Mortgage Interest Overcharge
Refund Evaluations
Get and Save Homeowners Big $$$
And Why It May Help You Too
Especially If You're a Homeowner in California
As seen on...
Here's what the National Media has said about
the problem of Mortgage Interest Overcharges...
"It pays to check loans for overcharges; of 9,000 mortgages checked, errors were found in nearly half of them. The average refund owed to homeowners: $1,588" - The Washington Post
"...the mortgage industry was rocked by charges that one-quarter to one-half of all ARM loans may contain errors - miscalculations that are possibly causing homeowners to be overcharged by billions of dollars." - San Francisco Chronicle
"Homeowners should never trust their bank's calculations [especially] on their adjustable rate mortgage payments." - The Wall Street Journal
"Loan errors widespread." - USA Today
"...mortgage lenders are returning money to millions of homeowners..." - Bloomberg Financial
"Studies show that 30 to 50 percent of mortgages have been adjusted wrongly." - Woman's Day Magazine
And while statistics have shown the national average refund to be about $1,500...
21% of refunds have fallen into the $3,500 to $10,000 range and...
13% of refunds have been for more than $10,000!
Imagine for a moment you're standing in a room with 3 of your friends and you all have adjustable rate mortgages on your homes...
According to respected government and media sources like the ones above, and many others, the chances are very good that one and maybe even two of you are probably overpaying on your mortgage. Are you one of them?
Keep reading to learn how you can easily find out if you're overpaying...and how to get your money back!
A brief history of the dilemma...
The problem of interest overcharges on mortgage loans was first brought to light in the late 1980's during the Savings & Loan Crisis that eventually led to the Savings & Loan "Bailout" by the Federal Government. Once the U.S. Congress agreed to the "Bailout" they immediatedly sent in auditors from the Federal Savings & Loan Insurance Corporation (F.S.L.I.C.) to scrutinize the books of the largest S&L's.
John Gedds, a Federal Regulator, while testifiying in front of a U.S. Senate Sub-Committee, reported that 47.5% of all the Adjustable Rate Mortgages contained errors amounting to overcharges to homeowners of about $15 billion. Separate individual investigations conducted later by the Government Accounting Office (GAO) and the Resolution Trust Corporation (RTC) confirmed these finding and added "overcharges on ARM's could reach $60 billion..."
Naturally, the staggering amounts of interest overcharges that were discovered by the investigations into the S&L's next led investigators to take a closer look at other mortgage lenders. So, beginning in the early 1990's federal and state agencies began putting the lending industry on the "hot-seat" and Attorneys General of several states along with class-action lawsuits, over the years, have achieved some results against specific lenders.
Here are some examples...pretty impressive but it's just scratching the surface of a multi-billion dollar problem affecting American homeowners:
"Florida's largest bank will provide funds to 190,000 homeowners on their mortgage, due to overcharges." (Attorney General Bob Butterworth, July 1995)
"Citicorp agreed to pay back overcharges to 16,000 customers in a class-action suit"
"Four of the largest mortgage lenders settled court actions for over $330 million in overcharges."
"Attorney General Abrams (NY) obtains $150 Million refund in an overcharging case from Fleet Mortgage, the nation's largest lender!" He went on to be quoted...
"...there's a 50/50 chance that, by fraud or incompetence, your lender is overcharging you!"
Robert Abrams, New York Attorney General 1978-1993
As you might expect, the intense scrutiny and the lawsuits that followed threw open the doors to some sweeping changes in the mortgage lending industry (which seems to happen about every 7 to 10 years - the issues of "exotic mortgages" and "loan suitability" are starting to sweep through our industry right now...and in our opinion, it's about time!).
Unfortunately for homeowners, the Federal Government & lenders simply CAN NOT regulate away the biggest underlying cause of the errors...
In order to understand WHY we need to explore WHAT the 2 main factors are contributing to the errors.
#1 - The calculation of ARM rate changes are complex financial tranactions often requiring frequent and rather complicated adjustments which lends itself to errors occuring in a variety of ways. For example, a homeowner can be overcharged if any of the following errors occur during the origination, processing, or servicing of the loan:
Mistakes in the original loan setup (conflicting clauses, missing information, riders, addendums)
Incorrect factors used in calculating the payment
Incorrect application of Interest Rate Caps
Selection and use of incorrect Index Value, Type or Date
Faulty Index look-up methods
Use of incorrect Margins
Improper Rounding Methods used
Miscalculation of monthly payment factor
Calculate the wrong number of days between two interest charge periods
Use of incorrect loan balance
Use of incorrect Index
Improper allocation of payment between Interest & Principal
Failure to properly post "extra principal" payments due to suspense accounts
Late fees incorrectly applied
Bi-weekly payments improperly applied
#2 - This is the big one...the primary cause for the errors listed above...the one that will never be regulated away...
