The Bank of Montreal announced on Friday 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 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 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.

“We regret this situation and apologize for any inconveniences it may have caused,” said Lynda Brochu, senior vice president, personal and commercial products and distribution for BMO. “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’s dedicated customer service line at 1-866-895-3760.