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Question about mortgages & balloon payments

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This is a question regarding mortgages and balloon payments in NYS. My family has a mortgage that was originally given through a bank, with a twelve-year term, and a balloon payment at the end of the term. The bank told us that so long as we maintained a good payment record with them, they would continue the mortgage, i.e., they would not call the balloon payment. However, about a year and a half before the balloon payment came due, the mortgage was purchased by a loan holding company. This company did not call the balloon payment when it was due, but rather continued doing business as usual with us, so our assumption was it intended to maintain the policy of the original lender.

The new company continued the mortgage with us for approximately two years after the balloon payment was originally due, when we discovered they had not cashed a monthly mortgage payment check. Concerned the payment deadline would slip past, we called their customer service department, were informed they did not have the check, and must have lost it. To avoid being overdue, we gave them a check over the phone at an eight dollar expense to ourselves. This check was not cashed either, and upon calling them again, we were connected to a person in their lending department, who informed us that he had discovered the overdue balloon payment, had refused our checks for that reason, and was demanding immediate payment of the remaining balance of the mortgage.

Upon discussion with his supervisor, and pointing out what we felt was the highly unethical manner in which the company had acted, particularly in light of the fact we had a perfect payment history on the mortgage, the immediate payment requirement was relaxed to give us ninety days. However, since then, they have cashed both checks we sent them, collecting the interest portion of those payments, and sent us a bill for a June payment. Upon receiving the June payment, they put it toward the July payment, thereby collecting interest before it was due.

We feel this company has behaved in a grossly unethical and legally questionable manner for the following reasons: (1) they have collected two years of interest from us they were not entitled to as it was their intent to collect the balloon payment; (2) they failed to notify us in an appropriate manner of wanting the balloon payment; (3) they have continued to collect payments from us, even after demanding the balloon payment, thereby collecting additional interest we do not feel they are entitled to. And in this last case, they have collected interest before it was due.

Our question is, do we have any legal recourse against these people? For example, if we make the balloon payment, could we force them to return the interest payments of the last two years? Or do we have any other options? I appreciate any responses, as we are uncertain as to how to proceed in this matter.

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