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Legalease
Legalease, Lawyer
Category: Legal
Satisfied Customers: 14511
Experience:  15 years exp all aspects of general law
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My property is financed by a lawyer and insurance company in

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My property is financed by a lawyer and insurance company in the small town I live in. It is two separate notes. One is for 9 acres and the other is 1 acre and mobile home. This land is attached but the mobile home was financed by the seller and after a year she sold her note to them. I was late 2 months ago just 1 day past grace. I added $50 something and went in and paid that, with the payment and next months payment early. I wrote one check and separated the amounts out in the check memo. This month I went in and was late but within grace period.
I work nights and lots of hours it's hard to get things done.
I started writing out a check for two payments and the lawyers wife asked me why I told her because it gave me more time to get myself better organized. She said well your just owing more money when you do that. I ended up haveing to pay another $170 approx. because I paid early last month plus she said I wasn't charged a late fee but this is a simple interest lone and the only way I can make and early pmt is to make a separate check and post date it. That if I want to make additional principle payment it has to be paid the day my payment is due separate check. I have never heard of any of this before and didn't want to ask her to explain again because I was running late plus getting angry. Thanks Brenda
Submitted: 1 year ago.
Category: Legal
Expert:  Legalease replied 1 year ago.

Hello there Brenda -

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In any real estate loan situation the due date for payment of the monthly loan installment is always on the first day of the month unless the loan paperwork sets forth a different date that the payments will be due and then the borrower must pay the payment by the date set forth in the loan document paperwork. All lenders also have the legal right to charge a reasonable late fee if the loan payment is not made by the close of business on the day that the loan payment is due according to the loan documents (or the first of the month if an actual monthly due date is not set forth in the note or other loan documentation paperwork). There are no statutes which limit the amount of the late fee but a judge in a court would apply a standard of reasonableness to the situation and the judge would look at the late fee and determine whether the amount of the fee is reasonable under the circumstances -- and in your situation, $50 is not an unreasonable late fee for each note (and they have the right to charge that fee the very next day after the due date). Finally, if you want to make separate payments towards the principal balance then you have the right to also do that -- but again, the owner of the note and loan can specifically tell you how they want any separate, additional principal payments delivered to them (and you are really better off to make any principal pay ments in a separate check rather than by notation of the two separate payments in the lower left corner of the check -- because such an individual check is processed and applied in a quicker manner and will cut down on the number of days interest that you can be charged for the principal balance amount before the payment was applied).

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Please let me know if you have any further questions.

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MARY

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Customer: replied 1 year ago.

Hi,

That didn't answer the question I asked.

Let me explain little better. My note is due on the 26th of each month. I have a 10 day grace. On the first part of April I made March 26th Pmt and April 26th Pmt. I also added 50 something dollars for being one day past grace.

A few days ago first part of June within the grace period of of the May 26th Pmt I started to write a check for the May Pmt and June Pmt and was told it would just make me owe more. She stated that when I did this before ( first part of April) that she didn't charge me the $50 something late fee but they cashed the check and accepted the money. And that because I has made the Pmt early it didn't apply.???? And that I had just accrued interest. I said, how much, she stated $171. I then wrote he 3 checks. One dated June 4th for May 26th Pmt noted in memo. One postdated June 26th for June 26th Pmt. and the other dated June 4th for $171 to catch up whatever. My question is what happened to the $ 50 late fee i paid but wasnt charged. Why did I owe interest of $171? which if I had not insisted paying would that interest accrue interest? How can I owe more when she allegedly didn't charge the late fee? And accrue interest for paying April Pmt early.

This isn't a huge bank this is the lawyers wife. My payments are $1016.34 . Where was this money applied? Also I have paid before a couple days early on one Pmt and this wasn't an issue?

Also the part of saving on interest because they can't apply it in a timely manner if that was the case than they could just keep charging forever because they didn't apply it? If she applied this to the principle at the end of the note that would mean that March or April or both Pmts are not applied and still accruing interest. Thank you

 

 

Expert:  Legalease replied 1 year ago.

