Q: Can a mortgage company’s mistake cost me big bucks? I was told an audit uncovered a shortage in my escrow balance. To make up for the shortage, I must pay an extra $900 a month. I asked for a detailed explanation but have not been provided with one.
Refusing to pay the difference without written notice has resulted in late payments on my credit. The mortgage company refuses to accept the payment I sent because it doesn’t include the extra $900. The payments are not posted to my account.
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After my research, I found they did not charge me for private mortgage insurance for a year. Can they go back and charge me?
A: I strongly suggest that you start paying the extra money so that you will not be in default. However, first talk with the lender. Explain that it was their mistake and that you should be allowed to make up the difference on a more reasonable payment arrangement.
If they disagree, you should contact your state attorney general. Explain the situation, admit that you owe the money, but that based on the lender’s mistake, you should be given a break and have the payments spread out over a period of years.
Q: My wife and I are almost 70 years old, and our children live all over the country. We recently heard about a concept called co-housing and would like to learn more about this. Exactly what is it and how does it work?
A: I learn something new every day. I did my own homework and found at least two websites that are worth reviewing. According to the Cohousing Association of the United States (cohousing.org), “cohousing is a type of intentional, collaborative housing in which residents actively participate in the design and operation of their neighborhoods. Cohousing provides the privacy we are accustomed to within the community we seek.”
Another website definition: “Villages are membership-driven, grass-roots organizations that, through both volunteers and paid staff, coordinate access to affordable services including transportation, health and wellness programs, home repairs, social and educational activities, and other day-to-day needs enabling individuals to remain connected to their community throughout the aging process.” (vtvnetwork.org).
It appears that there are more than 100 such projects all over the United States, but with a large number in California.
I would like to learn more and if readers have experience (or are actually involved) in cohousing, please share your experience with me.
Q: I am refinancing and my lender insists that our home equity line of credit must be subordinated. Exactly what does that mean?
A: A home equity line of credit, or HELOC, is a second deed of trust (mortgage). When you refinance, you are paying off the first loan, and it will be released from land records. That means that the second (HELOC) loan will automatically fall into first position. Your new lender obviously wants to be in first trust position, so that if you default, it will be able to foreclose without problems.
The law is clear that a foreclosure by a first lender wipes out all subordinate lenders. And although those lenders can not foreclose on the property, they can still sue the borrower under the promissory note that was signed.
Accordingly, your lender wants your HELOC lender to agree (by filing a subordination agreement on land records) that it will be in second position. I have rarely had any HELOC lenders object. They went into the transaction in the first place knowing they were in second place, so why should they now object?
Benny L. Kass is a practicing attorney in Washington and Maryland. No legal relationship is created by this column; [email protected].