Even though we live in the computer age, no matter how sophisticated the computerized system a lender is using to process and service it's loans CLERICAL ERRORS CAN AND DO OCCUR when data is initially entered and/or updated.
Clerical errors can also occur during other phases in the "life of a loan" like the servicing process, especially during recalculation of monthly payments after adjustment periods, when the loan is sold or transferred to another lender, or when the original lender has gone out of business (this is happening almost daily in the sub-prime market right now).
It's a documented fact that when variable mortgages are adjusted every year or so, the employees making the adjustment can and do make miscalculations and errors (lots of them, actually).
The errors are simple mistakes made by data entry clerks who are toiling in the dull and monotonous grind of sifting through and interpreting heaps and heaps of loan papers and entering data into a computer.
That's why we'll never be able to regulate this away...you can't legislate away sloppy workmanship.
Check out these little gems...The following are taken directly from actual lender Mortgage Notes, Riders or Addendums:
"The interest rate will be based on an index as of the last business day of the second month preceding a change date." (Do you think an overworked clerk with a desk piled high with ARM adjustments to make might misinterpret that clause?)
"The Note Holder will then round up the result of this addition to the nearest one-eigth of one percentage point (.25%)." (One-eigth of one percentage point is .125% not .25%...in case you didn't notice; that's double!)
A change date clause on an ARM stated "on the first day of 3/22/97" (Will the person in the loan servicing department choose the 1st or the 22nd...it's anybody's guess...but it could be your loan and ultimately your money at stake)
And the list of errors, contradictory/conflicting verbiage & in some cases blatantly absurd "clauses" goes on and on...
Simple human mistakes or misunderstandings...simple, yet potentially expensive mistakes that may be costing you hundreds possibly thousands of dollars.
Throwing fuel on this money burning fire is the fact that new loans are constantly being originated, old loans are getting refinanced or paid-off and adjustable rate mortgages have taken a bigger and bigger share of the market as a whole.
Trying to keep up with this constantly changing environment is a bit like trying to juggle live kittens while standing on a basketball in a wind storm, my point being...it's extremely difficult.
Since this story originally broke in the early 1990's it's slowly faded from the media's and the public's attention but it may be more important today than ever before because of the...
"Frankenstein Effect" of the 2001-2005 Refi-Boom 
Like Dr. Frankenstein re-animating and breathing life back into the patchwork of body parts that made up his monster, the recent Refi-Boom may very well have done the same for mortgage interest calculation errors.
The reason is pretty straight forward, with trillions of dollars (yes, that's trillion with a "T") in mortgage transactions, literally millions upon millions of new home loans being originated for purchases and refinances the mortgage industry was in a hiring frenzy, desperately attempting to keep up with the overwhelming demand created by American home buyers and owners.
This frenzy led to a massive influx of inexperienced new loan officers, processors and staffers, coupled with a crushing work load. At the height of the boom, some of the largest lenders were closing tens of thousands of loans per month! There's no way to know for sure how many mistakes were taking place during this 'input' phase of the loan originations let alone the subsequent 'payment adjustment' phases.
Combined with the fact that the average loan amount today is much larger than it was in the early 1990's, thanks to the double-digit appreciation rate most of the country has experienced, the cost to homeowners is as scary as any horror film to hit theaters.
You see, the national average loan amount in the early 1990's was around $150,000 but now...
California Homeowners (and others) at greater risk
According to the Federal Housing Finance Board (FHFB) the average loan amount in California is $346,190. This means that California and other high price areas of the country like D.C., Hawaii and Maryland are at greater risk because small calculation errors are magnified by the larger loan amounts!
Think about it...if the average refund amount is around $1,500 and that's based on the old national average loan amount of about $150,000 then a California homeowner today with the exact same percentage calculation error and the average California loan amount would be due a refund of more than double the national average...$3,461!
And if the percentage error that caused a national refund of $10,000 (13% of refunds fall into this category) was found on the average California homeowner's loan today the refund due would be...$23,100!
Now, consider that the FHFB also reports that a whopping 59% of all existing mortgages in California are Adjustable Rate Mortgages (the highest ratio in the country) and you begin to quickly realize why California homeowners are at the greatest risk for being overcharged on their home loans.
What's your current loan amount? $400,000? $500,000? $600,000? More? Imagine how much bigger your refund might be with a super magnified loan amount like that. Millions of homeowners are overpaying are you one of them?
Here's how to find out if YOU have a refund...
We've made it easy by offering 4 levels of assistance in helping you get your current mortgage loan(s) evaluated - a quick overview:
For the Do-It-Yourself'ers (DIY's) - Basic Level - A no-cost option for homeowners interested in "rolling up their sleeves", sharpening their pencils and diving into their own mortgage paperwork and determining proper current & future adjustments.
For the Do-It-Yourself'ers (DIY's) - Silver Level - A very low-cost option for homeowners who want to perform an in depth "Look Back" refund analysis for the life of their loan(s).
