home equity loan

If a debtor sends a creditor an amount in excess of the regular monthly payment, absent of application instructions, the creditor must apply the difference to the principal

TRUE OR FALSE?

thanks

STECK

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by steck:
If a debtor sends a creditor an amount in excess of the regular monthly payment, absent of application instructions, the creditor must apply the difference to the principal

TRUE OR FALSE?

thanks

STECK

<HR></BLOCKQUOTE>

I'm used to only multiple choice or essay type of questions.

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by HomeGuru:
I'm used to only multiple choice or essay type of questions.<HR></BLOCKQUOTE>

a. true
b. false
c. don"t know
d. don't care
e. all of the above
f. none of the above

it's important--please!

thanks again...

STECK

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by steck:
If a debtor sends a creditor an amount in excess of the regular monthly payment, absent of application instructions, the creditor must apply the difference to the principal

TRUE OR FALSE?

thanks

STECK

<HR></BLOCKQUOTE>

That would depend on if there are any other amounts due and owing and in arrears such as interest, real property taxes, insurance, collection fees etc. If there is nothing outstanding then the monthly payment should be applied in accordance with the mortgage and promissory note. Sometimes the overage may be applied to prepay interest or be put into an escrow account. Other times it is used to pay down the principal loan balance. Of course from a consumer standpoint, it would benefit the mortgagor if the principal balance is reduced. So absent payment instructions on the check or via cover letter, the mortgage company is free to follow standard operating procedure in accordance with the mortgage loan documents. Even if the overage every month was say $100, the interest savings would be small due to the low reduction in principal.

David J Miller, do you have any other comments?

[This message has been edited by HomeGuru (edited November 01, 2000).]

Assuming we are talking about a mortgage, the answer to the posters question is as Homeguru said. The note will stipulate how funds are to be applied, absent of instructions.

Where were the funds applied? escrow account, late fees, interest.

A lot of times you can ask the mortgage company to make a correction and apply the funds as you had intended unless the funds were applied to cover late fees or a shortage in your escrow account, assuming the note stipulates they can do this, which my guess is it does.