Mortgage Daily Logo
mortgage news from industry experts

Countrywide Accused of Interest Overcharges

Countrywide Accused of Interest OverchargesLawsuit filed in Texas seeks class action certification

November 20, 2007

By JERRY DeMUTH

A lawsuit has been filed against Countrywide Financial Corp.’s servicing subsidiary. The company is accused of overcharging interest on mortgage loans after they were paid in full, according to the lawsuit which seeks class action status.

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.”


Countrywide profile

next story

back to current headlines

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...

Newsletter

Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI

Related Posts

THE TRUSTED PROVIDER OF ACCURATE RATES AND FINANCIAL INFORMATION