Beware SOME Bi-Weekly Mortgage Payment Plans

I just came across something that is NOT a scam but is potentially misleading and in my opinion NOT in the consumers best interest.

I received a letter in the mail from my mortgage lender, National City Mortgage, inviting me to sign up for its “bi-weekly” mortgage payment program which would save me thousands of dollars over the course of my mortgage AND would reduce the payoff period of my loan.

The concept is legit and makes a lot of sense. The idea is that if you make a smaller payment (approximately 1/2 of your normal monthly payment) every two weeks then because the mortgage company gets its money sooner there is less accrued interest so you end up saving money. Also, because there are 52 weeks in a year you actually make 26 x 1/2 payments vs. 12 full payments (one per month) equalling two extra 1/2 payments per year thereby adding to the interest savings and contributing to a quicker pay off. The savings can amount to tens of thousands of dollars over the life of the loan AND a quicker pay off of 5 years or more. This in a great way to save a lot of money over the life of the loan without struggling too much financially to do so.

Well, I thought that was what I was signing up for. But instead it turns out the National City Mortgage has contracted with a third party company (i.e. Western Union Paymap hereafter referred to as WUP) because National City Mortgage is not set up to calculate OR receive mortgage payments on a bi-weekly basis. In other words they are offering a bi-weekly payment option but they can’t really accept bi-weekly payments. Instead WUP collects payments every two weeks but makes the mortgage payment ONCE A MONTH just like I currently am. So I DON’T SAVE any interest expenses for making 1/2 of my mortgage payment early each month and even worse WKU keeps the interest it earns on my money during that two week period!!!

What’s worse is that WUP charges a service fee of approximately $117 per year to boot.

This doesn’t make any sense at all. It’s wiser for me to continue paying the way I am but make one extra payment each year. I’ll pay off the mortgage just as fast and save the same amount of interest PLUS make a little bit of interest on my money AND save the service fee.

There are normal bi-weekly payment programs offered by some lenders and again I think they make a lot of sense. Just be sure to know what you’re agreeing to first as some of the programs are real squirrely.

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15 Comments so far (Add 1 more)

  1. I just discovered that National Payment is pretty much the same. They hold on to your money and only pay once monthly. So basically they benefit from the interest not you.

    Also, their fees are $399 !!!!!!!

    Oh and when I called to cancel they did not refund all of my money and charged me for insufficient funds when I never lacked funds in my account.

    In one word: CROOKS!

    1. Alek on January 24th, 2012 at 3:14 pm

  2. In other words they are offering a bi-weekly payment option but they can’t really accept bi-weekly payments. Instead WUP collects payments every is applied toward principal 2.make one extra lump payment any time during the yea two weeks but makes the mortgage payment ONCE A MONTH just like I currently am

    2. research paper on December 7th, 2011 at 1:12 pm

  3. That sounds absolutely ridicules it is not that you are not saving even a single dollar but if you didn’t review this precisely you will lose 117 dollars every year.

    3. london property inve on November 29th, 2011 at 5:44 am

  4. Most people that attempt to make biweekly payments on their own don’t stick to the plan. When they setup the payments on automatic debit, it’s a more disciplined approach.

    4. Biweekly Payments on March 3rd, 2011 at 11:12 pm

  5. Very true Christine! I guess almost everyone get paid bi weekly.

    5. flights to nairobi on February 28th, 2011 at 3:03 am

  6. Thank you for you information, heard this before but didnt trust. Thanks again for proving this with evidence.

    6. flights to sri lanka on February 23rd, 2011 at 11:14 pm

  7. Very eminent post, am sure a lot of research and efforts would have been undertaken to accomplish this post. Thanks for sharing an outstanding post with us.

    7. Internet seo on April 29th, 2010 at 2:58 am

  8. Christine is right. I get paid bi-weekly. So 2 months out of the year I get 3 pay checks. So you actually make an extra payment (2 half payments) doing it that way. To avoid signing up just divide 1 payment by 12 and add that to the principle every month. You get the same result with no fees.

    8. William on December 15th, 2009 at 10:25 am

  9. With CitiBank they specifically say that if you do a payment for more than your account, it will go towards your principal, not towards a future payment, so the computer will not register that you made a payment (even if the total amount you paid is greater than the amount owed). How that logic is legal, I will never know. The way to truly accomplish what Western Union is doing is to set a 2nd checking account for yourself. Transfer your bi-weekly payment to your 2nd checking account. Then once a month, pay your mortgage payment, plus as the other poster said, the extra amount to go towards the principal. That way you are still making bi-weekly payments to a third party (your 2nd checking account), but your mortgage company only gets one payment per month. The things banks do to save money for themselves.

