Greentree Servicing - paying too much interest?

[ichb]

Hi everyone.

We have our Mobile Home Mortgage with Greentree servicing, they purchased it from CIT group. 11% simple interest 30 year loan (supposedly). But since day one it has seemed that the way they post payments isn't quite right. Started at 32000 in 2000 and is at 30000 now. I never knew how to try to figure out if we were getting overcharged or not.

The strange thing is if we make our payment early one month but right on time the next month, that entire payment goes to interest. I've called them about this and they say it is because the payment is more than 30 days after the previous payment. It seems wrong to me. It's penalizing you for paying early. I do not have any paperwork that states a penalty will be assessed for early payment.

I've noticed a bunch of loan auditing software programs out there and I wondered if anyone has tried any. Or does anyone have any ideas of what I could do to find out?

[Minnymouth]

Most of your 1st 10 years of payment on a mortgage goes to interest......unless you make extra payments on your mortgage. Example: Your regular payment is $400.00... you pay that, then sent an extra $200 toward the mortgage. Approx. $392 will be applied to interest, $8.00 to principal, and another $200 to principal.

Get a printout from your mortgage company showing your payments since 2000.... Go over it closely.

To get an example of a 30 year mortgage payment schedule on paper, go to msn money, visit loan section, and they have a calculator that you can use to figure your mortgage and what the payments would be like.

As soon as you can check into refinancing under a much lower interest rate. 11% is much, much too high and you should be able to get a much lower rate after your bankruptcy is over about 2 years.

[ichb]

Thank you so much. I was aware of the situation that you described with regards to paying on a mortgage. Remember that mine is for a mobile home in a park (near impossible to refinance). I'm not going to try to get any information from my mortgage company. If you want to know why just type in Greentree on www.ripoffreport.com they are horrible and if people ask for statements they turn around and try to foreclose.

I was just wondering if anyone else had this particular lender.

[TX Bluebonnet]

We have our Mobile Home Mortgage with Greentree servicing, they purchased it from CIT group. 11% simple interest 30 year loan (supposedly). But since day one it has seemed that the way they post payments isn't quite right. Started at 32000 in 2000 and is at 30000 now. I never knew how to try to figure out if we were getting overcharged or not.

The strange thing is if we make our payment early one month but right on time the next month, that entire payment goes to interest. I've called them about this and they say it is because the payment is more than 30 days after the previous payment. It seems wrong to me. It's penalizing you for paying early. I do not have any paperwork that states a penalty will be assessed for early payment.

I understand what you're asking here, because I had the same questions/concerns after years of paying $325/month on my mobile home through Greentree and seeing the principal decrease by only a few thousand. So, a couple of years ago I asked about this on another forum. Below is a slightly edited copy of what was said. I hope it helps some.

QUESTION:

I have a mobile home loan through Greentree Financial. Someone from their collection dept called me today regarding my June payment that was 21 days past due. I said I could pay that today over the phone and I also asked her if I could go ahead and make my July payment while I was at it. She said that wasn't a good idea and I would be better off not doing that. She went on to explain that if I made my July 5 payment today and then made the next payment on the August 5 due date that that would be more than 30 days between payments and that about $8.00 per day, for each day over 30 days between payments, would be applied toward the interest instead of the principal. I don't understand this concept. Is this legitimate? If it is, do I need to make my payment exactly on time every month to avoid this type of interest penalty?

REPLY:

It sounds like the lender is accruing interest on a daily basis. This is not an interest penalty, it simply means the longer you go between payments the more interest accrues. This type of loan pays the interest first and the remaining amount will be a principle reduction. As your principal balance decreases you will pay less in finance charges the following month. It is to your benefit to make your monthly payments on time to avoid paying more in finance charges.

FOLLOWUP QUESTION:

So this means that for people who occassionally make their payment a few days or a week early end up paying more toward their interest which means it'll take them longer to pay down the principal. So do they pay less interest during those periods where it's less than 30 days? I mean, does it balance out in the end when the loan is paid off. Or, if a person wants to sell before the loan is paid off, will any type of adjustment be made or are they going to owe a larger payoff amount than if they'd only ever had exactly 30 days between every payment?

