TAMPA — A Tampa homeowner claims he tried to pay down his mortgage principal by making extra payments, but Bank of America and US Bank delayed processing his extra payments to earn extra interest for themselves, two new lawsuits say.
In fact, Knut Horneland claims in lawsuits against each bank that they routinely delay people’s extra payments. Ultimately, homeowners have to pay more interest on their loans, his lawsuits say. He and his lawyers are hoping a judge will make the cases class-action suits and allow them to represent other homeowners in the same situation.
A Bank of America spokeswoman said the bank hadn’t yet seen the lawsuit as of Tuesday and couldn’t comment. A US Bank spokeswoman said the lawsuit has no merit.
Horneland took out a loan with Bank of America in October 2006 on his north Tampa home, and he took out a second loan on the property with now-defunct Superior Bank in June 2011. US Bank eventually began servicing the Superior Bank loan.
In both cases, Horneland made extra payments to pay down the mortgage principal in addition to his normal monthly mortgage payment. His contracts with each bank permitted him to make such prepayments without penalty, his lawsuits say.
Instead of immediately applying his extra payment toward his loan balance, both banks waited a few weeks until his next regular mortgage payment was due, said Horneland’s attorney, Craig Rothburd of Tampa. During this “float” period, Bank of America and US Bank earned interest for themselves on Horneland’s extra payments, he said.
Meantime, because the money wasn’t immediately applied to his outstanding balance, Horneland was forced to pay interest on an artificially high balance every month, Rothburd said.
Reached by phone, Rothburd didn’t know exactly how much money his client lost because of the banks’ improper actions, but it may have been around $1,100, he said. That may not be a big amount for Horneland individually, but there may be hundreds or thousands of people affected nationwide, Rothburd said.
Rothburd suggested there is no reason a bank can’t immediately credit a person’s account with an extra payment.
This isn’t the first time a homeowner and a class-action attorney have gone after a bank for this issue. James Sturdevant, a San Francisco attorney who is a co-counsel in the Tampa lawsuits, brought a similar case against Chase Home Finance a few years ago and reached a settlement, Sturdevant said. He couldn’t recall how many people signed on as plaintiffs in that previous case, but acknowledged it was relatively few.
A San Diego lawyer also brought a similar case against JPMorgan Chase in 2012.
“It’s obviously a repetitive problem,” Sturdevant said.