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Know What You Really Owe: Your Mortgage Loan Rights

By Cathy Moran

house check stockmonkeys dot com_optYou’ve got a lot to keep an eye on.

You probably regularly check

Your blood pressure.

Your credit report.

Your stock portfolio.

Your bank balance.

Your team’s standings.

Yet chances are, your home is your biggest investment and perhaps even the cornerstone of your retirement plan.

But you have no idea what lurks in the file of your mortgage lender or its servicer.

Questions to ask the servicer

Where is the lender applying your payments?  To principal and interest?  To fees? Or is the money held in suspense?

Does the monthly mortgage statement you see match the records on the servicer’s computer?  You would assume so, but assume at your peril.

Got a mortgage modification?  Who knows what the lender’s records look like.  A client recently asked for a loan payoff and the response was off by $127,000! The full story.

You need to know what the servicer is doing with your payments soon enough to fix it.

  • While you still have records, and recollection.
  • While the loan is still serviced by the current folks.
  • While you have time to fix errors.

How lenders get away with theft

Nasty questions about your mortgage balance usually come up when time is short:  sale or refinance.

The payoff demand isn’t requested from the mortgage lender til the deal is about to close.  The rate lock on the enabling loan is set to expire.  The lender’s payoff demand comes in laden with unexplained fees and charges.

And you have no time to find out what’s in the demand without imperiling the deal.

While you can always pay the demand and dispute it later, that seldom seems to happen. Borrowers roll over and assume either the lender is right or it’s too difficult to get the real analysis of the payoff demand.

CFPB to the rescue

As part of the Dodd-Frank financial reforms, the Consumer Financial Protection Bureau has given homeowners a spanking new tool to keep track of their mortgage:  the Request for Information.

The Request for Information improves on the long-standing Qualified Written Request.  The QWR took too long, could only be sent to a single, designated address, and often required the borrower to know what was wrong with the accounting before writing.

A RFI allows you to simply ask questions:

  • what is the payoff balance of my loan
  • what is the principal balance of my loan
  • what fees, expenses or charges have been added to the loan
  • is any money held in suspense
  • how have you applied my payments

The servicer can set up a special address for such requests.  You can get that address from your mortgage statement; the servicer’s website; or by calling the servicer.  But you can’t make a Request for Information over the phone.

Your request has to be on paper separate from your payment coupon or mortgage statement.  Your letter should provide

  • address of your property
  • names of the borrowers on the loan
  • account number

The servicer must acknowledge receipt of your request within 5 business days, and provide responses within 30 business days.

The CFPB has a RFI fact sheet including a sample letter.

Ask annually

Make a mortgage checkup a yearly thing.  Pick a holiday or an event that you can associate with making a request for information.  Perhaps every year on the summer solstice, you make a request for information about your home mortgage.

Save the responses you get so you can compare this year to last year.  Are they consistent?  Any unexpected change?

After all, information is power.

More

How to claim a tax deduction for mortgage interest in your Chapter 13

Is your home equity an adequate retirement plan?

Understanding your mortgage statement

The one thing you must do before listing your home for sale

Image courtesy of  www.stockmonkeys.com

 

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Filed Under: Real property & mortgages

About Cathy Moran

I'm a veteran bankruptcy lawyer and consumer advocate in California's Silicon Valley. I write, teach, and speak in the hopes of expanding understanding of how bankruptcy can make life better in a family's future.

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About The Soapbox

You've arrived at the Bankruptcy Soapbox, a resource of bankruptcy information and consumer law.

Soapbox is a companion site to Bankruptcy in Brief, where I try to be largely explanatory and even handed (Note I said "try").

Here, I allow myself to tell stories and express strong opinions on how I think law should work for the consumer and small businesses when it comes to debt.

Moran Law Group
Bankruptcy specialists for individuals and small businesses in the San Francisco Bay Area

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