FOLLOWUP REPLY:

If my understanding is correct on this situation and using the info in your post the following chart should explain the interest. (Using a due date of the 5th of the month & interest calculated at $8 per day.)

When payments are made on time each month:
May 5 - Payment made on time
June 5 - 31 days gone by, interest ($8 a day multiplied by 31 days) = $248.00July 5 - 30 days later, interest = $240.00
Aug 5 - 31 days, interest = $248.00
Interest for this 3 month period scenario= $736.00

When June & July payments are made at the same time:
May 5 - Payment made on time
Jun 26 - 52 days, interest = $416.00
Jun 26 - 0 days, interest = $0.00
Aug 5 - 40 days, interest = $320.00
Interest for this 3 month period scenario= $736.00

When July's payment is made on the due date after June's payment was late:
May 5 - Payment made on time
Jun 26 - 52 days, interest = $416.00
Ju 5 - 9 days, interest = $72.00
Aug 5 - 31 days, interest = $248.00
Interest for this 3 month period scenario = $736.00

By the way, my main bankruptcy debt is a 19k deficiency balance I owe Greentree after they repossessed and sold my mobile home last month. That's one big, expensive mistake I can't wait to put behind me. If you're thinking of bailing out, I strongly suggest you do it sooner rather than later.

[ichb]

Thank you for all the great info. I think right now the loan isn't too out of whack but I'm worried about some practices I hear of unfair reposession of mobile homes after bk, and also because they sometimes refuse to reaffirm the loan.

I'm going to talk to my attorney about it and see what can be done to protect us. We are current on the mortgage.

[Runnin on empty]

Thank you for all the great info. I think right now the loan isn't too out of whack but I'm worried about some practices I hear of unfair reposession of mobile homes after bk, and also because they sometimes refuse to reaffirm the loan.

I'm going to talk to my attorney about it and see what can be done to protect us. We are current on the mortgage.

You don't think it's too out of whack? 11% is LEGALIZED ROBBERY, plain and simple. I'd rent an apartment for the rest of my life before I'd pay that interest rate. And from the sounds of it, this Greeentree company will do everything in their power to make sure you're paying on that loan a lot longer than you have to. If I didn't know any better, it almost seems like their "financing model" is nothing more than the way the CC companies do it.

I'm surprised your lawyer hasn't screamed bloody murder about this already. I know everyone has their reasons, but if it were me, I would be letting the house go in the BK in your case.

[ichb]

Our mortgage is all up to date on payments and we actually have equity in it. We put a decent sized down payment. If we were to just let it go in the bk then we'd be out the equity plus we'd never find a place to rent, the rental market stinks in VT, that was as cheap as our mtg and rent here. Plus we have several pets and that just makes it harder.

And what I meant by it's not too out of whack, is that when we did an amortization schedule based on our starting information it actually shows that at this point in time we should have a higher outstanding balance than we do. I totally agree that the interest rate is horrible. It's really hard to re-finance mobile homes here too.

We aren't going to panic until after we've talked to our attorney.

[sillyme934]

my mom has the same problem with greentree. One month principal amount is 100, the next 6. She pleaded chp 7 7 yrs ago and after looking at her statements found out that they haven't been sending a balance owing on her trailer. They haven't been telling her anything. They were also sued for 22,000 by the bankruptcy court because they wouldn't follow the rules of bankruptcy. Well she is filing chp 13 now and asked lawyer about the fluctuating principal and he looked into it and said that he believes that greentree isn't giving her any info because they are probably charging her for the 22,000 that they were sued on top of her trailer. She is now giving her trailer up because she did not reaffirm on it.

[CindyLou]

11% is pretty standard on a Mobile Home loan.....

[Runnin on empty]

11% is pretty standard on a Mobile Home loan.....

WOW...

Why is that? It's still a residence, and can even be made 'permanent', ect.

[CindyLou]

I ask the same question years ago when I purchased one. Greentree wanted to charge me 14% (I was young and didn't have any credit). Their lowest at the time was around 12% (interest rates were slightly higher then). I asked them why and they told me that 1. Mobile homes depreciate quickly, and 2. There is a high incidence of delquiency on MH's even if the person has a good credit history.

