25-Year Installment Loan Hack -- and Our New $2.80/Month Mortgage Payment

[cv91915]

When I called on 5/5 and they couldn't find my letter, they gave me the option of submitting the second escrow removal request by email. 😧

 

I emailed the second request, and they processed it the following day.  We received a confirmation letter in the mail yesterday.

 

The letter doesn't address any of the most obvious questions:

1. What is the current balance in the escrow account?
    
2. What are the recent transactions on the escrow account, so I know if they've already paid the next tax installment that's due in June?  (Escrow account activity isn't viewable on their web site)  Historically they've paid the tax installments about a month early.  I suppose I can check the county's web site.  But good lord.
    
3. When and how will they refund the thousands of dollars that are currently sitting in the escrow account?
    
4. Will the ACH that's scheduled for 6/1 include the P+I+escrow amount that's currently showing as due on that date (and refund the escrow portion later), or will they only collect P+I of $2.80?
    

My best guess is that the soonest our credit reports will update with the $2.80 P+I payment (the goal of the most recent exercise) will be after the 7/1 payment is processed.

 

 

Edited May 13, 2020 by cv91915

[cputrwz]

On 1/20/2020 at 1:50 PM, cv91915 said:

When we set out to repay our mortgage early, we faced the very real possibility of never having another open installment trade line on our reports.

 

So I decided to turn our soon-to-be-retired mortgage into an ultra-low-balance, open installment trade line to carry us through June of 2046 (or until we sell the house, whichever comes first).

 

In the process we ended up with a $2.80 mortgage payment.

 

To Replicate:

 

Step 1: Get a mortgage (or start with one you already have). 

Step 2: Pay almost all of it off.

Step 3: Have your balance recast (re-amortized over the remaining loan term).

 

Tips and Thoughts:

 

Check with your servicer for their terms and requirements; these comments are based on how ours works.

 

• Recasts can only be initiated at the same time as an additional principal payment of $5,000+ is made.
• Recast requires a one-page form with original signatures, and generally takes 2 payment cycles to go into effect... but the timing isn't guaranteed.
• There is no cost.
• The P+I payment that is due each month doesn't change until the entire process is complete.  
• My original goal was to get the payment at or below $0.99/month, but pushing the principal balance too low would have created the risk of having the balance fully repaid in the event of a processing delay.
• In hindsight I should stopped having our taxes paid through escrow when the recast was initiated.  Our P+I payment plus 1/12 of the annual taxes pushes our "payment" to an amount that is greater than the loan balance.  This triggers a phone call each month from an agent who's very excited to walk me through the process of making my final mortgage payment... which is the opposite of what we want.  

 

Exhibit A - Recast Agreement Excerpt:

 

 

Exhibit B - January 2020 Mortgage Statement Excerpt:

 

 

 

Cv, can you give me 400k so I can do this too.

[cv91915]

44 minutes ago, cputrwz said:

Cv, can you give me 400k so I can do this too.

I can give you a blueprint:

 

[TheVig]

$563.41 <<< You should call and ask for forbearance. Just to see their response.

[cv91915]

10 hours ago, cv91915 said:

When I called on 5/5 and they couldn't find my letter, they gave me the option of submitting the second escrow removal request by email. 😧

 

I emailed the second request, and they processed it the following day.  We received a confirmation letter in the mail yesterday.

 

The letter doesn't address any of the most obvious questions:

1. What is the current balance in the escrow account?
    
2. What are the recent transactions on the escrow account, so I know if they've already paid the next tax installment that's due in June?  (Escrow account activity isn't viewable on their web site)  Historically they've paid the tax installments about a month early.  I suppose I can check the county's web site.  But good lord.
    
3. When and how will they refund the thousands of dollars that are currently sitting in the escrow account?
    
4. Will the ACH that's scheduled for 6/1 include the P+I+escrow amount that's currently showing as due on that date (and refund the escrow portion later), or will they only collect P+I of $2.80?
    

My best guess is that the soonest our credit reports will update with the $2.80 P+I payment (the goal of the most recent exercise) will be after the 7/1 payment is processed.

 

I haven't had time to call the servicing department today, but question 4 appears to no longer be a question. 

 

As of yesterday the 6/1 payment still included escrow, but it's been updated since then.

 

 

I'm more optimistic about the time frame for the payment amount updating on my credit reports. 

 

I spot checked the Equifax report that I got from ACR earlier this week, and the TL was last updated on 5/1, and the last payment also shows 5/1.   

 

 

 

Edited May 13, 2020 by cv91915

[cv91915]

1 hour ago, TheVig said:

$563.41 <<< You should call and ask for forbearance. Just to see their response.

Or a no-cost refi.

[cputrwz]

LOL that's pretty awesome though.

[cv91915]

On 5/13/2020 at 4:39 PM, cv91915 said:

• What is the current balance in the escrow account?
   
• What are the recent transactions on the escrow account, so I know if they've already paid the next tax installment that's due in June?  (Escrow account activity isn't viewable on their web site)  Historically they've paid the tax installments about a month early.  I suppose I can check the county's web site.  But good lord.
   
• When and how will they refund the thousands of dollars that are currently sitting in the escrow account?

I called and got the final balance.  They issued and mailed a check for the remaining funds on 5/13, and they closed the account before paying the property tax installment that's due in June.

