Mortgage shenanigans?
May 13, 2014 7:06 AM Subscribe
We have an excessive interest rate on our home. We tried to refi, and the appraisal came in a good $40,000 less than it needed to in order to qualify. So some of our more numerically-talented friends ran some numbers for us in an attempt to find alternative solutions and found a weird discrepancy that makes it appear we owe $15,000 more on the loan than we do...
My husband bought the house in 2001 before I lived with him. He's always paid the mortgage on time, but the attractive (for investors! not us!) interest rate means it's been resold a kajillion times to multiple mortgage holders. It's currently with (shudder) Ocwen after GMAC failed.
What steps do we take to determine if something hinky has happened along the way? Do we start by adding up a decade of mortgage payments and saying hmm, that totals xxx? Or what? Is there any way of tracking all the companies that have ever held the loan and demanding records?
(For the purposes of this situation, assume my husband pays everything online and that we don't have paper bills for every mortgage payment made). Thanks in advance, hive mind!
My husband bought the house in 2001 before I lived with him. He's always paid the mortgage on time, but the attractive (for investors! not us!) interest rate means it's been resold a kajillion times to multiple mortgage holders. It's currently with (shudder) Ocwen after GMAC failed.
What steps do we take to determine if something hinky has happened along the way? Do we start by adding up a decade of mortgage payments and saying hmm, that totals xxx? Or what? Is there any way of tracking all the companies that have ever held the loan and demanding records?
(For the purposes of this situation, assume my husband pays everything online and that we don't have paper bills for every mortgage payment made). Thanks in advance, hive mind!
Response by poster: If you enter it into an amortization calculator and just look at principal + interest paid, the total amount amortized from the purchase date to now is off by $15,000. He has paid exact amounts, no more no less.
So for example, amortization calc says we should owe $100,000 but mortgage co says $115,000.
posted by bitter-girl.com at 7:48 AM on May 13, 2014
So for example, amortization calc says we should owe $100,000 but mortgage co says $115,000.
posted by bitter-girl.com at 7:48 AM on May 13, 2014
Best answer: Lets get this soapboxing out of the way first: Buying a home in the United States is a vicious minefield of legal and semi-legal exploitation protected by an archaic monopoly that extracts a 6% tax on all transactions and resists innovations that would simplify the process.
So... there are a lot of ways that you could end up with a discrepancy between what you think you owe and what your bank thinks you owe. A big one is bank origination, title and other fees when the home is sold or refinanced. If you want to get to the bottom of this, you will, probably, have to establish that 10+ years of history of payments, on-line or off.
But... tracking down who has owned the mortgage - and who has been servicing it - won't be easy. You can try MERS. There are also look up tools from Freddie Mac and Fannie Mae.
In the end, you may need to get help. CFPB is the government agency that is supposed to deal with this, but of course has been continually undermined by Republican opposition.
posted by RandlePatrickMcMurphy at 8:22 AM on May 13, 2014 [4 favorites]
So... there are a lot of ways that you could end up with a discrepancy between what you think you owe and what your bank thinks you owe. A big one is bank origination, title and other fees when the home is sold or refinanced. If you want to get to the bottom of this, you will, probably, have to establish that 10+ years of history of payments, on-line or off.
But... tracking down who has owned the mortgage - and who has been servicing it - won't be easy. You can try MERS. There are also look up tools from Freddie Mac and Fannie Mae.
In the end, you may need to get help. CFPB is the government agency that is supposed to deal with this, but of course has been continually undermined by Republican opposition.
posted by RandlePatrickMcMurphy at 8:22 AM on May 13, 2014 [4 favorites]
You really need to find your copy of the original closing documents. I wouldn't trust what the amort calculator is saying at this point in regards to your situation.
posted by JoeZydeco at 8:34 AM on May 13, 2014 [2 favorites]
posted by JoeZydeco at 8:34 AM on May 13, 2014 [2 favorites]
I put down $50k on my house and the original mortgage ended up being about $15k or so more than ${PurchasePrice} - $50,000. A lot of that was closing costs and other fees that weren't adequately explained to me up front but weren't shenanigan-y.
Assuming your house is in the USA, check your original HUD-1 Settlement Statement.
posted by tckma at 9:04 AM on May 13, 2014
Assuming your house is in the USA, check your original HUD-1 Settlement Statement.
posted by tckma at 9:04 AM on May 13, 2014
The bank says you owe $15k more than you think you do.
At that point, it's probably worth spending $1,000 on a lawyer to go over all of your documents to make sure. If the bank is wrong, hey, you just saved a bunch of money. If the bank is right, odds are still decent that you'll be in a better position to know how to reapply for refinancing.
