Problem: Paying off mortgage results in default

Bank of America adds late fees, sends notice to creditors, but payoff of $64,161.57 had been made

Financial responsibility, thy name is Nancy Schweitzer.

The Des Plaines resident pays for her cars in cash, has never been late on a payment, and waited until she was 55 to buy her first house. By then, she had saved enough to pay off half the mortgage.

“My credit should be pristine,” Schweitzer said. “I did everything right.”

It was with great pride that she paid off her mortgage in November, 24 years early. The monthly payments, she said, were leaving her too little spending money. With the mortgage gone, she would also avoid decades of interest payments.

Her lender, Bank of America, had given her the payoff amount and reminded her she also had money in her escrow account for taxes. The Bank of America representative told her not to worry — when she paid off the mortgage, the $2,776.13 in escrow would be applied to the principal.

On Nov. 13, Schweitzer went to her bank and obtained a cashier’s check for $61,385.44 which, combined with the escrow money, equaled the $64,161.57 payoff.

“It was a very good feeling,” she said.

The happy vibes didn’t last long.

A month later, Schweitzer became concerned when she hadn’t received any documents that showed she owned her house free and clear. So she called Bank of America, where a representative told her the escrow money hadn’t been applied to the principal.

“The person I spoke to was going to correct the error that day,” she said. “I thought it was settled.”

It wasn’t.

On Jan. 15, Schweitzer received a letter from Bank of America informing her that her monthly payment was past due.

“We want to help you avoid foreclosure,” the letter said.

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