If you're paying your mortgage to one bank, only to find that another holds the note...

[Barack_America]

What happens?

Are your payments still valid?

[ejpoeta]

1. they should be but that's a good question.

[Ozymanithrax]

2. Perhaps and perhaps not...

Perhaps bank 2 uses bank 1 for billing. Perhaps they screwed up mortgage. If you think that is your case find out which banks holds the title. If they can't tell you, talk to a lawyer.

[Barack_America]

3. That's what I worry about, that homeowners are going to have to pay lawyers to sort it out.

Between 2 banks and a homeowner, I think we know who's going to end up getting screwed.

Fortunately, we don't have a mortgage yet, but will be looking in a few months.

[Ozymanithrax]

7. I have kept every piece of mail since we bought our house in 2002.

The mortgage on our house was transfered/bundled and sold six times. They are required to let you know when they do that. We have also refinanced to consolidate a time share, and we owe far less on this house that it is worth, even in this crappy market. If someone tries to forclose on me, I can trace the paper pretty well, though we are up on our payments and even ahead on our schedule to pay the house off.

Most mortgages have a notice in them that if the banks must forclose, the cost of the lawyer comes out of the sale of your property or you, if the sale doesn't cover costs.

Yes, lawyers are expensive, but it if you are about to be screwed it is better to have a lawyer in the bed with you and the banks.

[Barack_America]

10. Makes you wonder if scam artists can exploit this.

[Ozymanithrax]

11. A good scam artist can exploit anything. n/t

[SoCalDem]

4. Our payment goes to AHMSI, but they always identify themselves

as a payment collection service..only...and they are NOT helpful at all whenever I have a problem with them..which is always..

I have been fighting with them since FEBRUARY, when they mis-allocated a payment. I have been prepaying , and because I made 3 payments within one billing cycle, they credited one of the payments to principal only..

They have not lost the payment,just credited it incorrectly. Their phone system will not allow me to talk to the person who can fix the problem. I can only write to them, which I have done several times. Another payment they put into escrow account, which means that our escrow account now has over $2k in it, and we pay our OWN insurance yearly, in a lump sum, so the only amount that should ever be in our escrow would be for taxes, of which the remaining payment this year is $743.00.

The last letter I got from the "fixer" assured me that it was corrected, and that our whole payment plan would be re calculated, but to date, it has not..

I am totally frustrated with them, and hope they sell our loan soon...anyone would be better than this outfit.

[zipplewrath]

6. Sue them

seriously, you ought to consider having a suit filed against them. A lawyer could probably figure out the specifics, but after you have done "due diligence", it's time for them to be sued.

[pnwmom]

8. Isn't it a good idea, if you're paying extra, to have the payment

credited to principal only? If you allocate an extra amount every month for principal only, that could substantially shorten the term of your loan.

[SoCalDem]

9. That's true, but we were looking for the extra interest deduction

to help offset our added income (husband started collecting SS this year).. Apparently we can only make one extra payment per year, but at that time I did not realize that fact.. I was hoping to pay 3 or 4 extra payments..I even called them beforehand to make sure I was doing it correctly & they assured me that once they received a payment, they immediately sent out the next payment's "bill", so as long as I waited until I received it, it would be credited as a complete payment for the next calendar month..They lied:(

They will HAVE to reduce our payment when they re-figure everything at the end of the year because they have so damned much in escrow...or at least refund it to me.

I am just so angry that I cannot just call a person on the phone and get it fixed..

[Hannah Bell]

12. thank you for confirming what i vaguely recollected from when i bought my house,

some loans have clauses making it difficult (or impossible) to pay down the principal. i remembered turning down some option for that reason, but couldn't remember the details.

[pnwmom]

23. Some loans do have something called a "pre-payment penalty."

We made sure our mortgage didn't have one, so that if we were in the position to pay the principal down, we could.

[hugo_from_TN]

13. You can't pre-pay interest

Interest accrues daily based on the current principal. You can't pay it in advance.

[SoCalDem]

14. I wanted more interest paid to show up for the calendar year

for a tax deduction.

[hugo_from_TN]

15. That's interesting.

I'm not sure how the mortgage company would be able to apply the extra payments before the interest accrued, but for tax purposes I suppose that would work. I guess it depends on the laws for reporting interest payed on the 1099 (or whatever form)to the IRS. I may investigate this also as I made a lot of money this year and could use the tax break moved backwards.

[SoCalDem]

16. apparently you can make ONE extra payment a year

I was (planning) hoping to make double payments to have 12 extra interest payments to deduct, but only 2 months into my plan AHMSI screwed it up, so I just reverted to the 1 a month/with 1 extra. we had significantly more income this year & will have to pay extra taxes, so I wanted every deduction I could come up with..

I donated a bunch of stuff to some non-profits that help homeless & foster families, we put in all new windows & doors to get that energy deduction & I did another OLPC donation this year.. The home owners interest is always our biggest deduction, so i wanted it to be as big as possible

[hugo_from_TN]

17. Yes - I just did some research.

You can pre-pay the January payment because that covers interest accrued in December.

From the 1040 Schedule A instructions (2010):
In general, if you paid interest in 2009 that applies to any period after 2009, you can deduct only amounts that apply for 2009.


It was a good try, though. :)

[SoCalDem]

19. good UNTIL they messed it all up

and messed with my head as well.. :rofl:

I am just super-hopeful that they sell our "paper" to some other outfit:)

[pnwmom]

24. It's too bad they got rid of income tax averaging. nt

[pnwmom]

22. It IS so frustrating when you can't talk to real people. Good luck. n/t

[Viking12]

5. That's the case with my mortgage.

The bank that I pay is contracted to service the mortgage. I received clear notification of teh arrangement.

[lumberjack_jeff]

18. More valid than all the alternatives.

If Bank B is being ripped off by Bank A, then it's up to them to sort it out.

[Yo_Mama]

20. Legally you are at no risk.

The servicer is the outfit that takes your payments, sends you any required notices, and transmits your payment to whoever owns the loan (minus servicing fees).

Fannie/FHA loans are all like this. Only a minority of mortgages are owned and serviced by the same entity.

Legally you are at no risk as long as you make the payments as specified in the note, because that is the legal contract you took on when you signed the note, and the only way someone can come after you for more money or for your property is if you do not make the required payments.

The agreement between the servicer and the owner/beneficial owner of the mortgage is a separate contract, and if the servicer screws up and doesn't send what is owed to the owner, the owner must pursue it with the servicer, not you. There is a contractual liability there, but the defaulter is the servicer, not you.

So don't worry about it unless they screw up the bookkeeping, which can happen with porfolio loans just as it can with separately serviced loans.

You do want to check your statements and make sure everything looks okay each year. You also want to preserve your payment records on the mortgage until you have something like your mortgage interest statement to show that everything's okay. If you don't know, then keep your bank statements and images or copies of the cancelled checks so you can prove payment.

Also, you have a special grace period under federal law every time servicing rights to your loan are transferred in case they do screw up, and they have to send you a notice about the transfer, and the change in payments.

[Barack_America]

21. That's great to know.

Thanks very much for this post.