Hello again --

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I apologize for the delay -- I just came back online now. Thank you for the clarification here.

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It sounds like the lawyer's wife decided to make you pay the unpaid interest charges which accrued during the late period as an additional payment on the loan rather than roll the additional charges into the principal balance of the loan as most lenders do in such a situation. First, as you are probably aware but I will state simply to tell you what the lawyer's wife did here -- if you do not make a payment on the date that it is actually due, then the principal amount of that payment that you have not made continues to accrue interest (in addition to the remaining principal balance) after the due date through the date that you actually make that overdue payment. For example, if the payment was made on the due date, the principal balance that you are charged interest on would be reduced by that payment amount and thus your interest payment would lower slightly for the next month based upon a lower principal balance. If you are ten days late with the payment, then interest will continue to accrue on the higher principal balance during that 10 day period until the principal monthly payment has been made by you. Typically a lender will simply add this additional interest amount to the outstanding principal balance of the loan and the borrower generally does not notice it. FOr some reason the lawyer's wife asked you to actually pay that additional accrued interest amount for the months that you were late recently and she did not really give you an explanation as to why she asked you to do this. Now, unless there is language in your note or other documents stating specifically that the lender will not require you to pay this additional interest charge immediately for each month that you are late in addition to the actual payment and the late fee (rather than rolling it into the principal balance of the loan), then the lender does have the right to charge you the additional interest in this manner -- it was simply unusual for her to do it in this manner. Perhaps she simply did it to remind you of the importance of paying the payments on time? I simply have no idea why she decided to do this in this manner. However, because she did this, I believe that your question is about the significance of and "value" of the grace period and the late fee to the borrower if the lender can still charge the accrued interest after the due date AND ask the borrower to pay for that accrued interest as an additional cash payment together with that payment and the late fee. Legally, a "grace" period in which to make your payment does not stop interest charges from accruing on the entire outstanding principal balance of the note/loan from the actual due date through the grace period and including the day on which you make your payment - and that principal amount is inclusive of the amount of the principal payment that is then overdue so there is an additional interest charge for that 10 day period -- the reason for the grace period is not to stop this additional interest from accruing -- the grace period simply gives the borrower a small amount of time to make the payment before the lender can declare that the loan is in default and pursue outside collection activity against the borrower (although most lenders will wait several months without a payment before pursuing collection activity -- the lender has the legal right to pursue collections the date after the grace period expires). Regarding the late fee -- this fee is simply a cash cow for the lenders and is legally permitted to be charged for their "inconvenience" of having to accept your payment late and on a date that it is not otherwise due -- lenders are not required to use this late fee towards the unpaid accrued additional interest (and that is true of regular lenders and smaller lenders such as yours). Traditionally, the late fees were charged and permitted by courts because it was inconvenient for the lender to have to change the date of the payment in their "accounting" books and inconvenient for the lender to have to recalculate the interest due because of the days that passed without a payment having been made on the due date. Now because computers do all of these calculations and work in the blink of an eye, the late fees paid by millions of borrowers on all types of loans in the US are simply a way for the lender to line their pockets with more money at the expense of their borrowers and such late fees can be used in any manner that the lender wants to use the late fee. Finally -- you are wondering why you do not receive a credit to your account in the months that you pay the payment earlier than required by the note and loan documents - because the interest from the date you make an early payment to the date the payment is actually due should then be based upon a lower outstnding principal balance for the number of days in advance that you made the payment -- this is because you agree to a traditional installment period when you sign the note which means that the principal and interest payments will remain the same in each 30 day period (and if there are differences in the interest due amount based upon the manner in which you pay the principal payments or if you pay additional money on the principal balance, then that will be reflected at the end of the loan and the number of monthly payments may be a few months less than anticipated and agreed to originally once all of the numbers are crunched and the loan is coming close to being paid off)

