Opinion ID: 150389
Heading Depth: 2
Heading Rank: 1

Heading: Fensterstock's Loan and the Allocation of His Payments

Text: In mid-2006, Fensterstock responded to a solicitation from EFP offering to consolidate his student loans in a single loan. Fensterstock executed an EFP Private Consolidation Loan Application and Promissory Note (the Note), and he received a loan in the principal amount of $52,915.49 at a fixed rate of interest equal to 9.32% per annum. The Note, defining you and your to mean Union Bank of California, N.A. pursuant to agreements with Education Finance Partners, Inc., and assigns, and defining I and me as the borrower (Note, Terms and Conditions Statement at 1), provided, inter alia, that [t]his Note will be deemed to have been made in California, and your decision on whether to lend me money will be made in California and that the provisions of this Note will be governed by Federal laws and the laws of the State of California, without regard to conflict of laws rules ( id. at 3). Fensterstock's repayment period began on October 14, 2006; he was to repay the loan over a period of approximately 29 years, with 348 monthly payments of $440.74, each due on the 14th of the month, for a total of $153,377.52 including interest ( see Complaint ¶ 29), plus one final payment of $335 ( see id. ¶¶ 3, 36) due on October 14, 2035. The Note stated that payments would be applied first to charges, costs and fees, next to unpaid interest, and then to Principal. (Note, Terms and Conditions Statement at 3.) Beginning October 14, 2006, Fensterstock made timely payments on the loan; he was not subject to any charges, costs, or fees. Through December 2007, he had paid a total of $7,051.84. According to what Fensterstock refers to as [t]he Amortization Schedule ( e.g., Complaint ¶ 32), a total of $476.58 of that amount should have been applied to reduce the loan's unpaid principal ( see id. ). After learning that only $213.39 had been applied to principal ( see id. ), Fensterstock inquired of ACS and was informed that when his payment was received prior to the 14th day of the month in which it was due, his entire payment was treated as a payment of interest only ( see id. ¶¶ 2, 57).