News Releases

BMO Bank of Montreal today announced that it will be providing refunds to approximately 28,000 mortgage customers who overpaid penalties on certain mortgage pre-payment and early-renewal transactions. The total amount to be refunded will be approximately $7.1 million, including interest.

The Bank identified an inconsistency in the way some mortgage contracts explained how interest penalties were calculated compared to the way the calculations were actually done.  This inconsistency impacted a small percentage of the Bank's fixed-rate, limited pre-payment residential mortgage customers who pre-paid or early-renewed their mortgage, and a small percentage of the Bank's farm mortgage customers who early-renewed a fixed-rate mortgage within the last 12 months of the term. As a result, some customers paid less than provided for in the mortgage contracts, while others paid more.  The majority of customer overpayments occurred after 1997 and a small number of the early renewal overpayments date back to 1986.  BMO Bank of Montreal will not be attempting to recover any funds from customers who paid less than the penalty that should have been applied.

The Bank will automatically mail refund cheques to customers whose eligibility has been verified through its electronic database.  This includes former customers who have been located by the Bank.  Customers who believe they may have been affected but who have not received a cheque by June 23, 2006 should contact the Bank's dedicated customer service line at 1-866-895-3760.  Upon request, BMO Bank of Montreal will investigate instances where customers believe they may have been impacted, but have not received a cheque.   Requests should be received by September 30, 2006.

“We regret this situation and apologize for any inconveniences it may have caused,” said Lynda Brochu, Senior Vice-President, Personal & Commercial Products and Distribution, BMO Bank of Montreal.  “We've taken the matter very seriously and once the error was discovered we conducted a thorough investigation to identify customers who may have been affected.  We intend to fully reimburse any customers who are identified as having been negatively impacted.”

For more information customers can visit www.bmo.com or contact BMO Bank of Montreal's dedicated customer service line at 1-866-895-3760, Monday to Friday from 8:00 a.m. to 5:00 p.m. Eastern Time.

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Frequently Asked Questions for BMO Customers

How does a customer determine whether they have been impacted?

Some customers who paid an interest penalty in the following instances may be entitled to a refund:

�         Residential mortgage customers who paid a penalty when they made a partial or full pre-payment to a fixed-rate, limited pre-payment mortgage between March 1997 and July 2005.

�         Residential mortgage customers who paid a penalty when they early renewed a fixed-rate, limited pre-payment mortgage between November 1986 and July 2005.

�         Farm mortgage customers who paid a penalty when they early renewed a fixed-rate mortgage within the last 12 months of the term between November 1986 and June 2006.

How long will it take before a negatively impacted customer is reimbursed?

We have attempted to locate impacted mortgage customers including those who no longer deal with us.  We will be automatically issuing refund cheques to customers where the information required to determine if they were eligible for a refund was electronically available.  Customers who believe they may have been affected but who have not received a cheque by June 23, 2006, should contact the Bank's dedicated customer service line at 1-866-895-3760, Monday to Friday from 8:00am to 5:00pm eastern standard time. Upon request, the Bank will investigate instances where they have been unable to locate past customers or where the information required to calculate the refund was not automatically accessible.  

Is it the customers' responsibility to contact the Bank and identify themselves as impacted customers?

Cheques were automatically issued on June 8, 2006 to most customers who overpaid dating back to April 1999.  Due to data constraints, we were not able to identify impacted residential mortgage customers for the period prior to April 1999 and any impacted farm mortgage customers.  Customers who believe they were impacted that have not received a cheque by June 23, 2006 should contact the Bank's dedicated customer service line at 1-866-895-3760, Monday to Friday from 8:00am to 5:00pm EST. Requests must be received by September 30, 2006.

How will the reimbursement for residential mortgages be calculated?

The calculation to determine the refund amount is complex.  The calculation that has now been applied is documented in the customer's mortgage contracts.  A refund amount is payable if the amount originally charged is greater than the calculation based on the formula outlined in the mortgage contract.  If a customer was entitled to a refund, interest has been calculated on the refund at BMO Bank of Montreal's average daily prime rate in effect from the date of the transaction to June 30, 2006.

If the variance was in the customer's favour, will BMO try to collect the funds?

BMO will not ask for a reimbursement from customers who were undercharged per the contract.

Has the inconsistency been fixed?

In October 2004 we introduced new contracts for residential mortgages and in June 2006 we introduced an amending agreement for farm mortgages.