 

All that's left now is waiting for the new $2.80 payment to update on my reports (replacing the P+I+escrow payment that's currently reporting), most likely on or about 6/1.  I'm assuming it will report as $3.  

[cv91915]

This loan is an ARM.  I received notice that on July 1, 2020, our rate will adjust from 3.74% to 3.25%.

 

Normally when the rate adjusts, the outstanding balance is re-amortized over the remaining term (in this case, $557.10 over 311 months), which results in a new payment amount.

 

And yet...

 

 

The new payment should be $2.65/month.

 

 

 

If we continue paying $2.80 at the lower rate, our 337th of 360 payments would be the final one, and that's not consistent with the terms of the note.

 

From the amortization schedule I'm maintaining for this loan:

 

 

 

It appears to me that there is a calculation or data mapping error on this form.

 

Let's see what the 8/1/20 mortgage statement (available mid-July) shows for the payment due.

 

 

 

Edited May 27, 2020 by cv91915

[cv91915]

On Friday I e-signed some updated disclosures on a HELOC we're in the process of opening, and our processor must have verified our mortgage details, because this is what was showing on the new disclosures:

 

 

On the original HELOC application from mid-May, the first mortgage details were imported from my credit report, which still showed the monthly payment with escrow $$$$ baked in.  

 

[cv91915]

On 5/13/2020 at 5:47 AM, cv91915 said:

f

The first P+I payment since I closed the escrow account posted to our checking account this morning. 

 

It's so cute!  😺

 

[cv91915]

TransUnion:

 

 

 

Equifax:

 

 

 

Experian:

 

 

 

 

 

[Rogue]

Equifax

 

Term Duration: 36!  

 

 

[cv91915]

19 minutes ago, Rogue said:

Equifax

 

Term Duration: 36!  

 

 

I noticed that also.  
 

I wonder if that's because it's a 3/1 ARM.

 

🤷‍♂️

[cv91915]

[cv91915]

On 5/27/2020 at 6:31 AM, cv91915 said:

This loan is an ARM.  I received notice that on July 1, 2020, our rate will adjust from 3.74% to 3.25%.

 

Normally when the rate adjusts, the outstanding balance is re-amortized over the remaining term (in this case, $557.10 over 311 months), which results in a new payment amount.

 

And yet...

 

 

The new payment should be $2.65/month.

 

 

 

It appears to me that there is a calculation or data mapping error on this form.

 

Let's see what the 8/1/20 mortgage statement (available mid-July) shows for the payment due.

 

 

There is definitely a calculation problem in the servicing system.

 

Even though our rate adjusted on 7/1 (reflected in the 8/1 payment), the interest is being calculated with the new rate but the payment is staying the same.  That's not how this is supposed to work.

 

 

 

 

[Burgerwars]

10 hours ago, cv91915 said:

 

There is definitely a calculation problem in the servicing system.

 

Even though our rate adjusted on 7/1 (reflected in the 8/1 payment), the interest is being calculated with the new rate but the payment is staying the same.  That's not how this is supposed to work.

 

 

 

 

Were you depending on that extra 15 cents per month to increase your cash flow?

 

I'm wondering how you will take it if the bank sends you a notice that they've zeroed-out your account and it's paid in full. Don't get depressed. As I've mentioned, my mortgage was declared paid in full before I made the final payment (Wells Fargo mortgage).

Edited July 25, 2020 by Burgerwars

[cv91915]

49 minutes ago, Burgerwars said:

Were you depending on that extra 15 cents per month to increase your cash flow?

 

I'm wondering how you will take it if the bank sends you a notice that they've zeroed-out your account and it's paid in full. Don't get depressed. As I've mentioned, my mortgage was declared paid in full before I made the final payment (Wells Fargo mortgage).

They don't know who they're dealing with here.  I've gone to federal court to recover $0.38 from Discovery.  

[cv91915]

What do you think would happen if I started paying 20 days late every month, and just let the late fees pile up?

 

 

 

 

 

[cv91915]

Kredit Carma to the rescue.  

 

 

[Burgerwars]

On 7/25/2020 at 3:25 PM, cv91915 said:

What do you think would happen if I started paying 20 days late every month, and just let the late fees pile up?

 

 

 

 

 

Your house will be foreclosed and you'll be living on the streets. If we don't hear from you anymore, it was nice knowing you. 😕

[centex]

On 8/2/2020 at 6:36 AM, Burgerwars said:

Your house will be foreclosed and you'll be living on the streets. If we don't hear from you anymore, it was nice knowing you. 😕

They can still get the free wi-fi at the coffee shops...

[cv91915]

Current balance, YTD principal and interest totals, etc., are shown below.

 

Payments are on autopay, so there's little risk of encountering that 14-cent late fee.  👍

 

Paying 3.25% on this mortgage is killing me, given how low rates have been.  Plus this is an ARM, so I need to brace myself for the next adjustment.

 

 

[TheVig]

Nice of them to mention that housing counseling is available. Looking out for the little guy. 

[Burgerwars]

I still worry about you jumping out the window if the mortgage company zeroes out the balance and declares the mortgage paid in full. As I've mentioned, Wells Fargo Home Mortgage did that to me before I made the last payment. I did, though, get another installment loan trade line when I started a cat lease (Chase Bank). The car lease ends in about a year, when I'll have to decide what will be my next set of wheels.

Edited April 11, 2021 by Burgerwars