I was told that the depreciation has the most effect on the rate.

[CindyLou]

Here's an article on the subject:

Financing a manufactured home
By Vikki Ramsey Conwell • Bankrate.com

Trailer? Wash your mouth out.

They're manufactured homes now and, with 19 million people living in them, they're fast becoming the housing style of choice for people who have to achieve the American Dream on a limited budget.



Today's manufactured homes bear little resemblance to yesterday's air-slipping tin cans on wheels. With improved quality and material, stitched together seamlessly in double-wide sections, they can be indistinguishable from site-built, conventional homes.

But financing a manufactured home still can be unconventional.

'Mobile' means higher rates
In financing, the key is the word "mobile." The less mobile a manufactured home is, the better the financing deal a consumer can get.

Historically, manufactured homes have been financed as personal property, resulting in personal loans that often require a 10 percent down payment, with the remainder financed over 10 to 15 years. Interest rates are higher than mortgages, resembling the rates charged on car and boat loans. However, whether the loan is called a mortgage or not, if it is used to secure your principal home, the interest paid is generally tax-deductible.

Though these loans still are the most common, the changes in the industry have attracted additional lenders and types of loans. Many manufactured homes now require only 5 percent down and finance the remainder over 20 to 30 years.

If the home is immobile and if the owner of the home also owns the underlying land, then the loan is likely to be viewed as a mortgage, gaining vital tax benefits.

How to find financing
Shop around for financing. Loans for manufactured housing vary widely in their terms.
If you're buying a new home in a community, don't feel obliged to take the financing offered by the salesperson.
Study the warranty closely. Who will pay for defects in manufacturing or installation?
If you also own the land, make certain you can obtain the tax benefits of having the property titled as real property. Yes, it will go on the tax rolls, but the real estate taxes you pay become tax-deductible.
If you must title the home as personal property, find out if your state will require you to pay annual motor vehicle fees.
Study the area where the property will be located. In the past, manufactured homes were a declining asset, like cars -- they almost always lost value over time. Because the homes are better made today, the ones located in an area of appreciating property values can go up in value.

"We have a variety of products and programs that vary according to down payment, the size of the home, and terms extending out to 30 years," said Leonard Zych, executive vice president of Chase Manhattan Mortgage, which has been financing manufactured homes through retailers for 25 years. Chase now offers loans directly to their consumers.

When affordable housing is the goal
Even Fannie Mae and Freddie Mac are players in the market, as buyers of manufactured housing unit mortgages for years and asset-backed securities on the secondary market.

"Affordable housing is central to our charter and our mission, and manufactured housing is a component of affordable housing," says Fannie Mae spokesman Clyde Ensslin.

The added attention from major financing players represents a big step up for an industry that people delighted in running down.

Previously referred to as "box kites," "ovens" and "freezers," the manufactured housing business is in the middle of a growth spurt, blossoming into a $14 billion industry that builds nearly one in three new homes bought in the United States.

In 1997, the most recent year for which complete statistics are available, mobile homes sold for an average of $41,100. The average home had 1,420 square feet, all cooled by central air.

"This market has changed dramatically over the past five, six years," says Kami Watson, spokeswoman for the Manufactured Housing Institute, a trade group based in Arlington, Va.

"The old bias against manufactured housing is dying with the growth of multi-section homes," said John Diffendal, director of research at the investment firm JC Bradford & Company. "The homes have become more residential-looking and that has helped."

Though financing for manufactured homes has begun to more closely resemble traditional-home financing, there are still substantial differences.

Higher interest rates
The big difference for consumers is that loans for manufactured homes tend to carry a higher interest rate.

There are several reasons. Lenders demand a higher rate when a customer has fewer assets to repay a loan with, and buyers of manufactured homes tend to be on a tight budget: Lenders also have less collateral in the deal, because manufactured homes depreciate more quickly and have a shorter life span than traditional homes.

