My Mortgage Was Sold. Should I Be Worried?
By Elizabeth Dougherty
Selling mortgages is normal. You should
not be worried, but you should be EXTREMELY
CAUTIOUS.
Good News
The good news is that no matter who
bought your mortgage note, or how many times
it is sold, the terms of the original mortgage
CANNOT be changed without your permission.
If you agreed to pay $2,000 per month, at a
fixed rate for 30 years, the new owner(s) of the
mortgage note cannot change these terms.
Bad News
If that is the case, then what is the problem?
The problem can start during the “hand
off” from one servicer to the other. (The basics
were outlined in the previous HomeSeeker. If you
missed it, view the previous articles.).
The new “servicer” may not receive your
payment “on time” or at all during this period.
All of a sudden, you are being sent late notices,
late fees, and possibly a default notice. You owe
more money than you thought and your credit is
being damaged.
You Should Be Protected…by Law
You are, or should be, protected by a
portion of the federal Real Estate Settlement
Procedures Act (RESPA) or more exactly 12
U.S.C. § 2605 (http://www.hud.gov/).
When the “servicing” of your loan is sold,
the law requires the current servicer to send you
a notice 15 days prior to the “effective date” of
the transfer. This letter will detail, among other
things, the name, address and phone number of
the new servicer and the date when the transfer
is effective. You will shortly receive a letter from
your “new” servicer “welcoming” you and telling
you basically the same things as the other
letter.
Should you not get the letters in time (for
example you could be on vacation), you might
send your payments to your “old” servicer
instead of the “new” one. Your “new” servicer
may consider your payments late or even in
default.
To protect you, RESPA law states that, “As long as the borrower makes a timely payment
to the old servicer within 60 days of the loan
transfer, the borrower cannot be penalized.”
(emphasis added). Basically, if you send one or
two on-time payments to the old servicer, everything
should still be considered on time. Some
servicers, however, determine that even one day
late is not “timely.”
Some Bad Apples May Spoil Your Day
and Your Credit
Reputable mortgage servicers are not the
problem. There are however some servicers that
are “aggressive” in generating millions and
millions of dollars in fees that many consumers
claim are wrongful.
There have been major lawsuits about
servicing companies that don’t credit payments
on time and throw loans into a late or default
status. There are nightmare stories about wrongful
defaults and wrongful foreclosures. There
have been class action suits against several
servicers for systematically generating wrongful
fees in the tens of millions of dollars.
Many homeowners simply pay the wrongful
fees. Some pay out of fear. Some pay because
they don’t know the law that protects them.
Some valiantly fi ght with the servicer, but for
the most part homeowners don’t have the time,
money, or expertise to fi ght for very long. As
a result, their homes wrongfully head towards
foreclosure.
The Best Defense
The best defense is a good offense.
To avoid any problems regarding your
mortgage being sold in the future, there are two
things you can do.
First, before fi nalizing your choice lender,
ask them if they sell their loans and to whom.
Go online. Research the possible future purchaser
and/or servicer of your loans. See if they
have great reputations or consumer lawsuits
against them.
Second, NEVER, EVER, EVER ignore a letter
regarding your mortgage payments. Whether
you pay online or by mail, always keep a record
of when the payment was received by the
servicer.
Finally, don’t let a couple of bad apples
spoil the excitement of buying your dream home.
Most homeowners will never need the information
outlined above, but it’s always prudent
to be prepared if your mortgage is sold or the
servicing is transferred.
Elizabeth Dougherty, a resident of
Auburn, is a former Real Estate Broker
and Mortage Broker. She can be
reached at EADougherty1@aol.com.
|
|
