When is a grace period not really a grace period?

Posted by Ian Cooper - Thursday, January 20th, 2011

From MSNBC:

"Some Bank of America mortgage customers will receive an unwelcome Valentine's Day gift when the bank's policy for grace period mortgage payments changes on Feb. 14. Essentially, it means those customers will have six fewer days to pay their mortgage each month without facing additional fees.

Consumers who use the bank's online payment tool, Mortgage Pay, will risk a $6 fee if they fund payments using another bank's checking account and the payment falls during the final six days of the traditional 15-day grace period. Consumers who make payments from Bank of America accounts are not subject to the fee.

"Let me get this straight. They tell you that you have a grace period, (then) they say, 'Oops, you only have half of it if you don’t bank with us,'” said Gail Hillebrand, a lawyer for Consumers Union who specializes in banking issues.  "That doesn't seem fair. ... This looks like a new ‘gotcha,’ and we have enough of those already."

Notice of the subtle adjustment, titled "Upcoming Change to Fees," was sent to customers recently. 

“If your payment is due on the first of the month and you have a 15-day grace period, you can schedule your payment to be drafted prior to and including the ninth of that same month to avoid a service fee,” it reads. “If you schedule your payment to be drafted on or between the 10th and 16th of the month, you will be charged a $6 service fee that will be included in your total deducted amount.”

"They intend to penalize non-checking customers if they possibly can," complained homeowner Karen Conavatti, who has been paying her mortgage using another bank's checking account.

Bank of America (which responded after initial publication of this story) said the firm has in the past assessed grace period late charges ranging from $3-$6, and the notices went to consumers to clarify a new policy that raises fees on some customers but eliminates them on others.

The move comes as banks continue to crank up new fee opportunities..."

Read more here.

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