Regions Bank Mortgage Loan Interest May Have Broken Federal Rules

Homeowners who have paid off an FHA Regions Bank mortgage loan may have been unlawfully charged interest on their balances.

There are numerous Regions Bank mortgage loan options available to consumers. These options include adjustable rate mortgage loans, fixed rate mortgage loans, and what Regions refers to as “affordable home loan programs”. One of the types of affordable mortgage loans available are the Federal Housing Administration (FHA) fixed rate loans.

Regions says the following about this loan category: “FHA loans are insured by the Federal Housing Administration (FHA), and are available for purchase and refinance loans. They offer a low down payment and fixed monthly payments, and are popular with first-time home buyers who may not qualify for other loan programs.”

Although Regions Bank talks up these loans, attorneys suspect that the financial institution may be violating FHA regulations by charging too much interest when the loan is paid off.

The FHA was created by Congress in 1934 and later became part of the Department of Housing and Urban Development’s (HUD) Office of Housing. The purpose of the administration was to open up the possibility of home ownership to the millions of Americans struggling to secure a mortgage. Since its inception, the FHA has insured 47.5 million home mortgages and 48,500 multifamily project mortgages.

For a significant amount of time, the FHA did not have rules that prevented certain kinds of interest charges. One behavior that the Chicago Tribune described as “a massive, government-sanctioned rip-off of home mortgage borrowers” was charging interest on FHA mortgages even if the account holder had paid off all of their principal balance.

If a consumer paid off their loan before maturity, regardless of when in a month the borrower paid the balance off, they were reportedly charged for a full month of interest

In a 2016 article, the Chicago Tribune reported that excess interest charges on FHA mortgages have generated hundreds of millions of dollars each year over the past decade and a half. The news source reported that, according to an estimate from the National Association of Realtors, consumers with FHA mortgages paid around $587.4 million in excess interest in 2003.

New FHA rules prevent this practice in FHA mortgage loans taken out by consumers after Jan. 21, 2015. However, Regions Bank is suspected by legal professionals to be circumventing these rules and excessively charging interest after consumers have paid off their principal balances.

Although legal action has not been taken against Regions Bank, plaintiffs have taken legal action against Bank of America, Wells Fargo, U.S. Bank and SunTrust Mortgage with similar allegations.

According to the Chicago Tribune, one plaintiff in a class action lawsuit against Wells Fargo claimed that she was charged $1,227.68 in her loan payoff statement. In contrast, the plaintiff reportedly was only charged $613.84 for typical months. She alleged that the payoff statement from Wells Fargo was “both misleading and confusing” and did not fit the FHA approved format.

This issue is not the first time that Regions has been in legal trouble for their FHA loan policies. In 2016, Regions Bank agreed to pay $52.4 million to the federal government in order to resolve claims that they failed to meet borrower creditworthiness standards set by the HUD according to USA Today. The bank allegedly failed to meet the standards between Jan. 1, 2006 and Dec. 31, 2011.

It was reportedly determined that Regions failed to follow guidelines that helped make sure that borrowers met FHA standards. When FHA loans were found to be deficient, Regions allegedly committed further violations by failing to take the appropriate steps.

The failure to meet HUD standards was reportedly a large issue because the government relies on Regions to make true and accurate recommendations about whether or not a borrower should be given an FHA loan.

“FHA-approved lenders have a responsibility to ensure that FHA-insured loans meet our standards, which are in place for the protection of FHA’s insurance fund,” said HUD’s General Counsel at the time of the settlement, USA Today reports.

“The agreement we announce today should serve as a reminder that sustainable homeownership starts with compliance with underwriting requirements.”

Regions may be continuing their track record of failing to uphold federal regulations when it comes to FHA loans. Luckily for affected consumers, there may be compensation available through a Regions FHA lawsuit.

Consumers may be able to take legal action if they: had an FHA Regions Bank mortgage loan; sold, refinanced, or paid off their mortgage within the last four years and were charged a post-payment interest fee. Eligible consumers can speak with a qualified FHA attorney to review their case and determine if filing a lawsuit is the best choice for them.

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.

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