Countrywide Accused of Interest Overcharges

The suit, brought by Timothy J. and Jessica Kay Lauricella, of Gilbert, Ariz., accuses Countrywide Home Loans Servicing LP, of Plano, Texas, of “improperly retaining unearned per diem interest” on conforming home loans beyond the payoff dates. The company allegedly failed to return the Lauricella’s excess per diem interest that was included when they paid off their mortgage through a refinance that occurred on Oct. 21, 2004.

The servicing unit is a subsidiary of Countrywide Home Loans Inc., based in Calabasas, Calif.

Countrywide did not immediately respond to a request for comment from MortgageDaily.com.

Countrywide’s payoff statement “demands per diem interest on the unpaid principal amount through the last day of the payoff month,” according to the suit. “The problem is, defendant does not always refund the class members’ unearned interest, which defendant demands and collects through the last day of the payoff month.”

Quoting from both the remitting and reconciling reporting portion of Fannie Mae’s investor accounting document and from Countrywide’s payoff demand statement, the suit notes that any per diem interest paid after the payoff is to be returned to the borrower because no principal remains outstanding on which interest can be charged.

“If Countrywide,” the servicer’s payoff demand statement states, “receives funds greater then [sic] what is required to pay off your loan, we will automatically process the overage within 30 days of payoff.”

The Lauricellas paid interest of slightly more than $44 per diem, or a total of $1469.70 for the entire month, of which $487.51 should have been returned, according to the suit, which alleges breach of contract.

The litigation, which was filed on Nov. 14 in U.S. District Court in Sherman, Texas, seeks class action status on behalf of all persons “who have been charged unearned per diem interest at payoff before scheduled maturity” and thus suffered damage.

The lawsuit notes that borrowers prepay their mortgages when they sell their homes, refinance existing mortgages through a new loan or prepay their loans in full while their existing promissory note still has an unpaid principal balance.

“This case,” the suit maintains, “involves every Fannie Mae and Freddie Mac conforming promissory note and VA-guaranteed promissory note for which defendant received and did not refund unearned per diem interest when the loan was paid off.”

Obtaining class action status, attorney David Wilson Dodge told MortgageDaily.com, will “probably be a long, hard struggle.”

The suit seeks, for the Lauricellas and other class members, the return of “the money it retained in breach of its contracts” with those borrowers, plus interest and “such other and further relief as the court may deem just and proper.”