Posted by Shoshana/AZ on 5/24/12 5:43pm Msg #421786
Wells Fargo
I just did a WF signing a little while ago. The doc for automatically withdrawing the payment out of the borrower's bank account states that if you choose once a week or twice a month payment frequencies, the money will stay in a separate account until the full amount is collected for that month. In other words, people who usually choose those intervals to pay because they want to pay off their mortgage quicker, are getting shafted. WF won't apply the payments till the appropriate time. Is that even legal to hold on to the borrower's money like that?
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Reply by Les_CO on 5/24/12 6:02pm Msg #421789
Sounds like a slick deal to me. I’d bet it’s perfectly legal if the borrower signs off, and (although probably not necessary) they pay interest on that separate account. Better to pay ½% and get 4%. I have a WF tomorrow I’ll look.
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Reply by Shoshana/AZ on 5/24/12 6:20pm Msg #421795
It didn't say that they pay interest. n/m
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Reply by Linda Spanski on 5/24/12 7:01pm Msg #421800
Many banks do this.
And some charge hundreds to set up weekly or bi-weekly payments. I discovered this years ago when Suntrust was my lender and they pushed these plans because it made THEM money. No interest was paid on these funds.
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Reply by MW/VA on 5/24/12 8:12pm Msg #421804
IMO they're offering the flexibility for convenience only.
I've never seen anything that said it became a "bi-weekly" mortgage program in the truest sense of that definition.
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Reply by Linda_H/FL on 5/24/12 8:26pm Msg #421807
Not really shafted if you think about it
If memory serves me from when I closed these in my other life..
If you make a monthly payment you make 12 payments per year
If you opt to make every 2 weeks..that's 26 weeks - 13 payments per year...cuts time off the life of the loan. So whatever pitiful interest they're gaining on those payments every two weeks pays off at the end for the borrowers.
Just a walk down a foggy memory lane.. 
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Reply by Jack/AL on 5/24/12 10:46pm Msg #421818
Re: Not really shafted if you think about it
Linda H/FL..... True, not so bad, when done as you said. Many lenders once did as you explained, wiith 13 payments being made per year, which is for the good of the borrower. The OP is talking about something different. Today, Wells Fargo and some others merely hold onto the weekly or bi-weekly payment increments until they're holding enough to make a NORMAL monthly payment, thus making only 12 payments per year. One obvious difference is that the lender using the latter method gets to hold the borrower's money for weeks, thus earning some interest for itself (none to the borrower).
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Reply by Les_CO on 5/26/12 9:38am Msg #421919
Re: Wells Fargo/ follow up
I had a Wells Fargo loan yesterday (at the WF Bank branch) and actually looked at the form. I usually just briefly ask the borrower if they want their payment automatically deducted from their account, if so they will must completely fill out this form, handing it to them. Never had one say yes. I asked the OL about it. He said it’s for the convenience of the borrower to help them budget their payment, to coincide with their paycheck.
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