Selling your home?
- Before you list your home,
- before you interview a realtor,
- before you lift a paint brush, or clean a closet, you need to write a letter.
A letter to the servicer of your mortgage.
You want full disclosure of what charges, fees, expenses and other “stuff” they want to collect from you when your sale closes.
For all you know, they’ve stuffed your loan full of fees, not authorized by law or agreement, that pad their bottom line, and suck money out of your pocket.
Or, they’ve misapplied your payments or failed to note a mortgage modification.
So, your first step in selling your home is to get a handle on the loan payoff, while there’s still time to strip the mistakes and the junk fees from the payoff demand.
Why tackle your loan first?
Is it really necessary to explore your existing loan before you list your home for sale. Yup. You start with the existing lender because getting informatoin takes time. Federal law requires them to make full disclosure if you ask, but they get 30 business days to do so.
So it may be a month and a half before you have their first response. And if you don’t agree with the figures they produce, it takes longer still to resolve the dispute.
All too often, the inflated payoff demand doesn’t surface until your sale is about to close. Maybe the payoff demand from the servicer bears little relation to the mortgage statement you’ve been receiving monthly.
And with a sales contract in place, a deadline for closing, and a buyer’s loan commitment about to expire, too many sellers are forced to accept the servicer’s numbers or lose the sale.
They end up paying too much because there’s no time.
Since good information takes time, start here first.
How to make a Request For Information
The Dodd Frank Act beefed up your rights as a home loan borrower to get information from the servicer of your loan. Time lines were shortened; broader inquiries were permitted. And some consequences created for failure to respond.
Here are the essentials of a Request for Information under Reg. X 1024.36
An enforceable request must
- Be in writing
- Identify the borrower, the loan and the property address
- Indicate that the property is your principal residence
- Set out the information you seek
- Be sent to the specially designated address of the servicer for RIF’s
The last requirement, delivery to the servicer’s designated address, that trips people up. The magic address is often found on the back of the monthly mortgage statement.
Sometimes the address designated uses the previous name for the kind of request we’re talking about: Qualified Written Request. Servicers usually have the address on their website, tho it may require digging to find it.
Don’t send an RFI with your payment. Don’t ask for it over the phone. You have a right to good answers only if you follow the procedures in the regulation.
What to ask the servicer
If you are selling your home, you want a payoff figure, itemized.
Chances are you know what the principal balance is. It’s the other stuff that doesn’t necessarily appear on your statement that you want to flush out.
Are there late fees, escrow deficiencies, non-interest bearing balances, inspection fees, appraisal fees, processing fees.
You get the picture. Fees, fees, fees. For too many servicers, their profit is all in the fees. Find out ahead of time what you are facing.
Heading to sale
With your RFI in the mail, you’re ready to list your home for sale and turn to the myriad of other things to do to get your house on the market.
Mark your calendar for 30 business days so you know when to expect good information.
What if you get a response and you don’t agree with it.
Call the servicer. Complain to the CFPB. Ask a HUD certified housing counselor for help. Get an attorney.
Consumer rights are only meaningful if they are used.