    9. Melissa Newman on November 30th, 2009 at 8:08 am

  10. Paymap stole an entire mortgage payment from me. They had some shady arrangement with my previous mortgage company (Taylor Bean and Whitaker) where they transferred the funds from my bank account to an account with TBW and then TBW transferred the funds to Wells Fargo. Can you say “huh??” I did not find out that this scam was happening until TBW went bankrupt and my September payment went missing. As in TBW has it and I cannot get it. Paymap never sent me one piece of communication explaining what happened and has not communicated with me once to this day. I called them several times and was told they could not send me anything in writing about it. Gee, is that because you know you did something illegal and that I am going to sue you? In the meantime I’ve been getting foreclosure notices and have had to take a loan on my 401K to pay the missing payment. Wells Fargo doesn’t care what happened – they just want their money. Well sorry **I** don’t have a couple extra thousand lying around to cover being robbed by a crooked bank and their crooked servicing partner. What’s even more insulting is I have never once been late with my payment. And now I have to suffering the indignity of daily notices about “how to avoid foreclosure”?? Unfortunately I am going to have to get a lawyer to get my money back (if I even can – TBW is bankrupt so I’m going to have to sue Paymap for breach of contract). The moral of this story is – be careful with your money. And stay away from Paymap. Or you could end up in the same boat.

    10. Sherrie on November 6th, 2009 at 1:52 pm

  11. Where in the world is that mysterius Paymap? If you enter paymap.com, it takes you to Western Union website. I called Western Union Customer Service, even spoke with their supervisor, but they said they have no idea what the Paymap is, never heard of it. I wrote a letter to Western Union CEO Christina A. Gold, asking to provide me with Paymap’s address or phone number, but received no response. And search engines don’t provide any useful information, either. They used to opeate openly, but now it seems like Paymap has become some underground mob operation.

    11. VMazelis on September 21st, 2009 at 6:42 pm

  12. You don’t need national city (or any bank) or third party to make extra payments. Simply take what you send in on a monthly basis and divide that by 12. Now add that amount to your usual payment and tada you will be saving the same amount as National City or any other third party wants to do for you. It’s simply if you setup an automated payment through your online banking. Example: Usually monthly payment = $1000. Divide 1000/12 = 83.33. Add 83 to your usualy payment amount – 1000+83 = $1083. So now just set up a monthly recurring online banking payment to your mortgage company for 1083 and you’ll achieve the same results.

    12. Jamie Morgan on September 12th, 2009 at 6:35 am

  13. Actually paymap is the largest accelerator program in the U.S. with over 750,000 customers….the reason being? The program DOES work and DOES save you money in interest as well as shaving years off of your loan. FYI, you CANNOT do this program on your own….paying one extra payment at the end of the year does not add up to applying funds directly towards the principle of the loan (as paymap does) every month. I’ll refute this statement if you can find me an individual who has paid extra on their mortgage every month for 20+ years!!! The reason Western Union is contracted with all major lenders is because the program works. There are many third party programs that charge upfront fee’s and that are non-transferable. FYI, the only way you can make 2 mortgage payments in a month is if you have a true bi-weekly mortgage set up.

    13. Darryl on May 14th, 2009 at 5:13 pm

  14. I fell for this a year ago…then just last month I refinanced and paid off the old loan. Today Paymap tried to do an ACH from my account. I did not even know who Paymap was. I guess they’ll try anything to get their money.

    14. Julie on April 7th, 2009 at 3:10 pm

  15. Actually. If you don’t every sign up for ANY mortgage company’s bi weekly payment but just make sure you make one additional principal and interest payment per year (so instead of 12 you make 13 payments) you shave off approx. 7 years on a 30 yr mortgage. You can make this payment a few different ways 1. you can add xtra to your montly pmt and just make sure to note that any additional is applied toward principal 2.make one extra lump payment any time during the year and note that all of it go toward principal. 3.Do you own biweekly like WUP does. This is not a scam OR misleading. It does accomplish the same results. The only difference is you paid a fee for it instead of doing it yourself. You don’t ever have to sign up for ANY company’s bi weekly payment plan. I hope you hold this bit of information for all debt instruments you hold from now going forward. Good Luck.

    15. Christine on February 13th, 2009 at 11:14 pm

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