CountryWide PayPlan/52

Countrywide wants me to believe that making more payments on my loan will benefit me. For example, with PayPlan/52, I could pay off my mortgage every week.

You may be able to save thousands of dollars in interest payments and reduce the term of your loan by several years, or just enjoy the ability to have your payment drafts occur when you receive your paycheck.

In reality, they take my money every week but hold it until they’ve accumulated enough to pay the monthly bill. So the fact I made weekly payments had no effect on the loan. In the event I paid more than what was due for the month, it went against the principal, consequently reducing the interest and term of the loan.

While other lenders may offer similar plans, they also charge significant up-front fees, which can add up to hundreds of dollars. With PayPlan/52, you pay nothing to enroll, and a nominal fee of $1.00 for each weekly transaction.

I can pay additional principal when I make my monthly payment, consequently reducing the interest and term of the loan. So where’s the benefit of spending an additional $52/year for this PayPlan service?

8 comments on “CountryWide PayPlan/52

  1. I have three mortgages with Countrywide. I called to find out how I go about makin payments to the principal on each mortgage. am told I will be charged a fee of $250 for each principal recalculation. Is this not a prepayment penalty? It is in effect penalizing me from paying down my principal and therefore benefiting Countrywide. According to the Mortage Note, there is no pre-payment penalty. Is this legal???

  2. PayPlan 52 is a plan that if you are on a fixed interest loan (ARMs cannot be on the plan). It is true that the payments have to be made prior to the due date on the loan because of your written contract.

    A servicer cannot modify the due date of the Note as that is set at the beginning of the contract. Should the loan be released to another company for servicing, the original terms of the contract would be honored by the new servicer. Payments under the PayPlan are collected before the contractual due date so that a full payment (see section 3 of your Note) is posted on the due date.

    Because of the timing of payments collected sometimes will result in 2 extra weekly payments being collected (1/2 of the monthly payment), this is applied directly to principal on the loan, thus reducing the amount going toward interest (if allowed by the Note). This happens twice a year.

    You can request an amoritization schedule to show you the comparison.

    As to the fee for the service, check your Note for verbiage “Interest will be calculated on unpaid principal until the balance…” If this is present, you don’t have to join the PayPlan programs to enjoy the effects of paying less in interest over the term of your loan. These loans, if you pay anything toward principal, is recalculated the next month to have less interest calculated. Given, your payment will remain the same, but the amount to go toward principal will be greater for the rest of the loan and you will shorten the life of the loan.

    The time you would save off of the life of the loan for any principal reduction is taken off the end of the loan, where the payments toward interest is the least and principal the most. If you pay $50,000.00 on a $100,000.00 outstanding balance, you won’t cut your loan time in half. You have to go to your amortization schedule (given in the closing documents) and subtract the amount going toward principal off the last payment from the $50,000.00 and work your way backward.

    If you don’t have the special clause, it is a fixed payment loan and the “fee” that other companies charge sometimes $300.00 to do for a “recast” is where they take the principal reduction and recalculate the remaining balance based on the original terms of the loan over the existing maturity date for the loan, thus lowering the amount toward interest and more toward principal. You could save thousands in interest for a small fee up-front.

    Back to PayPlan 52, the cost of drafting electronically on a weekly basis and the lack of a “recast” fee is greatly offset by the thousands of dollars in interest you could save in the long run.

  3. I have used Countrywide and Pay Plan 52 will reduce the payoff of a 30 year mortgage to 23 years. Instead of guessing how this works, create an Excel spreadsheet and amortize a mortgage payment over 30 years then create a second spreadsheet and amortize similar to Pay Plan 52. Here is the explanation:

    PayPlan/52 drafts one fourth of your payment amount each week. After one year of participating in this plan, you will have made an equivalent of 13 payments. The additional funds that you paid are directly applied to the principal balance of your loan. While other lenders may offer similar plans, they also charge significant up-front fees, which can add up to hundreds of dollars. With PayPlan/52, you pay nothing to enroll, and a nominal fee of $2.00 for each weekly transaction. This payment option is available for most fixed rate loan products. It is not available for Adjustable Rate Mortgages or Home Equity accounts. Select PayPlan/Services under Payment Services to learn how to enroll.

  4. My husband and I get paid weekly. We are not disciplined. I love the 52 payment plans. I was using another service just before being refinanced with Countrywide, and I have the choice of staying with them or going with Countrywide. The other plan who serviced Chase charged $8/month, and waited until the end of the month to make my payment, which was either 4 or 5 payments, depending on how many Wednesdays were in the month, which was the day I choose to draft. For $96/yr. and no hassle, it was worth knowing my loan was paid on time, and I paid a little more each week, and my mortgage was being paid off in 20 years. I am just wondering if with Countrywide, if they pay towards the principal each week or wait til the end of the month, probably the latter.

  5. Sounds like the lenders are part of the banking issues in 2008-2009. I have countrywide right now and I can not automate any payment without paying an extra fee! You think they would like to get their money. Good thing countrywide is becoming bank of america. At least b of a is a little better customer service (key – a little).


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