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B of A, U.S. Bank Sued for Delays in Processing Mortgage Payments

FEB 14, 2014 4:57pm ET
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A Tampa homeowner is suing Bank of America and U.S. Bancorp, claiming that the banks delayed processing his mortgage payments in order to earn extra interest for themselves.

In two separate lawsuits, Knut Horneland claims he paid down the mortgage principal on his home by making extra payments, but claims it often took the banks several weeks to process payments, forcing him to pay more interest on his mortgage loan.

The lawsuits were first reported by the Tampa Tribune.

Horneland obtained a loan from Bank of America for his home in October 2006. He then received a second loan for the property in June 2011 from the now-defunct Superior Bank. U.S. Bank is the servicer on the second loan.

Contracts with both banks allowed Horneland to make prepayments without penalty, the lawsuits say. Rather than immediately apply these payments toward his loan balance, the lawsuit alleges that both banks waited to process this until his next regular mortgage payment was due.

Overall, Horneland might have lost approximately $1,100 due to the mortgage processing delay.

Horneland wants these cases to become class-action lawsuits so other homeowners can join.

A Bank of America spokesperson said the Charlotte-based lender was just served with the lawsuit and is beginning to review the case, so it is not in a position to comment.

In an emailed statement, U.S. Bank said, "The allegations in this case are simply false. We reviewed this customer's account and we believe we applied all of his payments properly and consistent with his instruction."

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