But I'm betting it's mostly fees and closing costs. Those can be a lot steeper than you figure.
posted by valkyryn at 9:29 AM on May 13, 2014
At that point, it's probably worth spending $1,000 on a lawyer to go over all of your documents to make sure. If the bank is wrong, hey, you just saved a bunch of money. If the bank is right, odds are still decent that you'll be in a better position to know how to reapply for refinancing.
But I'm betting it's mostly fees and closing costs. Those can be a lot steeper than you figure.
posted by valkyryn at 9:29 AM on May 13, 2014
Is that $15K discrepancy in their assessment of the existing loan, or is it the amount for the new loan? If it is the latter, then a likely explanation is that they have rolled fees and closing costs into the principal on the new loan.
This should all be quite clear in the standard paperwork they give you. If it isn't then that is, in itself, hinky.
posted by Good Brain at 10:27 AM on May 13, 2014
This should all be quite clear in the standard paperwork they give you. If it isn't then that is, in itself, hinky.
posted by Good Brain at 10:27 AM on May 13, 2014
Response by poster: No, it isn't a discrepancy in the new loan, Good Brain -- we can't get a new loan, because the appraisal didn't come in high enough...
Everyone else: I'll go start pulling paperwork and see what I can find out. You've all been enormously helpful in giving me some starting steps to take. Thanks!
posted by bitter-girl.com at 11:49 AM on May 13, 2014
Everyone else: I'll go start pulling paperwork and see what I can find out. You've all been enormously helpful in giving me some starting steps to take. Thanks!
posted by bitter-girl.com at 11:49 AM on May 13, 2014
You're paying property taxes separate from the mortgage, right? If your monthly payment included property tax pre-payments that go to an escrow account then you would see a dependency like that if you calculated assuming that all of the payments were just going towards principal and interest.
posted by burnmp3s at 12:31 PM on May 13, 2014
posted by burnmp3s at 12:31 PM on May 13, 2014
Response by poster: This is looking at principle and interest only, burnmp3s -- tax is separate.
posted by bitter-girl.com at 12:44 PM on May 13, 2014
posted by bitter-girl.com at 12:44 PM on May 13, 2014
Best answer: If you wind up in a conflict with your bank about this, contact CFPB. They're the bees' knees of federal agencies—they're just the best. A complaint to the CFPB gets a bank's attention like nothing else.
posted by waldo at 1:47 PM on May 13, 2014
posted by waldo at 1:47 PM on May 13, 2014
Best answer: I will just say that I used CFPB to help with a credit card issue and ten days after filing my claim with them the CC company called me and refunded almost $2000 in overpaid interest. If not for CFPB I would still be paying 19% interest without an explanation of why the bank raised my rate.
They are the best at helping consumers deal with financial institutions that seem to make any problem solving a nightmare for the average person.
posted by cairnoflore at 3:30 PM on May 13, 2014 [1 favorite]
They are the best at helping consumers deal with financial institutions that seem to make any problem solving a nightmare for the average person.
posted by cairnoflore at 3:30 PM on May 13, 2014 [1 favorite]
Best answer: Two ideas that might help you get a grip on what is going on
- assuming he has a fixed rate mortgage, use a mortgage calculator to enter the amount of the original mortgage, # of years and the interest rate and see if it produces his actual mortgage payment. If not, see what size original mortgage matches his actual payment. If the monthly payment fits with the +15,000 mortgage amount then you will know that the extra money got added on in the initial loan which means that there was probably no mistake.
- since you know how much he actually paid, total (since it was fixed payments every month), you can go back through your old taxes and find out how much of that went to interest (assuming that you probably took advantage of the mortgage interest deduction on your taxes). Simple math, and you will know how much was calculated as principal repayment. (Doesn't mean that there wasn't a mistake but might help you see what is going on) The 1099 might also help identify who was collecting the payments each year.
posted by metahawk at 6:16 PM on May 13, 2014
- assuming he has a fixed rate mortgage, use a mortgage calculator to enter the amount of the original mortgage, # of years and the interest rate and see if it produces his actual mortgage payment. If not, see what size original mortgage matches his actual payment. If the monthly payment fits with the +15,000 mortgage amount then you will know that the extra money got added on in the initial loan which means that there was probably no mistake.
- since you know how much he actually paid, total (since it was fixed payments every month), you can go back through your old taxes and find out how much of that went to interest (assuming that you probably took advantage of the mortgage interest deduction on your taxes). Simple math, and you will know how much was calculated as principal repayment. (Doesn't mean that there wasn't a mistake but might help you see what is going on) The 1099 might also help identify who was collecting the payments each year.
posted by metahawk at 6:16 PM on May 13, 2014
This thread is closed to new comments.
Can you explain about the "weird discrepancy"? Where are you seeing the $15,000 increase and what are you comparing it against such that you think the balance is inaccurate?
posted by payoto at 7:32 AM on May 13, 2014