The Mortgage Reduction Plan
Mortgage Audit
According to Robert Abrams, the former New York State Attorney General, one out of every two mortgages contain at least one error throughout the life of the loan.
- The average overcharge is about $1,500 while some go as high as $10,000.
- Errors could occur when mortgages are bought and sold between lenders and entered into the various computer systems or they could occur when there is a change to any of the terms, including interest rate and Escrow.
- These errors can be miscalculations, data entry mistakes, clerical errors, programming errors, or just miscommunication. Due to the cascading effect of interest, a small miscalculation on a single payment accumulates into a larger amount with each additional payment.
- Mistakes can favor either the lender or the borrower but are usually in favor of the lender. The borrower could end up paying thousands of dollars in overcharges without even knowing it.
- A yearly mortgage audit can catch these errors before they get out of control.
The Mortgage Reduction Plan (MRP) audit is just a break down of each payment into its various parts; Principal, Interest, Escrow (if any), and Ending Balance.
The Mortgage Reduction Plan audit will show all payments that Tower has made, any payments that were made without Tower, refunds that have been sent back to the customer, and any amount that was returned to Tower by the lender.
- The borrower can compare the detailed information in the Mortgage Reduction Plan audit with their monthly or yearly lender statements to make sure each payment is being applied as it should and that the ending balances match.
- If the balance varies between the two then the borrower knows there has been a mistake.
- Once the error has been identified the borrower can then look back at all the previous payments to determine where the mistake may have occurred.
Most lenders do not provide audits to their customers, while some do for an additional fee. Tower will do one audit per year upon a customer's request for no additional fee.
- The audit that is done by Tower will include:
- An audit of the mortgage as it was paid on the Mortgage Reduction Plan
- An audit of the same mortgage without the Mortgage Reduction Plan.
- This is a great way to see how much the bi-weekly payment program is actually saving the customer by showing the accumulated equity increases along with the highlighted dates and payment amounts for their additional principal payments.
The Mortgage Reduction Plan audit will also continue the amortization, assuming there are no changes, until the loan is paid off so that the customer can get an idea of what their future payments will look like and the approximate date that the mortgage will be paid off.
The Mortgage Reduction Plan audit consists of one summary page with:
- All starting terms
- Yearly payment totals for both past and future payments
- Additional pages that show each broken down payment, grouped together by year, along with a grand total of payments at the end
