Bank Stopped Debiting Mortgage Payments

[djsherly]

Hi All,

I posted this thread on another forum so if you're a nerd it might look familiar....

I'm pretty much a set it and forget it kind of guy. My pay goes in, I direct debit all my expenses and I try and make sure that the balance at the end of the month is greater that at the start. Generally, I don't even do that. I trust that the payments are coming out.

I don't look at my statements as a result. I don't use a credit card so as long as the numbers look about right it's one less thing for me to worry about.

Except I had to do some tax related stuff and discovered that my bank stopped debiting my mortgage payments. In December. Of 2007. That means my mortgage has been capitalising for 12 months.

First of all, can the bank use my redraw to cover payment shortfalls (I suspect the answer is yes). Secondly, can the bank simply stop taking payments in this manner? It looks to me like some kind of **** up at the banks end because they tell me the payment should be coming out. It wasn't until I pointed out there were no mortgage size debits against my transaction account that they figured something to be wrong. No-one is able to tell my why the payments simply stopped coming out.

Had these payments been coming out, my spending habits over the past year would have been significantly different so it's not just the extra interest that is ******* me off.

I know it comes across as a little naive (and it probably is) but if the bank has stopped taking payment surely they have some duty to inform me of it.

Do I have any form of recourse in such a matter?

 

[Alex P Keaton]

Hi All,

I'm pretty much a set it and forget it kind of guy. My pay goes in, I direct debit all my expenses and I try and make sure that the balance at the end of the month is greater that at the start. Generally, I don't even do that. I trust that the payments are coming out.

I don't look at my statements as a result. I don't use a credit card so as long as the numbers look about right it's one less thing for me to worry about.

I think that is pretty irresponsible and a silly thing to do not to be checking your statements. *scratches head* I dont understand why someone wouldnt be checking! That just sounds odd to me

Hmmm but even if your taking money out via a bank machine, surely you would have seen how much was in your account after your withdrawel, triggering you to wander if the bank had taken out the money. Do you check your slip when you take money out of the machine??

Sorry but this just sounds weird to me, someone not checking their statements for a whole year. lol You need to monitor things, you cant just set it and forget it!

Cant wait to see the replies

Do you have any recourse? Dunno


edited to say: Is this someone new playing a joke

 

[djsherly]

I appreciate your point of view but that's not the question being asked. I already accept that this is a little naive of me - I come from a family which never really received a financial upbringing you might say.

I take out money each week from the ATM and don't often enquire on the balance.

No, this is not a joke.

 

[marg4000]

The responsibity is yours to check that everything is progressing OK with your accounts. It's all there in the fine print.

Unless it was a tiny mortgage, how could you not notice?
Marg

 

[djsherly]

The responsibity is yours to check that everything is progressing OK with your accounts. It's all there in the fine print.

Unless it was a tiny mortgage, how could you not notice?
Marg

Neither the T&Cs nor the Loan offer require me to regularly check my accounts. However, I am required to notify the bank of any discrepencies as soon as I become aware of them, which I have.

For the purposes of this thread it's sufficient to say that it did go unnoticed. I am not asking for missives on what I should have done. That time has passed and don't think I am not already feeling suitably chastened.

 

[Alex P Keaton]

hi



hmmm not sure what you can do, maybe there isnt anything you can do because its been 12 months and its too late now, but im just guessing. I'm a newbie....maybe someone else will come on that will know more and is more experienced.

good luck anyway

 

[twobobsworth]

In a slightly different instance I once had an employee that was paid double over a period of 6 months and claimed she didn't know.

She also didn't feel it was "right" that payroll had stuff up and given her too much money (to spend), which she now had to pay back.

We were well in our rights to claim the money back immediately in full. However worked out a repayment program over 18 months.

You do not have a leg to stand on.

 

[The Y-man]

First of all, can the bank use my redraw to cover payment shortfalls (I suspect the answer is yes). Secondly, can the bank simply stop taking payments in this manner?

Just wanting a clarification:

Did your mortgage account have extra money in it (availabe for redraw), and instead of taking the interest payments from another account, they have been taking it from the redrawable amount (i.e. amount available for redraw has been decreasing) - is that correct?

Cheers,

The Y-man

 

[TLZ]

If I’m reading this right it took you over a year to realize your repayments on your mortgage had ceased. WTF ! how can this be.

Buggered if I know the answer to your questions but the first thought that come to my mind is WTF are you doing with a mortgage in the first place !.

Goodluck !!

 

[marg4000]

As interest has been capitalised for 12 months, I suggest you increase your mortgage payments as much as you can over the next 12 months or so to try to get back on track.
Marg

 

[djsherly]

Y-Man - there is significant redraw available - more than 20% of the loan's value. Yes, the mortgage balance has been increased over the course of the year.

