About Me
Friday, February 22, 2008
As a mortgage broker, I have encountered a number of clients with reasonable confidence in their lenders, insurance companies, creditors and other entities that are responsible for their personal information. With so many rules, regulations and governing bodies, it seems logical to feel confident that major companies will handle your affairs and finances with the utmost respect and care. Besides, you contribute to their monthly paychecks. While most individuals and organizations may have good intentions, I encourage you to only trust God. With that said, you must take personal responsibility to ensure that your affairs are in order.
If you are or plan to be a homeowner you currently must pay property taxes. In most cases, the property tax is included in your mortgage and paid to the lender. Depending on where you live, your taxes must be paid to the county tax assessor based on your county's due date. The county will usually send you a bill, but there typically should be no worries or out of pocket expense. The monthly mortgage payment that goes to your lender includes the property taxes and should be paid to the county by your lender. In my experience, I have seen cases where these taxes weren't paid by the lender as expected. I once had a client that was weeks away from losing their home because the taxes had not been paid in three years. The fault could be place in many directions, but what will that help when your taxes haven't been paid. Why weren't they paid?
Similar situations have surfaced pertaining to homeowners insurance, which is also included in your escrow account to be paid by your lender. When the company you make your payment to changes, escrow issues are more prone to arise. If the lender mistakenly suspects you don't have insurance coverage on your home, they will usually force place a ridiculously priced policy on you and increase your mortgage payment to collect it. The policy they give you will easily be doubled, if not tripled, what you would normally pay for insurance. That I know from personal experience. All of the terms you agreed upon when signing your mortgage documents should remain the same when and if it transfers to a new lender or servicing company. When a loan transfers or is sold between lenders, mistakes can be easily made. Their mistake usually means your hassle.
Credit reports are notorious for having mistakes and incorrect information. It makes for a bad day when you have special plans to handle some business, only to discover that it can't be handled because of a credit reporting error. Creditors have no concern for your time when they want to collect a past due debt. If you make yourself available to take the blame, you take the pain. Your credit scores will drop along with the best available options for financing or possibly even getting a job. Don't become the victim. It can become a major battle correcting credit reporting errors, especially if you're slow to act.
My advice for you is to think prevention. When I say prevention, think in terms of preventing wasted time when you REALLY! need to get something done. These mishaps can happen despite your most diligent efforts. But, you can certainly minimize the damage.
Here are few suggestions to help diffuse these potential time bombs:
- Homeowners should periodically check their escrow balance with the lender or servicing company to ensure it is correct
- If you receive a notice that your mortgage payment will now be paid to a new lender, be sure and confirm that they transfer your information and terms accurately
- Confirm with the county that your property taxes have been paid when due
- Confirm that your homeowners insurance has been paid when due
- Review your credit report at least 2 times each year to know your scores and to check for errors
- Respond in writing within 30 days whenever you receive a bill in the mail that you do not actually owe. If you don't, it can become yours.
The responsibility is yours to take care of your affairs. Who will watch your back the way you do? Check up on the organizations that influence your livelihood and keep them sharp. If more people monitor their affairs properly, there would probably be fewer unfortunate stories of people losing homes or being misrepresented by a credit reporting system that isn't totally fair anyway. Stay alert and stay smart.
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