Refinanced mortgage - does this seem right?

[Maggie'sMom]

I refinanced my mortgage at the end of April. The closing on the new mortgage was 4/29. The lender that held my prior loan insists on auto withdrawals from my checking account. When that lender provided the payoff balance to my new lender, they (as I would have expected) calculated the payoff as if no payment would be made on 5/1. But on 5/1, they withdrew my mortgage payment as normal. I had expected that as well. I figured it would be a timing issue. They wouldn't receive the payoff from my new lender before the withdrawal date. But I HAD expected that the first lender would send me a check for the overpayment as well as the closeout balance on my escrow account in a timely manner. When I've done refinances previously, the first lender has mailed the check within a couple weeks.

I received a closeout statement for my escrow account dated 5/7, but no check with it. I assumed I'd get a check in about another week. By 5/20, still no check, I called the lender to ask when I'd be receiving it. They told me they hold the money for 30 days before refunding it. The total between the escrow balance and the overpayment is over $3,000. Um, I could really use this money right now! I'm skating by, but it's tight. They've received the payoff from my current lender. I don't understand why they are holding onto my money. Of course, they are holding my money without paying me any interest on it.

What's your experience? Is it normal for the old lender to not refund overpayments and escrow balances for 30 days?

 

[Gammaresource]

Did you call and ask?

 

[Maggie'sMom]

Did you call and ask?

Yes, I called. That's when they told me that they hold the money for 30 days.

 

[Gammaresource]

Well, I missed that!! Sorry. I can't remember if ours held the money or not. I remember getting both checks, and I think that they weren't at the same time. It stinks to have your money held like that!

 

[Maggie'sMom]

I know there's nothing I can do about it. It took me by surprise that they feel it's necessary to delay refunding the money for so long. The loan officer at my new lender said I'd get the checks from the former lender in 2-3 weeks at most, which is in line with what I'd experienced the last time I refinanced. Ugh!

 

[HM]

I'm actually suprised you had a payment pulled on 5/1 if you had a closing on 4/29.

I hope you get your money soon!

 

[mom2mikel]

I've heard that Countrywide is holding money right now so they can earn the interest for that extra month. Although it might only be a few dollars per account, they have so many accounts it adds up.

Very frustrating.

 

[Maggie'sMom]

I'm actually suprised you had a payment pulled on 5/1 if you had a closing on 4/29.

I hope you get your money soon!

The new lender has to hold the paperwork to allow me the 3 day right to rescind. So it didn't get sent to the former lender until after the 1st. And even if they had sent it out on the 29th, the paperwork might not have been processed in time to stop the auto-withdrawal on the 1st. I was prepared for that. I just didn't think they'd hold onto that money for so long.

 

[bmoncher]

I refinanced my mortgage at the end of April. The closing on the new mortgage was 4/29. The lender that held my prior loan insists on auto withdrawals from my checking account. When that lender provided the payoff balance to my new lender, they (as I would have expected) calculated the payoff as if no payment would be made on 5/1. But on 5/1, they withdrew my mortgage payment as normal. I had expected that as well. I figured it would be a timing issue. They wouldn't receive the payoff from my new lender before the withdrawal date. But I HAD expected that the first lender would send me a check for the overpayment as well as the closeout balance on my escrow account in a timely manner. When I've done refinances previously, the first lender has mailed the check within a couple weeks.

I received a closeout statement for my escrow account dated 5/7, but no check with it. I assumed I'd get a check in about another week. By 5/20, still no check, I called the lender to ask when I'd be receiving it. They told me they hold the money for 30 days before refunding it. The total between the escrow balance and the overpayment is over $3,000. Um, I could really use this money right now! I'm skating by, but it's tight. They've received the payoff from my current lender. I don't understand why they are holding onto my money. Of course, they are holding my money without paying me any interest on it.

What's your experience? Is it normal for the old lender to not refund overpayments and escrow balances for 30 days?

