Read the entire article (where he answers a question about foreclosure defenses) but here are some of the highlights:
— Active military duty. If you are on active duty, you have the right to have the foreclosure determined by a court instead of losing your home through a non-judicial sale at an auctioneer’s office. The judge must postpone the process for up to nine months if you formally request that. Discuss your rights with your commander and with the judge advocate general where you are stationed.
— Fair Debt Collection Practices Act. Typically, the lender’s attorney will start the process by sending you a notice of foreclosure. That notice must contain language advising you that it is an attempt to collect a debt. If, within 30 days of receiving that letter, you question the amount claimed to be owed, the attorney is legally obligated to provide you more details as to how the amount was calculated.
— Errors. Once you have received the verification, review it carefully. Lenders and their computers do make mistakes. Have all your payments been credited? Are the late fees consistent with the terms in your promissory note?
— Force-placed insurance. Lenders properly require that you carry adequate homeowners insurance. In case of a fire or other damage to your house, the lender needs to know there will be insurance coverage either to repair the property or to pay down the outstanding mortgage loan. If your insurance is canceled, lenders will obtain a policy for you, and this is called “force-placed” coverage. Typically, the cost of this insurance is astronomical. Review the loan verification documents you receive from the attorney. Is there a charge for this insurance, and is it valid? If your lender has been escrowing for taxes and insurance, the lender was required to pay the annual insurance premium. Accordingly, you should not be charged for any additional insurance.
— Escrow for taxes. We all have heard horror stories about lenders that did not pay the real estate tax, despite the fact that they were escrowing money monthly, or that paid the tax late and the borrower was charged the penalty and additional interest. Again, check to see whether this happened to you.
— Truth in Lending Act. The lending law requires lenders to make certain disclosures to you before you sign the mortgage documents. Under certain conditions, you have the right to completely rescind the transaction. You should have received all of the documents you signed when you went to settlement. If not, ask the settlement lawyer or title company to immediately send you a complete copy of your settlement file. Review it carefully, though this is a technical law and your attorney should be consulted for advice.
Thanks to the Washington Post and Benny Kass for writing this very timely and important article.