Posted by MarkB_MI on October 09, 2015 at 02:56:20 from (70.194.5.199):
In Reply to: Mortgage company scam posted by MarkB_MI on October 08, 2015 at 18:05:34:
I slept on it and now I think I know how this scam works.
The purpose of the scam isn't to pad escrow accounts, since it just creates an overage they have to refund at the next escrow review. Sure, they get to use your money interest-free for a few months, but current interest rates hardly make it worthwhile.
Nor is the purpose to collect interest that hasn't accrued. You go to jail for doing that. (Well, normal people do. Bankers and mortgage company executives seem to be immune from doing jail time.) So eventually they have to credit you with the interest. Yes, by pushing the payment into the next month they get to collect a little more interest, but the difference between this month's interest payment and the next isn't that much.
The REAL reason they took out two month's payments as advance payments was to collect some interest BEFORE paying down the balance. And they had to take out at least two payments, since one payment wouldn't make any difference. Mortgage interest is paid in arrears, so the next month's interest would be based on the principal before it was paid down. But the interest payment for the second month after the overpayment SHOULD be based on the principal after it was paid down, but this way they were able to collect one additional month's interest based on the old principal. So, in my case they did it to stiff me out of a hundred bucks. Multiply that by a few thousand mortgagees paying down their principal and you're talking real money.
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