We see with some regularity banks sending statements to our clients claiming that they owe more on their mortgage than they in fact do. When this happens, it is most likely due to the bank’s failure to credit homeowners with the payments they’ve made. Lisa’s story serves as an example of this fraudulent practice, which is consistent with banks’ desire to foreclose because it is profitable to do so.
Lisa took out a $48,000 loan on her modest home in 1989. After making her payments for 14 years, Lisa was forced to file a Chapter 13 bankruptcy due to mounting debt. Through the course of the bankruptcy, Lisa continued making payments on her mortgage. Despite the fact that Lisa had made payments totaling more than double the original amount of the loan, her bank claimed she owed $60,000 when she came out of bankruptcy.
Not knowing what to do about this apparent discrepancy, Lisa stopped making payments altogether in November, 2009. After waging a three-year battle, Lisa’s bank finally has come to the table with an exceptional modification proposal which rights its past wrong, and allows Lisa the opportunity to stay in her home for good. Essentially, the proposal reset her unpaid principal balance, waiving tens of thousands of dollars. Just as importantly, the bank lowered Lisa’s interest rate from a whopping 9.5% to less than half, 3.875%. In all then, even though she has not made a payment in over three years, including not paying taxes, her payment has been lowered by over $100 per month with the above concessions, and an extension of the maturity date of the loan.
Why it took Lisa’s bank three years to come around and do the right thing we’ll probably never know, but at least it did. The lesson in her story for every homeowner is to keep a careful watch over the monthly mortgage statement you receive paying particular attention to the claimed principal balance owing. If there is a question as to the accuracy of that amount, request in writing a “Payment History”. By federal law, your bank is obligated to send that to you. When you get that History, carefully compare the payments you made with those showing on it to make sure every payment was credited. Finally, make sure that your bank isn’t adding false charges, such as unjustified late fees. By doing that, you may be able to avoid being the victim of an illegal “balloon payment”, as was the case with Lisa.
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Next week: “WOW!” The Story Of Ross.
Copyright 2012 Daniel L. McGookey