How to check if your mortgage statement is correct

by Xin Lu on 28 January 2009 9 comments

This week the Federal Trade Commission sent out around $28 million in redress checks to more than 86,000 customers of Bear Stearns and EMC Mortgage Corporation.  Apparently EMC Mortgage engaged in a flurry of unlawful practices such as misrepresenting mortgage amounts owed, charging unauthorized fees, and engaging in abusive collection practices.  This is obviously a case of a dishonest company, but I am sure some customers were defrauded without even realizing it because they trusted the statements they received.  This is a guide to how you can double check that the mortgage statement you receive is accurate.

The mortgage statement varies in format from company to company, but the following information are what you should pay attention to:

  • Principal amount owed
  • Last payment received date
  • Interest paid in last payment
  • Principal paid in last payment
  • Tax and insurance paid in last payment if you impound taxes and insurance
  • Interest rate
  • Amount owed for current payment
  • Late fees owed for current payment

It is usually pretty easy to verify errors in payment dates because you should have records of when your money was taken from your accounts.  The  due date for the current payment is generally the first day of the next month and the late charge deadline is usually the 15th.  If you submitted a payment before the late charge deadline then you should not have a late fee.  The tax and insurance impound should also be easy to verify with your tax records and insurance  contract.  The interest rate should stay the same as the mortgage contract you signed if you have a fixed rate loan.  If you have a variable loan, you should watch out for interest rate hikes and contact your lender immediately if your rate is unexpectedly adjusted. I have read some stories where  borrowers were crying foul when they were told they had a 5 year fixed period and found that their interest rate hiked up after only 2 years.

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It gets a little trickier to verify the amount of principal and interest owed. You would need a spreasheet program and know the terms of your specific loan and your payment history.  I think this is where people place  complete trust in their mortgage servicer.  The easiest case would be that you have a fixed rate mortgage and you have been paying the same amount every month.  In that case you can just use a mortgage calculator to calculate your amortization table by plugging in your original loan amount, loan term, and interest rate. However, if your mortgage rate is variable or if you have made additional principal payments then you would need to input it all into a spreadsheet to see where you are now.  The basics you should know are the following:

  • Monthly interest owed should be the principal amount owed multipled by the yearly interest rate divided by 12.  For example, if your current principal amount owed is 300,000 and your yearly rate is 5.75%, then you owe 300000 * 0.0575 /12, which is 1437.50 for the month.
  •  The principal amount you owe each month is based on the length and terms of your loan.  If you have an interest only loan then you pay 0 on principal during the interest only period.  If you have a fixed rate loan you can figure out the minimum payments you should make per month with a mortgage calculator  or check out this article by Julie.
  •  Any extra money you put towards your mortgage beyond the minimum monthly payment goes towards the principal.  So if you put in extra money and not all of it was credited to the principal amount then something is wrong.
  • Your new loan balance each month should be last month's principal balance minus the amount of principal you paid last month.

Here is a simple example on Google Spreadsheets of four months of mortgage payments and how it was calculated.

If this is too much math and you suspect something is wrong with your statement then you should ask someone familiar with accounting to figure out if everything is in order.  It would definitely help if you kept a record of all your payments and statements.  If there is in fact something wrong you should contact your  mortgage servicer first  and if you have enough records to back up your math then it is very likely your servicer will fix the error because I do not think any of them want any new lawsuits.

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Guest's picture

Thank you for the warning and information. Your articles are always right on the money. I think companies make things so confusing for a reason. All the important information is buried in the fine print or written to confuse. Great article!

Guest's picture
Stacey2007

It always pays to double-check your statements. I'm sure that companies make mistakes more often than we realize.

We track our mortgage payments in Money - it automatically adjusts the amortization schedule each month, based on our extra payments, and calculates the interest/principle split. It's just easier to verify that both "my" calculated balance and the mortgage company's balance match. As a bonus, it lets me know each month how many more payments we have until the loan is paid off!

Guest's picture
Guest

Confusion, Obscusion and Obtusion is how they pirate and make the "big money" taking advantage of the poor, weak and uneducated members of society.

It's a "system" and your either a slaver or saver.

