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When mortgage lenders go under..


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28 replies to this topic

#1 of 29 Jay H

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Posted September 17 2007 - 02:55 AM

As a policy/mortgage holder, I'm wondering what happens to one's mortgage when/if a lender or mortgage company goes kaput? I presume some other mortgage company will buyout the mortages/liens current held by the current provider, but is this transparent to the holder? Could the new provider drop certain mortages based on it's whim? Would the existing holder have to pay any fees during the transfer of the policy to the new owner?

Just wondering with all this talk about subprime and mortgage companies...

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#2 of 29 Lucia Duran

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Posted September 17 2007 - 03:43 AM

I am really shocked at how many lenders are going under. I read an article a while back about how lenders are giving anyone a mortgage, even if they cannot afford one. So all these loans are going into default. People are filing bankruptcy and or forclosing.

it does not look good for many of these companies. As for what happens to loans/mortgages when the companies go under, I have no idea, but would be very interested in finding out.
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#3 of 29 KevinGress

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Posted September 17 2007 - 06:42 AM

I would expect it to be similar to a lender selling a mortgage to another holder, and thus, be transparent to the buyer. I've had my mortgage sold to other banks, etc. several times, and it never caused me any additional fees, etc.

#4 of 29 Mort Corey

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Posted September 17 2007 - 11:12 AM

The only thing you might really want to keep an eye on is if you have an impound account where insurance and taxes are a part of your payment.

In theory, the loan may be callable but the likelyhood of that happening are pretty slim. Even should it happen, they're not going to knock on your door demanding payment in full one morning, but you could have to refinance.

Likely scenario....you get a letter saying make your payment to someone else. Verify the account balance against your records (as well as impounded funds if applicable) and it will be pretty transparent.

Mort (leastwise, as far as I know)

#5 of 29 Dennis Nicholls

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Posted September 17 2007 - 01:09 PM

Jay,

I hang out at real estate bear sites. Check out this humdinger:

http://ml-implode.com/ Posted Image

156 mortgage companies have imploded since last year!!
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#6 of 29 Greg*go

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Posted September 17 2007 - 04:57 PM

To the original question, other companies are always willing to buy up the loans from the companies that are closing.

Quote:
Originally Posted by Mort Corey
The only thing you might really want to keep an eye on is if you have an impound account where insurance and taxes are a part of your payment.

I'd check the unpaid principal balance that was transferred, and make sure your next due date is correct as well.

Quote:
Originally Posted by Mort Corey
In theory, the loan may be callable but the likelyhood of that happening are pretty slim. Even should it happen, they're not going to knock on your door demanding payment in full one morning, but you could have to refinance.

Likely scenario....you get a letter saying make your payment to someone else. Verify the account balance against your records (as well as impounded funds if applicable) and it will be pretty transparent.
Mort is correct, where you mail your payment to may change, but nothing else can.

Is it really possible that the new company can make you refi? You signed a note, and both you and the mortgage company have to abide by it. AFAIK, if I have a 30 yr note at 4.75%, the new mortgage company can't do anything to force me to refinance at a higher rate.
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#7 of 29 Jay H

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Posted September 17 2007 - 11:40 PM

I have been transfered between 2 agencies already and my mortgage gets direct debted from my savings account... I do have an "escrow" or "impound" account that pays my taxes. I have a 20 year fixed at 5.875, but I knew the mortgage transers were voluntary and not out of one company going under. I would be royally pissed if I had to pay any kind of refinance fees (at least directly) from the transfer...

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#8 of 29 DaveF

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Posted September 18 2007 - 12:11 AM

I was wondering the same thing when CountryWide was in the news, nearing implosion. I expect the only changes would be where the check is mailed (or rearranging direct deposit settings).

If you have an alternate pay schedule, like biweekly, your fees for such service could change. There could also be changes in grace periods, late fees. And quality of service could change as well.

But the your mortgage terms can't change.

#9 of 29 Greg*go

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Posted September 18 2007 - 10:48 AM

Quote:
Originally Posted by Jay H
I would be royally pissed if I had to pay any kind of refinance fees (at least directly) from the transfer...
Jay
Fear not... you'll never have to pay any kind of refi fees if your mortgage is being transferred to a new lender.


Quote:
Originally Posted by DaveF
If you have an alternate pay schedule, like biweekly, your fees for such service could change. There could also be changes in grace periods, late fees. And quality of service could change as well.

But the your mortgage terms can't change.

Well your last sentence is correct, but if you think about it, the length of your grace period and the amount of late fees are terms of your mortgage. I'd say 95%+ of 1st mortgages have a payment that is due on the 1st of every month with a 15 day grace period that is written in the mortgage note. The way you determine the amount of the late fees varies, but that is also included in the note.

Regarding biwkly. If you have a mortage that is setup to make 1 mortgage payment per month (it'll state that in your note), you usually can not make multiple payments directly to your mortgage company. This is where 3rd parties come into play. There are companies out there that take funds from people's checking accounts every 2 weeks, then they send a payment to the mortgage company once a month. In the months were there are 3 payments made, they make an additional principal payment. Any fees involved in this could would be with the 3rd party, not with your mortgage company.

Otherwise, if you have a mortgage that states you'll be making payments every 14 days in the note, then your new mortgage company can't charge you any fees for this.

After thinking about what would happen to the loans of a company after closing cough: South Star they would most definitely get bought by other companies. Perhaps at a discount, but your terms aren't going to change, and you're debt isn't going to disappear.