For the Pay-The-Pro'ers (PTP's) - Gold Level - A competitively priced option for homeowners who recognize the value and want the 'peace of mind' that comes from a professional financial analysis of their largest debt obligation.
For the Get-A-Pro-For-Free'ers (GAPFF's) - Platinum Level - An unbeatable option for home buyers and owners who are currently in the market for mortgage financing for either a purchase or refinance...around the offce we call it our "Get the Gold for FREE!" Level.
Okay, you caught me, those last two acronyms don't actually exist in our current vernacular...yet. I was just having a little fun when I made them up. The mortgage industry's chock full of 'em, so I thought I'd join in the festivities.
Let's take a closer look at what you get with each of the 4 levels...
Basic Level Assistance (D.I.Y. I):
With help from one of the nation's major publishers of consumer loan information we've put together our ARM Eval Kit to assist you in performing your very own analysis of your loan's current and future rate adjustments. Our kit is packed with useful information and instructions like:
Step-By-Step instructions for verifying your lender has correctly adjusted your rate
A follow along worksheet to 'plug in' your numbers for easy calculation
List of the documents you'll need to find all the particulars for your loan
'Live' Internet links to current and historical ARM index values to simplify the data gathering process for you
'Live' link to a multi-year calendar to help you pin-point the exact date your lender selected the index value
A simple 'Fraction to Decimal' Converter Chart
And much, much more
Click here now to request your Free ARM Eval Kit!
Silver Level Assistance (D.I.Y. II):
If you're a DIY homeowner who's ready to tackle the project of performing a full Mortgage Interest Overcharge Refund Evaluation of your loan in order to identify and receive any interest overcharge refunds your lender may owe you...we've made arrangements for you to get a copy of The ARMCHECK Do-It-Yourself ManualTM
Kiplinger's Personal Finance Magazine, in their "Worth Getting" section, had this to say about the manual:
(Kiplinger cover is representative, not the issue the comments below appeared)
Homeowners with adjustable rate mortgages can make sure they're paying the correct amount each month with a new do-it-yourself manual...the pages of fill-in-the-blank forms and interest-rate tables allow you to do your own audit of your lender's rate changes.
Math is limited to addition and subtraction; the tables provide the percentages you need. The ARMCHECK Do-It-Yourself Manual: How to Audit Your Adjustable Rate Mortgage even includes a form letter for a refund.
The manual and it's author have also been featured on ABC's Good Morning America, CBS, CNN, CNBC and NBC television.
They've also been profiled in hundreds of publications including USA Today, The New York Times, The Washington Post, Money Magazine, The Wall Street Journal, US News & World Report, Barrons and Forbes.
Click Here to request this highly recommended manual for the low price of only $44
Gold Level Assistance (P.T.P.):
Do you prefer to use the services of an accountant or CPA instead of doing your own taxes? Do you work with a financial advisor or CFP instead of trying to go it alone? Did you draw your own 'will' and 'trust' documents or did you work with an attorney to draft them?
If you're the type of homeowner who prefers to have hightly-trained, skilled professionals work with you regarding your important financial decisions, analyses & transactions we offer our Mortgage Interest Refund Evaluation (M.I.R.E.) service...somebody help me, I think I've come down with a bad case of acronymitis!
For the nominal fee of only $249, our staff will conduct and prepare a comprehensive Interest Overcharge Audit & Evaluation Report. You'll get the benefit of our years of industry expertise and meticulous attention to detail combined with our state-of-the-art auditing software working for you to ensure you get any and all money you're due in refunds.
Click Here to Request Your Gold Level Evaluation
Platinum Level Assistance (G.A.P.F.F.):
This is our top recommendation for homeowners because you avoid the downsides of the Do-It-Yourself and Pay-The-Pro methods while still enjoying all the upside of potentially getting hundreds, thousands maybe even several thousands of dollars of your money put back into your pocket...it's a no-brainer.
First, you'll escape the hours of time involved with the DIY method. The index data gathering, figure checking, number crunching and double checking. We'll also rescue you from having to learn "Mortgage-ese" just to complete your DIY project.
Here's a sampling of this foreign language known as "Mortgage-ese": LIBOR, COFI, Index, Margin, Pay Cap, Floor Rate, Life Cap, Constant Maturity, Monthly Constant Average, and it just keeps going.
Secondly, we've designed it so you can wriggle out of the fee associated with the Pay-The-Pro method, which is why we say "You get the Gold for Free."
How?
Simple. If you're currently in the market for home financing, whether it's for purchasing a home or refinancing an existing home and you take advantage of our expert mortgage planning services and close your home loan with us, we'll credit you the full cost of the Mortgage Interest Refund Evaluation in escrow, that way it's free!
Find out how big YOUR refund is today!
Click Here to Start Your Platinum Level Service
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