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Bank stopped automatic withdrawls

Posted on: 16th Jun, 2009 06:47 pm
i had a simple 15 year home equity loan at 5.5% for $180k. the bank made automatic withdrawals from my checking which was also with the bank ($1540/mo p&i). after two monthly withdrawals i paid off $40k. the bank made one more withdrawal and inexplicably stopped. i didn’t discover they had stop withdrawing until 27 months later. i alerted them and they resumed the withdrawals. i noticed 18 months later (when i paid my taxes) that they were just taking the withdrawals as interest (all $1540/mo). since the loan balance was down to $140k, the $1540/mo interest works out to over 13%, so i have been overpaying for 18 months (22 months to date) after not paying for 27 months. i have been complaining to the bank (in person, phone, and email) and i believe they are sending me a proposal to resolve this issue.

my question: is it reasonable for me to expect the bank to except the loss for 27 months because it was their responsibility to withdraw the payments from my checking? they claim i should have noticed.
Hi KYNKELSDAD,

Welcome to our forum.

I think you have to inform to bank earlier while they stopped automatic withdrawal. Why you paying for 22 month's ?

You have to contact bank & resolve this issue. You need to tell this position to bank authority to resolve this issue.

Thanks & Regards.
Posted on: 16th Jun, 2009 09:49 pm
Hi KYNKELSDAD,

There is no way the bank will accept the loss for the 27 months. They will argue that they might have stopped withdrawal for some reason, but you should have brought this to their notice. The fact is you owe the debt and you will have to pay it off, sooner or later.

What you can do is, you can negotiate with the lender and ask them to reduce the interest rate, by extending the term of the loan, so you can afford the monthly payments. You can also request them to modify your loan and change the loan terms to help you pay off the debt.
Posted on: 17th Jun, 2009 01:47 am
you follow up with bank & ask them for loan modification
Posted on: 17th Jun, 2009 06:22 am
wow - my perpetual state of amazement here.

the bank is essentially correct in that you ought to have caught the lack of withdrawals and brought it to their attention long before the 27 months elapsed. clearly, they are in the wrong for having curtailed the withdrawals, but due diligence is required of all parties.

as for the payments of $1540 monthly while your balance had already been sustantially reduced: is there any possibility that you are mistaken in thinking that it was all applied to interest? i ask that because any financial calculation system in place ought to be operable to the point that it would do the true interest calculation on a monthly basis and apply the difference to your principal balance. that's what should have happened with the excess, and you should definitely see this take place ultimately - assuming that they'll have to go back and make manual adjustments.

modification? i don't know what modification has to do with this circumstance. all you really need is for the bank to do the recalculations and render your debt correctly. adjusting the interest rate doesn't make much sense to me, either, since all you're asking for is the proper calculations to be made.
Posted on: 17th Jun, 2009 09:08 am
Thanks for your comments. It's Bank of America that I'm dealing with. I've done numerous phonecalls, emails and visited the branch where I got the loan. The branch is useless. The email replys are form emails that don't adress any of the issues. The bank said they were recalculating the loan and would send it to me in a week. Two weeks went by, I called them and they said a few days. It's now been a third week.

The $1540 was all interest, the principle has remained unchanged. The bank tried to tell me that the $1540 was calculated as daily interest or something, but it's exactly the same as the original P&I. They lie and they are incompetent.
Posted on: 18th Jun, 2009 04:40 pm
you are correct in describing the branch as useless in a situation such as you describe. they can only direct you to someone in the servicing area, or try to find out things that they can spit back to you. i don't mean to demean the branch network at bofa or anywhere else - it's just that servicing is always somewhere else (unless it's a local bank or credit union).

all i can suggest at this time is to keep hounding them. don't let a day go by without annoying them. it's obviously a critical item that needs to be addressed.
Posted on: 19th Jun, 2009 07:30 am
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