What do I do when my lender collapses?
August 25, 2009 10:11 AM Subscribe
Mortgage switcharoo: My lender just went bankrupt and we haven't been able to pay the August mortgage. There's an additional wrinkle with an escrow account for taxes. What do I do? (lots of detail inside)
posted by gofargogo to work & money (13 answers total) 3 users marked this as a favorite
I bought my house almost 2 years ago using a 30-year fixed mortgage from Taylor Bean & Whitaker. They've been servicing my loan ever since, and I pay every month. With a 30 year fixed mortgage, I expected my payments to stay the same, but I got a letter at the end of June saying my payment was about to go up 33% because of a problem with our tax & insurance escrow account. There's a piece of paper at the signing that authorizes the mortgage company to create an escrow account to pay for property tax and insurance as an option. I mistakenly signed the wrong paper which told TB&W NOT to create the account (i.e. I'd be responsible for paying taxes & insurance on my own). Even though I'd signed the paper saying "Don't create the account" TB&W did, but didn't collect the initial funds for it. Thus when they went to pay our property taxes, the escrow account went negative. This went on for 18 months before they caught it, and now I owe several thousand dollars in order to make the escrow account correct. In order to catch up they were going to raise my mortgage by 33% (which I can't afford) in order to recollect the shortfall within 12 months. I spoke with a rep, and the extended the payback to 24 months and said it would be reflected in my August bill.
Ok still with me?
August 1st, and my bill shows the 33% increase. I attempt to call them repeatedly, but the phone system keeps dropping me, sending me to dead ends, giving me bizarre options. Emails to the company bounce. After 2 weeks of trying to get ahold of anyone at TB&W I google search the news, and discover that TB&W is under investigation for fraud and has been shut down by a judge. They declared bankruptcy last week. Reports from other TB&W customers say that payments aren't clearing, and the instructions from the state and fed regulators seem to contradict.
So: What do I do? Call a lawyer? Wait for whomever picks up the loan to contact me? Call the feds for advice? Will I have to renegotiate my repayment schedule again with a new bank?