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While Federal Housing Administration (FHA) loans do not have post-payment penalties under federal law, some banks may still be charging their customers these fees.
A lawsuit investigation has been launched into various banks, including Regions Bank, to see if the bank is charging customers interest on a loan that they have already paid off, violating rules for FHA loans. If you have recently been charged a post-payment interest fee from Regions Bank after paying off your loan early, you may be able to join this investigation.
Illegal FHA Post-Payment Loan Fees
What exactly is a post-payment fee? These fees are charged after a customer has paid their FHA loan early, but they are still responsible for the full interest that would be charged for the due date of the next installment. Essentially, mortgage lenders were charging interest beyond the time frame that the homeowner had paid off their loans.
This practice of charging post-payment interest fees had a substantial financial impact: in 2012 alone, FHA loan holders paid around $449 million in these post-payment interest charges.
While post-payment fees were not technically prepayment penalties, homeowners considered them to be unfair charges. When a person submits a prepayment, they are settling a debt or an installment on a loan before it is actually due. Many customers felt that they should not be charged interest for loan amounts that were no longer accurate due to their early payment.
This kind of post-payment interest fee has been prohibited on FHA loans since the Consumer Financial Protection Bureau (CFPB) promulgated a rule against the practice in 2015. The FHA rule was first proposed in March 2014, and took effect on Jan. 21, 2015. Now, FHA loan lenders are required to calculate monthly interest using the homeowner’s actual unpaid mortgage balance on the date the prepayment is received, and cannot charge interest past the date the mortgage is paid.
Filing a Regions Bank Lawsuit
Some banks may still be charging customers post-payment interest on the FHA loans that they pay off, despite the 2015 rule outlawing this practice. Now customers are fighting back in the form of litigation against their banks. One customer of Sun West Mortgage, for instance, alleged that the bank had wrongfully charged her and other customers interest on a loan after it was paid off, violating the CFPB rule.
A number of banks, including Regions Bank, are currently being investigated for potentially continuing the practice of charging customers interest on loans that have been paid off. Regions Bank has about 1,500 branches across 16 states, so a huge number of customers may have been affected by this issue.
If you are an FHA loan borrower through Regions Bank, and you have been charged a post-payment interest fee after selling, refinancing, or paying off your loan early sometime in the last four years, you may be able to join this Regions Bank lawsuit 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.
This article is not legal advice. It is presented
for informational purposes only.
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