I believe 30 days is normal. I am surpirsed the new lender did not disclose this to you at closing.

 

[amylevan]

We closed on 4/27 on our refinance, and the escrow account was closed out on 5/7, and we recieved a check for the escrow amount last week. So no, it's not necessarily "normal", unfortunately I don't know what you can do about it.

 

[corndog]

Definitely should have cancelled the auto-pay.

 

[mrudman]

I know its too late now, but I'm surprised the person you were dealing with at the bank didn't give you the advice of withdrawing all your money, to avoid this hassle.

We refinanced this past February.. knew we weren't going to have to make a March payment, and the lady we were dealing with at the bank make a point to tell us to withdraw everything from that acct so that it wouldn't be taken in March.

Unfortunately, it is common for them to hold your funds for that long.. hopefully you get it back soon!

 

[Maggie'sMom]

I believe 30 days is normal. I am surpirsed the new lender did not disclose this to you at closing.

The "new" lender is actually the one that I originally had the mortgage through when I got the house. I refinanced with Lender #2 last year when rates dropped. I wanted to stay with Lender #1, but their rates weren't competitive at the time. When I refinanced with #2, #1 sent me a check for my escrow balance and overpayment in less than 2 weeks. It was really quick. Then rates dropped a whole bunch again and Lender #1 offered me a great rate and $350 closing costs. Lender #2 couldn't get me anywhere close to that offer so I refinanced with Lender #1. My experience with Lender #1 gave me no reason to think that it would take longer than 2-3 weeks to get the overpayment and escrow refunded. So in my experience, 30 days is very NOT normal.

 

[Maggie'sMom]

Definitely should have cancelled the auto-pay.

I filled out the forms to cancel it, but they weren't received in time.

I know its too late now, but I'm surprised the person you were dealing with at the bank didn't give you the advice of withdrawing all your money, to avoid this hassle.

That would create massive issues with all my other checks and auto-bill pays.

 

[Mom of three]

I believe 30 days is normal. I am surpirsed the new lender did not disclose this to you at closing.

Its not the new lenders responsibility to mandate what the former lender will do. There are general guides but each individual lender is different and has their own set of rules to play by.

30 days is standard. Some lenders, such as Wells, tell you that they send out any monies due within 15 days after the loan balance is paid.

I disagree with someone advising you to withdraw all your money so the payment can't go through. Thats just not right.

 

[JeMarie6]

I'm not in the mortgage business, but the insurance business. We hold money for about 15 days before we can refund it. It can sometimes take that long to get notice from the bank that the check/withdrawal was no good. So we have to wait until we know the money is truly 'ours' before we refund, otherwise if the check/payment bounces, we're out the payment amount and the refunded amount. So 30 days seems long but still within reason.

 

[greens_in_WA]

from my refi experience 30 days seems like way too long - but yeah - probably nothing you can do about it

instead of taking money out - one could put a stop payment on with their bank - there's usually a fee - but at least you'd have your money. Too late for that now though

The other oddball one is this... if you had notified your former mortgage holder in writing not to pull the payment on 5/1, you can file an ACH dispute with your bank. You will need to file a statement under penalty of perjury that you notified the payee not to pull the funds, and that the funds were pulled. With this, your bank could provide you provisional credit - and I believe are required to do so within 10 days (I get confused on that one - but there is a timing provision.) Then its up to your bank to get the payment back from your mortage holder.

 

[mrudman]

That would create massive issues with all my other checks and auto-bill pays.

Oh ok, sorry.. was just thinking of my situation. Our regular checking acct is separate from the acct that they withdraw the house payment from. The only thing that comes from that acct is the house, so withdrawing it didn't cause us any harm.

 

[TheRatPack]

We closed on 4/28 as well and our payoff was posted on 4/29 since they overnight it. They held our overage from escrow for 15 business days so they cut it on the 20th of May to mail to us. They took out another PMI payment during this time so our escrow was minus that...which I thought was kind of crazy, but they did hold our funds...just not for 30 days.