Posted on 02/25/2008 7:21:45 PM PST by chiya
I need some advice. My husband recently received a small workers comp settlement and given the way the housing market is going and the fact that he will never be able to support himself because of his disabilities, we decided to use the money to pay down our mortgage and get ourselves out of debt.
I went on their website and used their calculator to get a payoff figure and determined that the amount we had would not completely pay it off but would pay it down to around 6,000 dollars.
I called Country wide and told them the money was coming and that I wanted it applied to the prinicipal. Our bank called country wide and was given instructions where to wire the money into something called an MRC account I think with Bank of America.
6 days later our bank called and said the money had just been returned to them. I called Country wide to find out why and was told: that because I had requested the payoff figure and the amount sent wasn't sufficient to pay it off that they didn't know what I wanted done with it. So they sent it back. Is this even legal?
As long as you got the money back, I believe it’s perfectly legal. Send the money via certified instrument directly to the mortgage holder with specific instructions that you want it applied to the principal. Read your loan agreement; there may be prepay penalties. But the mortgage company has no choice but to apply the sum where you instruct them (less applicable fees and penalties, of course).
I have already checked the mortgage note and it specifically says there are no penalties for prepayment
Unfortunately, I'm Nigeria at the moment. Standby while I forward my contact information
If you are not paying it off completely and there are no early payment penalties then simply write a normal check for the amount you want to pay it down by and send it with the normal payment coupon.
Paying the mortgage off is different. If paying it off completely you first have to get the exact amount required by the lender for a specific date. Then they will demand a cashiers check or wire transfer and will refuse it if it doesn’t exactly match the amount they want - even if you pay more than they wanted by the date agreed to...
The bottom line is you have to follow their procedures no matter how ridiculous to the letter. Any deviation and they'll refuse it and happily continue to collect interest on the loan...
Uh yeah I will get right on that, just go down to your local western union and hang out till it gets there
Look at it as a second chance. Take the money and go on a cruise with hubby.
I wish, but unfortunately I am just a hard working nurse and getting out of debt has to be the first priority
I am in Vegas, send it here and I will double it for you.
I am not a lawyer, but reasonably financially literate.
Since the bank expected full payoff of the loan, rather than pay $x amount towards the principal, when that is not what they got, they sent the money back. That was perfectly reasonable. They didn’t try to read your mind to apply it against the principal with an amount left over. In banking things have to be exact. You still have the choice of sending them a check and they will apply it towards the principal.
HOWEVER, I would strongly advise AGAINST paying off the mortgage, because now all your money is sunk in the house, and you can’t eat the bricks, nor will you be able to get any money out of the house, if you don’t have sufficient income. So paying off the house is actually adding a lot of risk into your life. If you have debts, other than the mortgage, I do advise to pay those off, because they are usually high interest loans.
You don’t mention what is the interest rate on your mortgage. If the interest rate on your mortgage is of the order of 5-6%, I would even more strongly advise you against paying it off. After it’s paid off, or almost paid off, do you have enough income for necessities, I hope, BUT what if an emergency happens, when you need a few thousand dollars? You would end up going into debt, paying higher interest rate and not likely to be able to pay THAT off?
You need to make sure to NOT spend the money on nonessentials, but if you put it in CD-s, you can get 3-4%, you can probably keep paying the mortgage and live on the money for quite a while and be able to cover unexpected/emergency expenses, so this is actually much safer.
If you want to FReepmail me with more detail, I’ll be happy to be more specific and do a few simple calculations for you, so you can see the differences.
In any case, good luck, but at the very least, don’t rush into paying off the morgage and sinking all your money into the house, you can always pay if off in a few months, if that is what you really decide, but once you paid it off, you will never be able to get the money back out, unless you sell the house.
Do you have any other debts, like a car loan?
It may make sense to use the money to payoff those debts first, and then after those debts are paid off, use the money that you would’ve spent on installment payments on those debts, and instead apply them to the principal on your monthly mortgage payments.
Follow the advice in 10; pay off any higher interest consumer credit first - automobiles, etc, before paying off the house. The refusal by Countrywide might actually end up saving you some money, time and trouble.
Nope that mortgage is pretty much the only debt we have. We had to live pretty frugally after hubby got hurt so debt is something we avoid.
Paying off your mortgage=stupidity.
You're joking right?
I’m with you. Debt free is a great place to be.
Nope. See post No. 10.
Chiya, debt free is not bad as long as you have some cushion somewhere, which it sounds like you do. I am doing a similar payoff of our mortgage this week. Only difference is we are taking it out of investments, and like you, paying off our only debt, the house.
For the last couple years the money sitting in investments was earning much more than the house cost per month. With the market as volatile as it is right now I am feeling more confident in living debt free and closer to investment poor. Especially after a January that drove the value of the investments down more than I was ready to digest :^)
The wife and I own an online retail business that as long as the economy stays somewhat afloat will keep us in groceries. Your choices are a lot more restricted with your husband laid up for good. I don’t think you can knock debt free in that situation. Especially if it means you can save a bit each month. Always keep investing in that retirement fund. That is the life saver for later.
Best of luck to you. Glad that the money didn’t disappear on you when it got misrouted. I was afraid as I read your original post that something happened to it. Coming back to you ain’t all that bad.
Rick
As to your mortgage, The advice regarding certified check with specific instructions is the best way to go, especially being it is Countrywide. Also, they have about 100 different headquarters, so make sure you send it in the envelope that comes with the regular payment, becuase not of those 100 places knows what the others are doing and it WILL get lost in red tape.
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