Guest's picture
KShore

I've noticed that most mortgage companies have an amortization calculator built into their website (at least Chase & Citi). The best part is that the calculator includes historical data about your mortgage, so for instance it knows that you've already made 50 of the 360 payments. You can usually test the impact of a one-time payment vs. paying extra each month. You can print or copy the amortization table for your records and check each month that your statement matches the table.

Guest's picture

This is why I rent. No red tape, just you and your landlord or company. Of course there are such things as crooked landlords, but I have been lucky to always get a good super.

Guest's picture

I keep my own accounts with the help of an Excel spreadsheet, and compare them with the yearly statement that I receive from the Bank. Sometimes there are small differences that happen due to interest changes during the year.

I then adjust the figures for the rest of the tenure and wait for the next statement.

Regards

Guest's picture

By using payment coupon books, consumers are forced to blindly trust that their payments are being applied timely and accurately -when all too often, they are not.

I have been fighting for a borrower's right to obtain, or have access to, monthly mortgage statements since the mid 90's after spending years cleaning up a mess caused by mortgage servicing problems. see: http://givemebackmycredit.com/richardson_my_story.htm

I too was paying additional principal payments that either were not applied -or inaccurately applied, without my knowledge all because I never received a monthly mortgage statement! This created a harmful chain-reactive set of events that took a decade to repair.

Since we are able to receive monthly utility statements and credit card statements, wouldn't it be a reasonable expectation that we should have access to monthly mortgage statements so we can track and verify how our mortgage payments are handled? Allowing mortgage servicing companies to continue operating without oversight or regulation, is not only a disturbing reality but one that angers many homeowners -and rightfully so.

Read comments from borrowers against mortgage servicing companies as they battle to right corporate wrongs caused by either accounting errors or fraud;
http://givemebackmycredit.com/richardson-petition.htm.

What you don't know -can absolutely hurt you! Knowing how our payments are applied should be a basic right -not a privilege dictated by mortgage servicing companies!

Guest's picture
jrscobie

I noticed on my mortgage statement some extra charges.
I noticed a $45 charge on my March 2010 statement.
Then looking back I found a $90 charge on my Feb 2010 statement, another $90 charge on my Jan 2010 statement and another $45 charge billed to my upcoming April payment statement.

Then when I call customer service to have this explained they tell me that the regional office authorized a company named "Home sweet home investment co" to CLEAN MY HOUSE.

GREEN TREE servicing mortgage company says they have invoices from this company for CLEANING MY KITCHEN, CLEANING MY YARD, CLEANING MY BATHROOMS.

sAY wHAT ????????????????????

An absolute fabrication.
They need a WARRENT signed by a judge upon probable cause to get pass me and my AR-15.

I was given a name to contact at the regional office.
This name, JEFF CONIG is who authorized these IMAGINARY cleaning crew fees.
NOBODY BUT ME CLEANS MY HOUSE.

They must have me mistaken for a foreclosure that did need to be cleaned before they could sell it.
This is the only reasonable persumption.
But I have to wait 2 days until the regional office opens to contact this person.

He better not call in sick on Monday.

If they continue to tell this story then they are involved in scamming me, FRAUD.

JEFF CONIG has NEVER been inside of my house.
He does not know what my kitchen looks like or what cleaning it does or does not need.

However their mistaking me for somebody else has occured me several hundred dollars of "extra charges".

And these charges are even on my next months future bill.

I must get immediately resolve plus some lipstick on my ass or Im going nationwide with this story on national radio and of course in the bloggesphere, probably after a few created youtube videos.
:)
From the state of Arizona

Guest's picture
Chris

There is an automatic online arm mortgage audit system called checkMyARMonline. This site recalculates your variable interest rate based on your mortgage note information - basically double-checking all the interest charges and monthly payments on your mortgage, past and future.

The website looks up the monthly index rate for your adjustable rate mortgage and handles all the complex math, rounding, lookback, rate floor and ceiling, etc. All you do is type 10 - 15 pieces of info from your mortgage note into a secure online form. They even offer the service free to homeowners facing foreclosure. This free foreclosure help can delay or even stop foreclosure proceedings, if the homeowner finds an interest rate error in their mortgage's servicing history.

http://checkmyarmonline.com