Some of you might want to read up on RESPA. The U.S. government passed legislation in the 70s stating that it's illegal for mortgage companies to charge mortgagors hidden or additional costs.
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#10 of 29 DaveF

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Posted September 18 2007 - 11:04 AM

Quote:
Originally Posted by Greg*go
Well your last sentence is correct, but if you think about it, the length of your grace period and the amount of late fees are terms of your mortgage. I'd say 95%+ of 1st mortgages have a payment that is due on the 1st of every month with a 15 day grace period that is written in the mortgage note. The way you determine the amount of the late fees varies, but that is also included in the note.

Regarding biwkly. If you have a mortage that is setup to make 1 mortgage payment per month (it'll state that in your note), you us
It's good to know that grace periods, etc. wouldn't change. But regarding alternate payment schedules: CountryWide offers varying payment schedules at varying additional costs. Paying biweekly is something like an extra $5 / month. I assume a change in mortgage company could change, or even remove, such options.

#11 of 29 Jay H

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Posted September 18 2007 - 11:50 PM

In fact, my mortgage is through Countrywide... I used to be through HSBC but that lasted like 2 months.... just enough time for me to setup a direct deposit...Posted Image

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#12 of 29 Brandon_T

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Posted September 19 2007 - 12:55 AM

My mortgage is also through Countrywide and they have the option for bi-weekly payments right on my mortgage site. I have enjoyed all the access that Countrywide gives on their site, but they call me a ton to refi. Now that the fed has cut rates again, I just might finally do that.

#13 of 29 Jay H

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Posted January 08 2008 - 12:05 PM

Oh great....

Countrywide stock plummets - Yahoo! News

Guess who I have my mortgage through? Posted Image
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#14 of 29 Brandon_T

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Posted January 08 2008 - 01:44 PM

This whole thing stinks. Two-three years ago we almost sold our house but we just weren't ready. Its not an expensive house for sure, but now, the prices have dropped so bad here in Michigan that we no longer have the equity in our home that we did, and are forced to stay here. We are considering renting the house out since we live in an attractive downtown area that still gets very good rent for a home. Just not what we planned on.

#15 of 29 Mort Corey

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Posted January 09 2008 - 11:16 AM

It appears that things in the home mortgage/ownership market will be getting worse in the not too distant future......regardless of any action(s) by the Fed or Washington. Countrywide may only be the latest mortgage originator to go belly-up but not likely that last. Interesting times.

Mort

#16 of 29 Eric_L

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Posted January 13 2008 - 05:26 AM

most often your mortgage service is NOT the mortgage holder. ie. - Citibank may collect the payments, but the loan is actually a FNMA loan. If the servicer bellies-up only the servicing is changed. Do keep solid records of your payments. It is not uncommon for mix-ups after a service transfer - such as a payment not correctly being transferred/applied.

For those with solid credit - now is a good time to get a loan. Lenders are desperate for business that they can get approved. Shaky deals are gone - but they still need to make a living. If you have good credit they will roll out the red carpet...

I, frankly, am unconcerned about the shake-up. It is a healthy part of the business cycle. It is blown far out of proportion. I am more concerned about the fiscal policy of the next congress/administration. If they are not careful they could tip a precarious economy into recession next year with ill-advised timing of tax code changes.

#17 of 29 Brandon_T

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Posted January 13 2008 - 07:48 AM

My wife and I are trying to make a tough decision. We did a 5 year balloon mortgage that is up this coming August. We desperately want to move, but understand the market and its tough to sell. I have told my wife that we should rent our house out, and go ahead and refi it now, but she just wants to hold out til the last minute then refi if we don't sell before August. We have equity in our house, not much now that the market has fallen, and our credit is excellent. Mine is 748 and hers around 730. Our family is expanding and we need a house with another bedroom. Just not sure what the right thing to do is.

#18 of 29 nolesrule

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Posted January 13 2008 - 08:43 AM

Talk to a professional Realtor in your area who knows it very well. They'll give you better advice than anyone here could.

They'll be able to tell you how much you can realistically expect to get for your house and how long it's likely to sit on the market. That will help you make your bottom line decisions.

#19 of 29 Scott Merryfield

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Posted January 14 2008 - 01:36 AM

Quote:
Originally Posted by Brandon T
Our family is expanding and we need a house with another bedroom. Just not sure what the right thing to do is.

Is adding on to your existing house an option?

The real estate market in Michigan stinks right now. If you can find a buyer for your home, though, you can get a great deal on purchasing another home.

I'm not sure how the rental market is in Flushing, Brandon, but there is a glut of rental houses on the market in the western suburbs of the Detroit area. We are looking to put my grandmother's house in Plymouth on the market, as she just moved into an assisted living facility. The outlook is not pretty for selling, and the monthly rental figures we've seen would not net her enough income.

#20 of 29 DaveF

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Posted January 14 2008 - 01:56 AM

Quote:
Originally Posted by Brandon_T
My wife and I are trying to make a tough decision. We did a 5 year balloon mortgage that is up this coming August. We desperately want to move, but understand the market and its tough to sell. I have told my wife that we should rent our house out, and go ahead and refi it now, but she just wants to hold out til the last minute then refi if we don't sell before August. We have equity in our house, not much now that the market has fallen, and our credit is excellent. Mine is 748 and hers around 730. Our family is expanding and we need a house with another bedroom. Just not sure what the right thing to do is.
Would any money lost on selling this house be offset by equivalently lower price on a new house? And, if you're moving up in price, could you come out ahead?

Let's say you bought a $200k home and want to move to a $400k home. If the market was up 25% since you bought, you'd sell for $250k. But now a $400k home is actually $500k. You're falling behind.

If the market were down 25%, you'd sell for $150k -- a big loss for sure. But your $400k dream home would now be selling for $300k -- and your $50k loss is more than offset by a $100k reduction in the price of the home you want.

From a bearish perspective, this is not a bad time to upgrade your home.

(And if my simplistic analysis misses something important, correct me. Posted Image)


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