Q: I have a question regarding a refinance. We had several unsuccessful attempts with two mortgage brokers because our house is located in a risky ZIP code and the appraiser said he was unable to get two comparables to complete the deal. Finally, we went with another bank, and it said “no problem” right off the bat.
Well, it’s been almost three months now and we’ve turned in all necessary papers and have an 800-plus credit rating — and we’re still waiting.
But that’s not the problem. Here is my concern: When we applied we paid a $400 appraisal charge. That would be fair if an appraiser were actually doing something. There was no walkthrough inspection; according to the bank, there was only a drive-by inspection, and the home value was done electronically. All the calculations seemed to be acceptable by the bank for the refinance to go through but why are we being charged $400 for this? There was no outside appraiser. Is this practice kosher?
I asked for a copy of our appraisal and was told there is none; only the value amount could be told. Shouldn’t the bank just say that it will cost $400 for a refi: take it or leave it? Do we have any recourse?
A: Under federal law, you have the right to obtain a copy of the appraisal. You paid $400 and have the right to see the bank’s report. Furthermore, under current lender rules, the bank should have used an outside, or independent, appraiser.
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I suggest that you demand to get either a copy of the report or a refund of your $400. If the bank balks, I suggest you file a formal complaint with your state’s attorney general as well as to the Office of the Comptroller.
True, it’s only $400. But if the bank is doing this to others, it is a practice that should stop.
Q: I recently inherited my mom’s home valued at $136,000. Unfortunately, she had a home equity line of credit (HELOC) on it for $66,000. Apparently, a relative talked her into getting this loan to start a small business. Of course she was stuck paying the loan, and the payments are current.
I would like to move into the home but have had no luck with Wachovia transferring the loan to my name. What are my options? I really do not want to refinance because her interest rate was 3.25 percent, which is fantastic. I am at a loss. I am maintaining all the expenses of this home but receive no benefits.
A: First, have you probated your mother’s estate? Depending on how she held title to the house, you may have to go to probate to make sure that the house is really in your name. If title was held in both your names as joint tenants with rights of survivorship, then you will automatically own the house. (Note: Not all states use the same terminology, so you should consult a local attorney for clarification of who currently owns the house.)
But if the house was in your mother’s name only, then title is in “legal limbo.” In other words, until a probate court issues a final order, you cannot do anything with the house legally.
You state that the current interest rate is 3.25 percent. Have you reviewed the legal documents relating to the HELOC? Although I have not seen those papers, I suspect that the interest rate is variable — in other words, it may be readjusted periodically, possibly every year.
Now to your specific question: Back in 1982, Congress enacted what is known as the Garn-St. Germain Depository Institution Act. Although this law deals with a lot of subjects, one of them relates to your situation.
In most mortgages, there is a provision known as a “due on sale” clause. This means that if a house is sold or transferred, the new owner cannot automatically assume the old loan.
However, the 1982 law imposed a number of restrictions on lenders who want to use that due-on-sale clause. Specifically, the language is as follows:
“With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon (5) a transfer to a relative resulting from the death of a borrower. …”
You fall in the fifth exemption. You are a relative who inherited the house from your mother. I would talk to the bank, and refer them to this law. If they continue to object, I suggest that you retain a lawyer to assist you. You can also file a formal complaint with the Office of the Comptroller, a federal agency that regulates national banks.