Countrywide wants me to believe that making more payments on my home loan with Countrywide PayPlan 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?
Jun 28, 2011 Update
Bank of America has been hit with a federal class action lawsuit for allegedly processing its PayPlan mortgage payments in a “deceptive, unfair and unconscionable” way by making “persistent” miscalculations of interest charges and purposefully taking payments late in order to charge customers even more interest.