TLZ - let me say I'm as shocked as you are. However, I don't appreciate the condescending tone. It neither answers the question nor contributes anything to the thread. I come here with a genuine question without wishing to be pilloried for my financial oversight. I know I'm asking these questions in a forum where people watch every dollar like hawks. I am not one of those people and because I credit most of the posters here with a modicum of intelligence and a desire to help, this is why I am asking these questions. Might I hazard that you may not be one of them.

twobobsworth - I think you are suggesting an ulterior motive, but that is not the case. I am not one to welch my responsibilities, but what you described is a completely different situation. I did not knowingly allow this to happen. I had an arrangement with the bank to debit my mortgage payments from a nominated account every month. I want to give my money to the bank as it's a central part of my agreement under the loan contract. Once that is setup, for what reason should I expect that arrangement to stop, unilaterally and without notice, and is it fair that I accept the consequences of something I have no control over. This is the principal concern I have. I am not trying to dodge any responsibility.

In the end I am looking for a just outcome. I feel the bank must shoulder some responsibility - when I called to enquire about the status of my loan, the phone jockey maintained that payments were set to come out of the account monthly. When I pointed out that there were no debits on that account that corresponded to mortgage payments I was put on hold, to be told that there was no explanation as to why the payments were not being made.

I have opened a case with the bank to try and understand why these payments were not being made.

 

[A95]

Hi djsherly ,

You need to talk to someone higher in the food chain, a supervisor in the mortgage center should do.

As I understand you'd provide them with a new (old?) account where the money can be drawn from to cover the interest (and capitalised interest, if any) for the last 12 months and the balance on your mortgage account should get back to the DEC 2007 level.

They, the bank, would inform you that something was wrong if they knew it!

As for the interest capitalisation, it should be of no consequence.
The amount of capitalisation would be v. small anyhow.

"Do I have any form of recourse in such a matter?"
I don't think so.

 

[djsherly]

Hi djsherly ,

You need to talk to someone higher in the food chain, a supervisor in the mortgage center should do.

As I understand you'd provide them with a new (old?) account where the money can be drawn from to cover the interest (and capitalised interest, if any) for the last 12 months and the balance on your mortgage account should get back to the DEC 2007 level.

That's the problem - there was nothing wrong with the original account. It has always had sufficient money in it to cover mortgage payments.

They, the bank, would inform you that something was wrong if they knew it!

I agree - but it looks to me like there is some kind of disconnect in their system. The bank says the payments should be coming out, but they are not. They maintained this until I told that no payments were being credited against the mortgage account, nor were debits appearing in the transaction account.

As for the interest capitalisation, it should be of no consequence.
The amount of capitalisation would be v. small anyhow.

Perhaps capitalisation is the wrong word. Interest has been accruing against the mortgage for twelve months. This is my concern.

 

[Monty Burns]

Something similar happened to me it only went for 2 months and there
was nothing I could do other than make up the missing payments?

From what I read you haven't made a repayment on this loan for a year???

has the bank made any contact? surely after a year with no payment they would have started foreclosing??

 

[Rolf Latham]

Hiya

Smeels like which bank to me with a PI loan ?

ta
rolf

 

[Y33]

Solitary confinement for 1 year!! What did you do wrong???

You will probably have to negotiate with the bank about either extra payments or having your loan extended by 1 year.

Being OS a lot and not having access to internet or phones I've been 3-4 months at a time not being able to check accounts or have contact with RE's etc.

 

[djsherly]

Hiya

Smeels like which bank to me with a PI loan ?

ta
rolf

Maybe they all smell the same. Two up in April.

 

[The Y-man]

Y-Man - there is significant redraw available - more than 20% of the loan's value. Yes, the mortgage balance has been increased over the course of the year.

I think you freaked many people out by saying your interest was capitalised.

In reality, as I view it, the amount available as redraw (effectively money you had "prepaid" into the account) was used for paying the interest.

Can they do it? It probably stated this as a "feature" on your loan documents.

I have a similar-ish thing with my SGB offset account. Every month, a fixed amount goes from the offset to the loan as P&I payment.

I now have 100% of the loan amount in the offset account. However, without notifying the bank, the same fixed amount will still be taken from the offset account and paid into the loan - even though there is no interest component.


Cheers,

The Y-man

 

[GoAnna!]

So basically you are saying that payments were made but instead of coming out of the account you authorised for that purpose it was coming out of your redraw which meant in effect that the loan was increasing by the amount of the repayment each month. I too would regard it as capitasied interest as the loan is growing and the repaymnets are coming effectively from th loan itself.

In complete ignorant bliss you were spending the money earmarked for repayments.

I can kinda see that happening in between statements.

Personally I also rely on the bank doing as authorised. I have way too many loans so as long as I am keeping sufficient monies in the account to cover the upcoming repayments I would feel fine (I look back 30 days to see what is due next). I would however discover anything strange (or so I would hope) at statement time.

 

[Ausprop]

my lender just debited my mortgage repayemnt twice on the day before xmas - over drew my account and had a dishnoured transaction (with a $50 fee) as a result. Then the next day they refunded one of the draws so effectively I haven't made the December repayment and I have a large chunk of cash in my savings account doing nothing over the xmas break. Not happy.