Legal Question in Credit and Debt Law in New York

Mortgages & Balloon Payments
My family has a balloon payment mortgage that was originally given through a bank. The bank told us that so long as we maintained a good payment record with them, they would continue the mortgage. Before the mortgage term ended, it was purchased by a loan holding company, which continued the mortgage for about two years after the balloon payment due date, so our assumption was it intended to maintain the policy of the original lender. Two years after the due date, the new company abruptly stopped accepting our checks, then demanded payment when we called them for an explanation. We have 90 days to make this payment, which we can, but we have had to continue paying interest till the end of the 90 days.

We feel this company has behaved in an 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 interest payments from us.

Our question is, if we make the balloon payment, could we force them to return the interest payments of the last two years?

Asked on 6/10/01, 3:06 pm

Garry Hanlon

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Re: Mortgages & Balloon Payments

Absolutely not. You still had the use

of the money, and under the terms of the note

you have to pay for this (that is the nature

of an interest charge)

You would have a better chance of forcing them

to continue to have to accept monthly payments

until the loan is liquidated based upon their

conduct. This, though, is a 50-50 proposition

Answered on 6/28/01, 9:09 pm

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