Administrative fees -- loan application fees, credit report fees, document preparation costs and origination -- that are paid up front in a traditional loan are passed along to the lender in a manufactured home loan. The consumer still pays them eventually, however, in the form of a still-higher interest rate.

"In the traditional world of buying a manufactured home, consumers are getting hammered on the interest rate," says N'ann Harp, president of Smart Consumer Services, a consumer education and assistance organization in Crystal City, Va. "It's just the reality of how it is, but, in my opinion, it's consumer abuse."

Personal property loans most common
As mentioned, the best rates are reserved for the buyers who most closely resemble conventional homeowners -- the buyers who own the underlying property and permanently affix the home to it. They will enjoy typical conventional mortgage rates and the accompanying interest tax deductions.

They, however, represent fewer than one buyer in six. All others have to get personal property loans. For them, the interest rates, fees and down payment requirements are all over the map, depending on the lender policies, the buyer's credit and the condition of the home. New manufactured homes tend to have a slightly lower interest rate than used ones.

Manufactured housing loans:
How they rate
When it comes to loan rates, buyers of manufactured homes can pay a little or a lot. The best terms go to a buyer when the manufactured home closely resembles a traditional site-built home -- when it's permanently affixed to land that the home buyer also owns. Here are some of the lenders that offer mobile home loans, their rates and terms.
Lender
Rate Term
Other conditions

NationsBank
13.18% 15 years
Based on a $25,000 loan, without land

First Union
7.5% 30 years
For double-wides set
on concrete, with land

First National Bank
11.25-11.9% 5 years
Based on a $25,000 loan. No "mobile"
homes, only manufactured homes

KeyBank
11.99-12.99% up to 84 months
$99 fee, minimum loan amount $3,000


Although manufactured homes have to have the wheels taken off to be properly installed, many states still consider them to be at least potentially "mobile." So buyers often have to pay annual vehicle license fees.

Retailer financing
For four out of five manufactured home buyers the journey toward financing begins with the person selling them the home. Retailers originate 82.6 percent of the loans, according to the latest survey from the Manufactured Housing Institute.

About a third of all manufactured homes are located within parks, courts or subdivisions set aside just for them. Buyers in these locales usually purchase just the home, not the land. Most often, the retailers selling the homes at one of these manufactured-housing communities can point a buyer toward financing, but buyers should be able to shop for their own.

Limited choices of lenders
While many lenders and banks provide a range of financing plans for manufactured homes, including fixed- and variable-rate loans, another hefty portion stays away from the market altogether.

In a recent Bankrate.com spot-check of 20 large lenders, seven offered no loans for manufactured housing. Several others restricted their offerings to those home buyers who also owned the land.

As more home buyers opt for manufactured homes as an entry into homeownership, the number of lenders offering financing will increase, but the industry remains very concentrated, Zych says. The two largest lenders, Green Tree Financial Servicing Corp. and Green Point Credit Corp., control about 30 percent of the market, he says. The top 10 lenders control about 65 percent of the industry.

Because of these factors, buyers of manufactured homes do not have the leverage to negotiate their financing like traditional home buyers and are at the mercy of the dealer.

If you cannot get a regular mortgage on a manufactured house, the best bargaining chip is a good credit rating, Harp says. She also recommends that consumers check with their local government for incentive programs.

President Clinton's Homeownership Initiative of 1996 -- a drive to increase the percentage of U.S. homeownership -- helped create additional initiatives for manufactured homes. "Lenders are doing their part to try to help what has traditionally been a high-risk buyer," Harp says.

Pay attention to details
Finally, avoid buying in a high-risk area, and read the fine print for hidden fees and rate increases for late payments.

"This is an area where consumers are not aggressive, and it's an income bracket where people are preoccupied in trying to make money to pay the rent, so they're not looking as closely as they should to the details of the agreement," Harp says. "That's how innocent consumers get stumped."

Each state sets guidelines specific to the purchase and financing of manufactured housing, so consumers should also contact their local consumer affairs office to learn how to protect themselves.

Several organizations on the Web give general buying guides to people interested in manufactured housing, including HUD and the Manufactured Housing Institute. In addition, the VA and HUD have online publications explaining their loan programs for manufactured housing.