send in the “Principal Only” payment first.


The reason I say send in your principal only payment first is because your mortgage servicing company will almost always apply the portion of your payment containing the interest first and your principal payment afterwards for a good self-serving reason.  It’s a wee bit self serving but it’s not illegal. It gets them extra revenue simply by holding your “Principal Only” payment.
      If the principal only portion is applied first, the amount of interest owed declines slightly based upon the size of the principal only payment. Admittedly it is only a small amount unless you make a huge principal payment at a very early stage of your loan.

Anyone having questions on this explanation can ask them; I’ll explain.  On this one I’d prefer the questions (if any) be asked publicly on the MSF forum so that others can benefit.

Ed Cage    

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Moose
I would only add that the terms and conditions of the note and mortgage define how payments are supposed to be applied.

I suggest you order a full statement of account (payment history) at least every three months just to make sure you have a hardcopy on hand - one they can't go back and fiddle with when they get caught making "mistakes."

Moose




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Ed Cage

Moose wrote:
I would only add that the terms and conditions of the note and mortgage define how payments are supposed to be applied.

I suggest you order a full statement of account (payment history) at least every three months just to make sure you have a hardcopy on hand - one they can't go back and fiddle with when they get caught making "mistakes."

Moose


Moose Example: Your regular hypothetical $1,000 payment might include $300 going to principal and $700 to interest during the natural course of events -  As you know early payments are very high in interest and later payments decline in interest charges while the amount applied to principal increases with every regular payment OR “PRINCIPAL ONLY” PAYMENT.

~ ~ I don't have to tell you while the application of a regular payment accompanied by a "Principal Only" payment in the same envelope may lead the borrower to believe they will be applied simultaneously, it is not unheard of for the servicer to intentionally hold the "Principal Only" payment anywhere from 7 days to as much as 6 weeks.  

 

The lesson is this: Don't believe the servicer will judiciously apply what is written in to the contract (if anything) on this matter.  

I would send in a $200 "Principal Only" payment for June 2 weeks early.. Or perhaps May 15th. Further I would code it $200.06 to tell me what month it was for.  I suggest the extra $200 never be included into the regular payment making it a $1,200 check. In spite of what the contract may say, they generally can take that extra $200 and apply it to some dubious "Escrow Account" or "Suspense Account" that may not even be valid.

 

Ed Cage   |   ecagetx@gmail.com 

PS: Your suggestion to "order a full statement of account (payment history) at least every three months just to make sure you have a hardcopy on hand" is a good one.  
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