Sunday, March 02, 2008

THIS JUST DOESN'T COMPUTE!

The world is shrinking, thanks to the internet and transoceanic travel. Places that once were visited only by the rich, the famous or a National Geographic expedition are now easily accessible to the average person. A quick internet search will get you hotel information for the most remote corners of the world, and an international phone call is as easy to make as calling across town. And yet….

Living in Italy for the last 4+ years has certainly opened our eyes to many things. People all over the world are certainly more alike than they are different. We all want the same things: someone to love, good food, a warm, safe place to sleep. And yet…..

We’re connected to the world by our computer with ADSL, a definite improvement over our old dial-up connection. We can check our Italian bank accounts online, calculate our Italian property taxes (ICI) online, and receive our phone bill in PDF form rather than having a paper statement. And yet…..

Somehow Italian companies don’t seem to make the most of their computers, and we don’t really understand why. As I mentioned, we can access our PostalBank account online. The system is live, so if Art makes a deposit while he’s at the Post Office to mail a letter I can see it immediately here at home on the computer. And yet….

When we wanted to find out if our final car payment was in November or December, Art stopped in to ask the director. I didn’t know if that information was available to me online, and it was just easier to ask in person. Imagine our surprise when the director told Art he’d have to call the main office in Rome, and to come back on Friday to get the answer! Why in world wasn’t that information available immediately on the computer?

We had a similar situation when dealing with our mortgage company. The whole process was really, REALLY complicated, and it took me a long time to figure out that some of the basics were very different from what I was used to. Since we hadn’t been issued an amortization schedule when we bought our house, I wondered what our loan balance was, in order to get an idea for when we sell our house. We do get an interest statement each year, but that’s a strange situation too.

Based on the interest statements, it seems that the interest and principle stay the same, year after, rather than changing each month/year as they would in the United States. We’ve had several friends who are both fluent in Italian AND knowledgeable about the mortgage industry contact our mortgage company so that we could understand the situation a little better, but honestly, we’re still a little confused.

The best we can figure, for our twenty year mortgage, the interest and principle payments remain at the same, predetermined amount for the first half of the loan, in other words, for ten years. Additionally, the amount that goes to principle isn’t really being applied to the principle….yet. Apparently it’s sitting in an account somewhere (collecting interest for the mortgage company), and will be applied to our mortgage in one lump sum once we pass the halfway point. Of course this system was completely new to us…and rather bizarre. Having OUR money earn interest for the mortgage company is something rather distasteful, something that U.S. mortgage companies used to do with escrow accounts until the public got wise and demanded a change.

So, with our house for sale now, less than ten years after our mortgage began, we wondered what would happen to the money that was (eventually) supposed to be applied to the principle. When we asked the mortgage company about this, we were told that it would be applied to the principle once we paid off the mortgage, but details remain sketchy. Apparently there is also a prepayment penalty involved, but the exact amount varies. When we pressed further, trying to figure out what the variables were, no one really seemed to know. (This prepayment penalty is now illegal in Italy)

We also asked them for an approximate payoff for our loan, just to get an idea. But of course this was waaaaay too complicated for our mortgage company. They offered to send us a three page form to complete, requesting an early pay off of our loan. When we explained that we didn’t want to pay off the mortgage, just get SOME SORT OF ROUGH ESTIMATE, the mortgage company told us that just wasn’t possible. HUH???

This is why I’m so confused. WHY have a computer if you’re not going to use it to it’s full potential? Even with the complicated and unusual system used by our mortgage company, surely there must be a program that could compute this information quickly and simply. Maybe we’re the odd ducks who anticipate closing our loan early, but certainly we can’t be the first or the last. At some point our mortgage company will have to figure out what our pay off is for a specific date, what the penalty will be, and how our principle will be applied. I just don’t understand why I can do so much via computer these days, but finding answers to what I consider simple questions is so difficult.

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3 Comments :

At 3/02/2008 07:34:00 AM , Anonymous Judith in Umbria said...

Barb, that's just plain incompetence at best and purposeful obfuscation at worst. While I don't have a mortgage I do have a 3 part complicated account with my bank. I get statements 2 months after the close of a month, so I walk into the bank and I ask the person I want to work with and within 30 seconds I get a report showing the relationship among the 3 parts-- in short where I am in positive or negative terms.
If the mortgage company wanted you to know the info, they could do it, because that straight forward account is less challenging that mine which includes investments, checking and loans.
I think they are being tricky, that it's probably not legal and that they're getting away with it because no one is checking.

 
At 3/02/2008 08:39:00 AM , Blogger Barbara said...

Yeah, just another reminder of the wonderful agents we used when we bought our house! At least now we have honest, knowledgeable friends who can help us sort thru everything when the time comes.

 
At 3/02/2008 04:48:00 PM , Blogger Kathy said...

That's very interesting! I've worked in both the mortgage and commercial lending industry since I was 17 (I'm 36), and I've seen some strange scenarios, but this one takes the cake.

I'm just learning to speak Italian, but if there's anything I can do to help, I'd be glad to. :-)

 

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