Can mortgage company change terms of an original contract?

Our 15-year fixed-rate second mortgage contract stated monthly payments calculated on a fully amortizing basis; payments due on the 1st of the month with a late fee assessed if payment was received after the 15th. The loan matured on 2 months ago and we received a payoff statement with a substantial balance due. They have admitted to using simple daily interest based on number of days between payments to calculate amounts to principal and interest each month, resulting in the large principal balance. This is contrary to our signed contract. How can they do this and what can we do?

Asked on October 15, 2011 under Real Estate Law, California


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

No, a mortgage company cannot change the terms of its written loan agreement with a consumer. If you are having problems with the lender on your second mortgage recorded on your home as security for the loan you obtained, you need to carefully read the loan agreement in that its terms and conditions control the obligations owed to you by the lender and vice versa in the absence of conflicting state law.

The best way to start resolving this issue is to contact a representative of the lender over the telephone to discuss your concerns and then follow up with that telephone concersation with a letter to the representative confirming the substance of the call keeping a copy for yourself.

If you are not getting a resolution of the issues to your satisfaction, consulting with an experienced real estate attorney in the area of loans is suggested.


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