Someone explain this from CitiMortgage

[mom-from-missouri]

OK.
We recently bought some adjoining land from a neighbor. Loan was with the bank, who turned around and sold it to citimortgage (my husband was livid-we hate citi-another story.)

Anyway, the loan is current.

At various times through my life, I have often made bi-monthly mortgage payments on my own--paying over half, then two weeks later, making another over half payment. Never been an issue. I did it primarily for easier budgeting after my first husband abandoned us, leaving me with all the bills.

I did some extra childcare, and went just now, to pay extra on my citi, (this months payment was already processed, next one not due till end of March)and thought I am going to start doing this bi monthly for 2 reasons-- #1, you come out ahead on interest and #2, husbands paychecks rotate from 36 hours on week 1, to 48 hours on week 2, then 60 hours on week 3 -thought it would make it easier if the payment came due on a week his paycheck was only 36 hours.

I will add, this payment is very low, only a little over $250, often times, when we don't have propane winter bills or high AC electric summer bills, we pay double or triple payments on it, and have already cut several years off the loan.

Anyway, when I just tried to send in $140 towards it online, it was rejected. I got an error message telling me my account was not eligible for bi-weekly payments. So I called them, and no offense to anyone, I ended up in India, with a very poor English speaking man (I swear it was a man, named Romonarose)and he said I could not make my payment until next month (meaning March) and it had to be at least a full months payment in order to be accepted.

WHY? He just said that is the rules. No where online, or in our paperwork is this "rule" stated.

Who can explain this one.

Again, I HATE CITI. We will probably move this over to another company. We did not want citi, as I stated earlier, the local bank it was with sent all their mortgage loans elsewhere--we knew nothing until after it was sold.

[MonkeyMama]

I think that is pretty common. Standard industry practice.

Usually there is a fee for bi-weekly payments.

The thing is they have to completely change your amortization schedule and re-calculate the interest twice a month (instead of just once).

The way around this is just to send whatever you can, once a month. Sometimes is extra - apply it to extra principal.

This is not just a Citi thing. Check with any new lender about their policy before you transfer the loan.

[solvision]

You could also set up an offset account where the money you have in that account is offset against the mortgage. For example, if you have $10000 in that account, you wont pay interest on $10000 of your mortgage.

You can then move the money across once a month or later as needed. This is a good way to get yourself some cushion/emergency money, let yourself go above the 3 or 6mths living expenses amount, and then only transfer what is above that over and off the mortgage.

[Seeker]

You could also set up an offset account where the money you have in that account is offset against the mortgage. For example, if you have $10000 in that account, you wont pay interest on $10000 of your mortgage.

You can then move the money across once a month or later as needed. This is a good way to get yourself some cushion/emergency money, let yourself go above the 3 or 6mths living expenses amount, and then only transfer what is above that over and off the mortgage.

Offset Mortgages are relatively new in the United States. They also work a bit differently here because of our tax laws.

Most people living here in the US do not know about them; and many mortgage lenders will not offer an Offset Account option.

[b4freedom]

That's actually really really crappy of citi to not accept your money and to limit you to one payment per month. If it's not in the terms of your loan, then it's technically not allowed and they must honor it. However, it may be the terms of their online system that you agreed to when you clicked, "Agree" when you set up an online account. So, mail them a check. If they reject it, you have two choices: 1) Hire a lawyer. 2) Suck it up, and do something else, like save the money and apply it to the principle the next month.

They do this to make more money, keep their expenses low, and keep the accounting simpler. Honestly, they also want to screw you. They're citi, they're all about screwing people. Average phone call costs the company probably about $3. I'd call 10 times a day for 30 years if I could.

[Shewillbemine]

Why can't you hang onto the money until your next payment and add it to the principal line? Doesn't it allow you to do that?

[MonkeyMama]

That's actually really really crappy of citi to not accept your money and to limit you to one payment per month.

I would presume "no bi-monthly payments" would be in the original terms of the loan. In most any loan.

[Joan.of.the.Arch]

I feel your frustration. When our mortgage got resold, the new holder of the loan tried to act as though the terms of the contract were different than they were. They wanted to charge us $60 per incident to take an early payment. Plus, they wanted us to send a letter 30 days before sending an extra payment, stating that we were going to do so. Rrrgh. Early payments (without fee!) were definitely allowable in our contract, and no such pre-notification was required. The new mortgage holder was also immensely difficult to contact. Rrrgh, again. Eventually, they, too sold the loan and we wound up with a mega bank, but at least we can make a single call and talk to someone if we want.

[AshleyB]

Offset Mortgages are relatively new in the United States. They also work a bit differently here because of our tax laws.

Most people living here in the US do not know about them; and many mortgage lenders will not offer an Offset Account option.

I think here they are called "all in one mortgages" or something like that. I would love one, but have no idea how to go about getting one.