Survive Deceptive Unfair Mortgage Lender Practices
by Bob in New Jersey, by Brad in Delta, Colorado, and more
Ask Kate about surviving deceptive and unfair mortgage lender practices: Does Bob's lender think it's acceptable to harass him for more and more paperwork, long after his mortgage transaction closed? Brad is buying a home and suspects Fannie Mae might be trying to pawn off IRS tax liens. For a third homeowner, is the risk of a deficiency judgement worth negotiating with the bank to buy back his foreclosed home now that he's no longer unemployed?
Q 1: Do I need to continue providing information to the lender after the closing? By Bob in New Jersey
Kate, We signed the closing documents with a title company about 20 days ago. We signed all documents for refinancing with a title company in April 30, 2013.
About 10 days later, my lender agent told us, they are in the process to sell our loan to another lender and she needs the letter from my CPA about the investments account as the additional funding condition.
I did for her.
After another week, another appraisal company knocks on our door without any prior notice and wants to walk around in our backyard. We did not refuse him.
Just yesterday, the agent called again, and asked me to fax her the permit from the township for the shed in the backyard, the first appraiser missed. It was build about 6 years ago. What??
Do I have to responding to her anymore? What is my responsibility for their future resale of my mortgage?
The disbursement date on the HUD-1 is May 6. Please advice. Thanks a lot. Bob
***zz-portrait-left.shtml*** Ask Kate answers: Do I need to continue providing information to the lender after the closing?
When your lender presented you with a mountain of documents to close your transaction, you most likely signed an agreement about cooperating with lender requests after closing.
This agreement usually raises an eyebrow or two but most borrowers sign it without too much argument because without a signature, the mortgage would never close. It's that simple.
I knew of a lender who was pretty sloppy. (Ha! I actually knew quite a few of these!) But this one in particular discovered if they included a dollar in their post-closing requests for another paystub, homeowners were more likely to respond.
Keeping this in mind, I'd like to tell your lender to offer you $1000! Gheesh! How far are they going to push their luck with you!
Why Lenders May Be Sending Requests
I don't know your legal obligation when the requests begin bordering harassment but this constant barrage is ridiculous!
Now this is only conjecture, but here's my guess on their predicament (not yours). They processed your loan and funded it on their line of credit. Before they could sell your loan, mortgage rates spiked and they lost their profit margin.
So they went hunting for an odd-ball investor to cut their losses. But this investor plays by a different set of rules regarding the type of paperwork, the appraisal, maybe even the color of your front door. (No, I'm not serious about the door.)
So the lender was left holding a closed mortgage transaction but without the necessary paperwork to sell it on the secondary market. In short, they are hoping beyond hope that they can unload their line of credit.
Double-Check Your Mortgage Documents
Review your closing documents to see if there is a limitation on lender requests. If you are feeling gutsy, you could drag your feet and see if they get tired of harassing you. Or you could try giving them one more piece of information, with the understanding that you are not going to participate in their game any longer.
But if you want to be really safe, comply and hope they grow weary of asking. It goes without saying (although I'm still going to), you should ask an attorney to explain your legal obligations.
Best wishes for getting this company off your back,
Q 2: Fannie Mae and IRS Tax Liens By Brad in Delta, Colorado
Kate, A property I'm trying to buy was foreclosed in April 2013 and went to sale at $199,000 with no bids. Fannie Mae is now selling property for $146,000.
There is a IRS Tax Lien of $34,000.00 and I'm being asked to sign a waiver. The agreement states:
Fannie Mae agrees to indemnify the purchaser for any and all reasonable amounts amounts actually incurred by the purchaser as a result of the IRS Lien, however, the liability of Fannie Mae shall be limited to the difference between the purchase price ($146,000) and the foreclosure bid price ($199,000)not to exceed $199,000.00.
Have you ever heard of this waiver? What does it mean?
***zz-portrait-left.shtml*** Ask Kate answers: Fannie Mae and IRS Tax Liens
Wow! How DOES Fannie Mae do it? Financially decrepit yet plays a dominant role in the US mortgage market. Makes a lot of sense. Not.
Well, here I go again. I have to tell you I am not an attorney and to get a legal reading on this agreement, you need to consult one.
But it seems to me as a layman that if the IRS tax lien of $34,000 turns out to be greater than $53,000, it won't be their concern. Guess whose concern it would be.
Call the designated title insurance company in your real estate transaction. They may be able to shed some light on your liability if you choose to sign the agreement.
Although not the exact scenario, you might also be interested in reading: Notice of Federal Tax Liens Causing Home Buyer Hiccups
Q 3: Taking back a home by reversing a mortgage foreclosure
Kate, I lost my house 7 months ago due to job loss but now that I have a better job do you think it's wise to try to contact mortgage company to see if a deal could be worked out to let me move back in the home since it's still sitting?
***zz-portrait-left.shtml*** Ask Kate answers: Taking back a home by reversing a mortgage foreclosure
I've never heard of anyone doing this but I'm guessing the banks don't like to advertise the possibility.
Here's my concern. I don't want you to wake up a sleeping giant if your state allows for collection of deficiency balances
. I'd definitely research the matter in light of your state laws and to repeat myself, contact an attorney to be safe.
You wouldn't want the mortgage debt forgiven in connection with your foreclosure to re-attach to you somehow.
Go here to learn about the Mortgage Forgiveness Debt Relief Act
which releases certain homeowners from paying taxes to the IRS on owner-occupied residences after foreclosure.
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