KJ McElrath  |  July 25, 2019

Category: Legal News

Top Class Actions’s website and social media posts use affiliate links. If you make a purchase using such links, we may receive a commission, but it will not result in any additional charges to you. Please review our Affiliate Link Disclosure for more information.

Regions FHA loanFHA loans are often sought after in the home-buying market because they come with fewer requirements than other mortgages.

Unfortunately, some borrowers who paid off their mortgages early report they were charged more interest upon payoff than they should have had to pay–possibly in violation of federal regulations.

Can I Get a Regions FHA Loan?

Many consumers are curious about whether or not Regions Bank offers FHA loans. FHA loans are issued by private lenders like Regions Bank and are insured by the Federal Housing Administration. These loans are available for refinance and purchased loans and allow for fixed monthly payments and low down payments.

Some consumers may have been negatively affected by a practice that is used by certain banking institutions even though these fees were prohibited since Jan. 21, 2015.

The rule in question has to do with HUD and FHA getting rid of post payment interest charges. If you have previously had a Federal Housing Administration mortgage in the past, or a Regions FHA loan, and you prepaid that mortgage in full, the FHA approved mortgage lender could have charged interest through the end of the month in which the last payment was made.

Do FHA Loans Through Regions Bank Have Prepayment Penalties?

On Aug. 26, 2014, FHA and HUD decided to eliminate any post-payment interest charges for all single family mortgage loans that are insured by the FHA that closed on or after Jan. 21, 2015.

Prior to the time the changes were enacted, it was standard practice for the FHA to allow lenders to charge a full month’s interest whenever a borrower paid off the outstanding balance – regardless of what day of the month it was paid.

This, incidentally, has not been the case in other types of mortgage loans. Here is an example: if a borrower had gotten the loan through his or her local credit union and the interest portion of the regular monthly payment was $900, that interest payment would be pro-rated at $30 a day. For example, if the loan was paid off on the 15th of the month, the interest portion of that payment would be $450.

However, with an FHA loan under the old rules, the borrower would have had to pay the entire $900 – essentially amounting to a $450 penalty for simply being able to pay their loan off early.

In 2014, the Consumer Financial Protection Bureau (CFPB) determined that the FHA’s interest payment policy was in violation of then-current Regulation Z provisions of the Truth in Lending Act of 1968.  This was an amendment to the Consumer Protection Act, and was intended to protect consumers from deceptive lending practices. The CFPB ruled that forcing a borrower to pay en entire month’s interest when prepaying a loan earlier in the month was indeed misleading and deceptive – hence the new rules that were enacted in January of 2015.

Unfortunately, some lenders have failed to get the message, or somehow believe they can get around it. Despite the new rule, some lenders have been accused of continuing to charge a full month’s interest upon payoff of the loan. Regions Bank is suspected of carrying on this practice.

What Does the New Rule Protect for Borrowers?

The new rule says that borrowers cannot be charged pre-payment interest and that mortgage lenders have to accept pre-payments in any amount and at any time. However, some consumers may have been affected by the charging of an interest fee when they refinanced, sold or paid off their loan within the last couple of years.

A current investigation is attempting to determine whether customers who got a Regions FHA loan could have been affected. Those consumers who were charged post-payment interest fees after the rule went into effect could have grounds for legal action. It’s possible some banking customers who went with a Regions FHA loan could have been charged mortgage interest they shouldn’t have had to pay.

What is an FHA Loan?

FHA loans are simply government backed mortgages insured by the Federal Housing Administration. FHA home loans require lower down payments and lower minimum credit scores which makes them extremely popular among first time home buyers.

According to Bankrate, many people can qualify for an FHA loan with just 10 percent down and a credit score as low as 500. In order to qualify for more favorable terms, a borrower should have a credit score of at least 580 and be prepared with a 3.5 percent down payment.

FHA loans work flexibly, according to LendingTree, in that the down payment can be increased to 10 percent for those individuals who have a credit score between 500 and 579 and those who have a bankruptcy in their past.

Those consumers who may have been affected by now prohibited post payment interest charges in the last several years may be curious about their rights to participate in this current investigation.

Join a Regions Bank FHA Mortgage Class Action Lawsuit Investigation

If you had an FHA mortgage loan with Regions Bank, and you sold, refinanced or paid off your mortgage early, you may have been charged a post-payment interest fee. If so, you may be owed money.

Learn More

This article is not legal advice. It is presented
for informational purposes only.

We tell you about cash you can claim EVERY WEEK! Sign up for our free newsletter.


6 thoughts onDoes Regions Bank Do FHA Loans?

  1. Dorina Grecu says:

    I have a mortgage with region

  2. Cynthia Lewis says:

    Please add me to class Action lawsuit. I’ve had my FHA mortgage with Regions since 1988. Add me now! Thanks

  3. Cynthia Lewis says:

    Yes I have a Regions FHA loan that I have had a long time. I had my FHA loan refinanced.

  4. Lori says:

    We were told by regions on fha loan that we were to owe 15% upfront. This was actually a practice they did!!
    So yes this is legit!
    We were turned down despite we actually qualified. They cost us from getting a good home!!
    Now we’re in other legal crap cause of it

  5. Sonal shah says:

    add me

  6. Anthony Eugene Aguilar says:

    We had regions mortgage for a home in norman oklahoma 1914 saddleback Norman. Please add me

Leave a Reply

Your email address will not be published. By submitting your comment and contact information, you agree to receive marketing emails from Top Class Actions regarding this and/or similar lawsuits or settlements, and/or to be contacted by an attorney or law firm to discuss the details of your potential case at no charge to you if you qualify. Required fields are marked *

Please note: Top Class Actions is not a settlement administrator or law firm. Top Class Actions is a legal news source that reports on class action lawsuits, class action settlements, drug injury lawsuits and product liability lawsuits. Top Class Actions does not process claims and we cannot advise you on the status of any class action settlement claim. You must contact the settlement administrator or your attorney for any updates regarding your claim status, claim form or questions about when payments are expected to be mailed out.