As a practical matter, I think the bank is correct about the 13 month rule. You could pay your January 1, 2017 interest on Jan 2, and your January 1, 2018 interest on December 31, and still be paying 2017 interest. (Your Jan 1, 2018 payment includes interest that accrued from 12/1-1/1 since interest is charged in arrears on mortgages.)
However as the regulation states, prepaid interest must be allocated over the years to which is applies, even if paid ahead of time.
