Never assume the banks calculate balances correctly

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Planner01
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Never assume the banks calculate balances correctly

Post by Planner01 »

For a few months now I’ve been monitoring our mortgage loan account because of misapplied payments. I also started auditing the account and recently noticed that after the payment gets applied and the interest gets deducted the balance does not add up correctly. Of course in their favor.

I called the bank and the rep agreed with me that it was not calculating correctly. A manager was supposed to call me back. It hasn’t happened yet... so I filed a complaint with the CFPB. I woke up this morning to a credit payment which I assume is for the extra interest they have been charging us all this time.

Moral of the story: Run your own calculations, yes is time consuming, but don’t assume that their checks and balances always add up correctly.
Last edited by Planner01 on Wed Sep 18, 2019 8:23 am, edited 2 times in total.
jwhitaker
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Re: Never assume the banks calculate balances correctly

Post by jwhitaker »

What bank is it? If yours was wrong probably so is every customer’s.
michaeljc70
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Re: Never assume the banks calculate balances correctly

Post by michaeljc70 »

I posted this in another thread, but I had a similar problem very recently. I noticed a difference of about $500 between the lender's balance and my balance in Quicken. I started going back and found an error in Jan 2017 where they misapplied an extra payment and overcharged on interest. After pointing it out they had to "research" it and fixed it. Their balance is now lower than what I have in Quicken but I am not going to hunt down errors made in my favor.
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FiveK
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Re: Never assume the banks calculate balances correctly

Post by FiveK »

michaeljc70 wrote: Wed Sep 18, 2019 7:58 am ...I am not going to hunt down errors made in my favor.
Might not want to spend money mistakenly deposited into bank account. ;)
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Nate79
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Re: Never assume the banks calculate balances correctly

Post by Nate79 »

Clark Howard ha warned against this problem for years. It's a good reminder to check their math.
GuyInFL
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Re: Never assume the banks calculate balances correctly

Post by GuyInFL »

I had a bank apply my additional principal payments toward future mortgage payments. When I asked about it they said I could skip a payment. I said no and they retroactively changed the payments to principal correctly.
michaeljc70
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Re: Never assume the banks calculate balances correctly

Post by michaeljc70 »

FiveK wrote: Thu Sep 19, 2019 12:41 am
michaeljc70 wrote: Wed Sep 18, 2019 7:58 am ...I am not going to hunt down errors made in my favor.
Might not want to spend money mistakenly deposited into bank account. ;)
Mine wasn't a deposit account. I cannot withdraw from my mortgage.
Last edited by michaeljc70 on Thu Sep 19, 2019 7:26 am, edited 1 time in total.
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whodidntante
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Re: Never assume the banks calculate balances correctly

Post by whodidntante »

Trust no one.
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Harry Livermore
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Re: Never assume the banks calculate balances correctly

Post by Harry Livermore »

I keep a spreadsheet for payments on both our primary residence and our rental property (3 years 6 months left!) Over time, they have diverged, but in my favor, and for less than a dollar in each case. If it was a larger amount I would request a review from the loan servicing company, or at least devote an afternoon to trying to find the error.
You keep each monthly statement, I presume? Good catch on your part, and good warning to others who read this thread. I'm glad you got it sorted!
Cheers
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RickBoglehead
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Re: Never assume the banks calculate balances correctly

Post by RickBoglehead »

Quicken calculates the payment, the breakout between principal and interest, and applies everything. If the year end balance is off by more than $0.03, I contact my bank. It hasn't been.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.
cherijoh
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Re: Never assume the banks calculate balances correctly

Post by cherijoh »

Planner01 wrote: Wed Sep 18, 2019 7:37 am For a few months now I’ve been monitoring our mortgage loan account because of misapplied payments. I also started auditing the account and recently noticed that after the payment gets applied and the interest gets deducted the balance does not add up correctly. Of course in their favor.

I called the bank and the rep agreed with me that it was not calculating correctly. A manager was supposed to call me back. It hasn’t happened yet... so I filed a complaint with the CFPB. I woke up this morning to a credit payment which I assume is for the extra interest they have been charging us all this time.

Moral of the story: Run your own calculations, yes is time consuming, but don’t assume that their checks and balances always add up correctly.
It depends on whether or not you have made extra payments. If no extra payments, it is quick and easy to run an amortization schedule using an online mortgage calculator. Some of them can also handle extra payments if the amount is consistent (e.g., you bare adding $100 extra to each payment) OR you have a limited number of extra lump sum payments. It is also pretty easy to set up a custom amortization schedule in Excel. So I'm not sure about the time-consuming part.
Texanbybirth
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Re: Never assume the banks calculate balances correctly

Post by Texanbybirth »

Our monthly budget spreadsheet has a mortgage balance calculator I built. It's within $0.01 of the bank each month, so I'm happy.

Sorry you had to deal with that, though. It's sad that they can't get the math right when that's what they're paid to do!
“The strong cannot be brave. Only the weak can be brave; and yet again, in practice, only those who can be brave can be trusted, in time of doubt, to be strong.“ - GK Chesterton
psteinx
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Re: Never assume the banks calculate balances correctly

Post by psteinx »

While banks and other institutions (and PEOPLE) make mistakes, double checking every calculation made by a financial institution is a time consuming endeavor.

Yes, you should have a general sense of where balances and the like are, and look into serious discrepencies between expectations and institutional figures, but re-calculating every transaction out to the penny is probably not a productive use of most people's time.
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