My adjustable rate mortgage with Verity Credit Union is due to reset next month. As part of the note there is an option to convert to a fixed rate. The calculation of this fixed rate is clearly defined as equal to Fannie Mae’s required net yield for a 30 year fixed rate covered by an applicable 60-day mandatory delivery commitment plus five-eighths of one percentage point, rounded to the nearest five-eighths of one percentage point. So take the Fannie Mae 30 year 60 day rate add 5/8ths and round to the nearest eighth. The note said the note holder got to decide the day of the rate but Verity was nice enough to let me pick which day I wanted as long as I gave them 15 days notice before the reset date. I patiently watched the rates every day and fortunately right before I was to give them notice rates were steadily declining…
I called to verify everything but was given a conversion rate which was 1/8th higher than I expected. I quickly double checked my math and found no mistake. I started asking questions, like where did they get the Fannie Mae rate which was rounded up to the nearest 1/8th. The lady did not know where the rate came from just that her rate sheet said what it said. I then went above her to a supervisor and posed the question why was the rate being rounded up to the nearest 1/8th when the Fannie Mae rates are not rounded at all. She was puzzled as well and asked for the website that was publishing the daily rates I was seeing and told me she would look into this.
The next day I got a call telling me that they had redone their procedures/policies and from now on would be calculating their conversion rates how I was doing it. Oddly enough I was apparently the first person to ever question or notice this discrepancy. In the end we are only talking about $15 a month difference but the lesson here is to always do your research and only work with quality establishments.
The daily Fannie Mae rate can be found online here.
Sure, but $15 a month can add up to a lot over time. That’s amazing that they took your inquiry seriously, then someone with a brain looked into it and then actually changed their policies based on your call. You would never expect that from a brand name bank. No wonder people are always spamming “CREDIT UNION, CREDIT UNION,” in our comments whenever we post a negative bank experience.