Is Your Mortgage a Purchase Money Mortgage or a Refinance ?
A purchase money mortgage means a loan that was made specifically so that you could buy the house. These normally "close" at the same time as the purchase itself; the mortgage lender lends you the money to enable you to pay the sales price to the seller. A refinance means a loan that was originated after you already owned the property. Usually but not always, this loan pays off your old mortgage, although at times there is no old loan to pay off, if you owned the property free and clear previously. That would still be considered a refinance. There are different laws and regulations that apply, depending on whether your loan was a purchase money mortgage or a refinance. These are very important in determining an appropriate strategy.
How Long Since Your Loan Closed ?
Under some circumstances, borrowers of refinanced mortgages may be entitled to rescind their loan up to three years after the closing. If this applies to you, timing is critical, since you CANNOT rescind after the three years is up. So, make sure to look up your paperwork, determine when the closing occurred, and then make sure to tell your attorney. A careful review of the file if you are still within the extended rescission period can often open the door to options you did not realize you had, if it is found that errors were made or inadequate disclosures provided. During the "boom" period in mortgage refinances, many mistakes were made that provide a basis to invoke rescission.
Were You Given any Incorrect, Misleading or False Information ?
Some of our clients tell us they were misled; they got a different interest rate than they had been quoted, or a prepayment penalty was imposed, or the loan was adjustable, not fixed, the fees were much higher, etc. We refer to these as "ambush closings" - borrwers not finding out about major changes until the very end, when it was often impossible or impractical for them to change their minds. If there was a major difference between what you were told and what they got, you may have been a victim of mortgage fraud.
Were Your Payments and Escrow Account Handled Correctly ?
Some borrowers have had problems with mis-applied or late-applied payments. Some borrowers were charged late fees for on-time payments. Others tell us that their lender or servicer "force-placed" their insurance, even though they had insurance in force. If any of these things happened, they may form the basis for a defense, far beyond the amount in dispute. It is very important that you put together any documentation you have of the application, closing, billing and escrow details and get it to someone who will understand the importance of the issues you have found and who will advise you what can be done to utilize them to help you to defend foreclosure if one has been filed, or to use as negotiating leverage to improve your situation.
Determine Your Objective
Are you looking for a solution that will allow you to keep your home, or for something else ? When people come to me for help with mortgage and foreclosure problems, the first question I ask them is "What is Your Objective ?" Unless I know what it is the prospective client wants to accomplish, I can't evaluate whether I can develop a strategy to help to get them there. Some people want to keep their home, some want to get out with a minimum of harm to their credit, some want to use it for rental income, etc. It is critical to understand your goal so that a strategy can be developed to achieve it.
Additional resources provided by the author
Golant & Golant, P.A. www.golantlaw.com
National Association of Consumer Advocates www.naca.net