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I hope that I have answered your questions regarding the additional monies that the lender requested you pay because of the late payment. As I said earlier -- it was unusual for her to request this payment in this manner and you really should determine from her or her husband whether or not she intends to do this going forward in this loan --- in other words - does the lender intend to require that you pay any accrued interest from the grace period in an additional lump sum on the same day that you are paying the rent (late) and the late fee or does the lender intend to roll any such accrued interest into the unpaid principal balance of the loan (as most other lenders do)? My suggestion is that you ask them what their policy is going to be on this issue going forward and whatever they decide to do -- could you please have written notification of that policy so you will know exactly what amounts to pay in the event that you are late with the payment again at any point in the future.

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MARY

Legalease, Lawyer
Category: Legal
Satisfied Customers: 14511
Experience: 15 years exp all aspects of general law
Legalease and 2 other Legal Specialists are ready to help you
Customer: replied 1 year ago.

Hi Mary, Thank you for your answer. I need additional help. I asked for a print out of Pmts made and what i got has made me literally sick at my stomach. Excuse the format of my writing (Im typing this on my phone). I want to take a picture of these papers attach them for you to review and advise me. Please tell me how to do that and the cost for you to review 17 months od amortization on these two loans. Answering approx 5 questions about them and advise me how to handle making future Pmts to quickly pay this off. Im usually good at this and when i signed these notes I had a lawyer working on my division of other property after my divorce. I had too much stress and should have got him to look at this too.

Im trying to join the unlimited just answer so i guess that would take care of the fees except bonus but i need to know how to attach these papers.ok apparently I lost the rest of what i typed. I can email or text the copies from my phone. Broke my ipad yesterday and haven't had a chance to get it fixed.

Expert:  Legalease replied 1 year ago.

Hello again -

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I wish I could do this for you but I cannot -- my function is to answer questions for customers and if the customer needs more indepth legal work done, then to refer the customer to a local attorney to handle the matter. First, the site rules do not permit me to engage in any indepth reviews and cases like this because the terms of the site is that this is for educational purposes only -- to point you in the right direction. Additionally, it is simply not economically feasible for attorneys here to do this -- we get about eight to ten dollars when we answer your question. Thats it -- so you see the problems presented when customers reach out to us to perform a large amount of legal work for them as one or two questions on Just Answer. Finally, while I do have a private practice and assist clients in this capacity for low, reasonable rates, I am not permitted to accept any work from customers of Just Answer and if I do that I can be dismissed from my slot here (their rules, not mine).

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Under the circumstances, I suggest that you first hire an accountant to review this entire loan and the payments made before hiring an attorney to get involved there in your local city or county. The accountant can review it all and make a determination regarding whether or not the lender is doing anything wrong or illegal or anything that rises to the level of a breach of contract and can give you some directions regarding how to clean this matter up and to make the most economical payments in the future. If the accountant finds anything that rises to the level of violation of criminal or civil law, then you can contact your local county bar association and ask for the name of a lawyer in your area who handles residential lending litigation and you will be given several names and you can telephone them and find one who will be a good fit for your case (because your lender is a lawyer and an insurer, you may have to make several dozen telephone calls to lawyers in your county and surrounding counties before you will be able to find a lawyer who is not friendly with this lawyer (either professionally or personally)).

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MARY

Customer: replied 1 year ago.

Hi,


Think you, I understand. To bad that you can't get work through the site because its the perfect way for potential clients to quickly get a idea about who they may want to hire. I understand the sites point too because it could become advertisey.


Thank you for this though I never thought of an accountant first. I dont want to use my lawyer because he's older than me (Im 53) and will say something like, you know better why would you do this". :) I still like him but he can be intimidating, good that he's on my side. Best Regards, Brenda

Expert:  Legalease replied 1 year ago.

Hello again --

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I wish I could do it too because it was a good way to get clients back when the website first started answering legal questions and then they stopped us from doing it about 2 years ago.

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I wish you the best of luck on these issues !!!

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