Legal Question in Real Estate Law in California

Re: Mortgage sold, payments rose drastically

You may have a case against the original lender and the new lender. Everything depends on the paperwork. Please call Mary at my office to set up an appointment or to review your paperwork.

Re: Mortgage sold, payments rose drastically

You stated that the taxes and insurance were "all figured into" the payments at the start of your loan; if so, that means you have an impound account, where the lender collects the monies from you and then pays the taxes and insurance for you. However, taxes and insurance INCREASE every year, and as they increase, the lender calculates a new monthly payment each year in whatever sum is sufficient to cover these increases in expenditures!

Re: Mortgage sold, payments rose drastically

The first thing you need to do is review all of the documents you signed when you purchased your home. Under most circumstances, homeowners agree to allow their lender to collect certain sums of money for insurance and property taxes and hold them in what is known as an "impound account." Every month the borrower pays a small amount into this impound account, and once or twice a year the lender pays the cumulative total to your homeowners insurer and the county assessors office when your insurance premiums and property taxes are due.

Most lenders review their records yearly and determine what amount will be needed in a borrower's impound account to satisfy the insurance premiums and property taxes. After that review, lenders generally notify the borrower that their payments are going to increase becasue of a rise in either property taxes, insurance premiums, or both. Although most lenders send this notification, I'm not sure that they are required to.

In the last year or two, California property owners have experienced a huge increase in insurance premium rates, and it is not uncommon for those rates to increase borrowers' impound account payments, and hence, their mortgage payment, significantly. Further, you are probably aware that property values in California have been on the rise recently. That rise in value has, or will, trigger the county assessors to review property values in their counties, and adjust the property taxes on that property to reflect the increased value. Both of these expenses must be paid by a homeowner, and the lender really has no control over the amount of any increase charged by the county or by an insurer. Unfortunately, that can, and usually does, mean that most homeowners experience increases in their mortgage payment at various times during the life of their loans.

One way to check to see if the foregoing explaination is what is truly occurring with your loan, is to look at your monthly statement. The statement should break-down how much of your monthly payment goes to principal, interest, and into an impound account. Remember, that the amount being paid to principal and interest will fluctuate (because each payment you make your principal payment will go up, while your interest payment will go down). That statement will also reflect any payments made by the lender to any insurer and to the county assessor.

If you need help in reviewing your documents, you should make an appointment with an attorney who practices in real estate law, who can help you understand your documents.

Re: Mortgage sold, payments rose drastically

Yes, it is common to sell loans, but the terms cannot change.

There are 2 posibilities.

1. You actually have an adjustable rate loan, which would account for a change in payments. I would need to see the original loan papers.

2. The second posibility is that the new lender believes that there are supposed to be impounds (taxes and insurance collected with the payments).

The best thing to do is get your loan papers and either call the person who brokered the loan for you, or call the new lender directly.

Re: Mortgage sold, payments rose drastically

from the facts given so far, it appears you do have a strong case against the new lender who holds your note. typically when lenders sell loans to one another, the initial agreement/rates cannot change unless there is some provision in your paperwork or you have some sort of adjustable interest rate you may not be aware of. however, you may want to either retain a lawyer in this matter or at least have one look over your loan docs to see if there is some discrepancy you may or may not have overlooked. if you would like further assistance and/or representation in this matter, feel free to email me directly on how you might like to proceed.