Real Estate Matters: Homeowner in trouble after mortgage was sold to a different lender
Q: We have lived in our house for 15 years. About four years ago our mortgage was sold to a different loan servicing company. We called the new company several times over the course of a year and they said they have no record of our loan. We had no way to make our loan payments and now the real estate taxes have not been paid. We recently got notice that our real estate taxes were sold. If I pay the taxes, who owns the home?
A: It’s hard to believe that it has been a full four years since you made a mortgage payment on your home, and you’ve been unable to figure out how to at least pay the real estate taxes. But let’s take your email as it is and start to unpack it.
We suspect you may have more serious issues to contend with than simply the lack of payments for your mortgage and real estate taxes. How this ends could be catastrophic: you could lose your home due to the tax sale or you could lose your home due to the failure to make your mortgage payments.
Let’s start with the assumption that you initially had a 30-year loan on your home and that the loan servicing issue came about 11 years into the loan term. We mention this because you may have put down 10% or 20% when you purchased your home and now, 11 years later, you have paid down a good chunk of the balance on the loan. This means that you should have quite a bit of equity in your home.
For years, we have told our readers that they must be careful when they receive notices that their loan servicing has been transferred by a lender or that the loan has been sold to another loan buyer, because it may not be true.
Identity theft these days is so much more than simply buying your Social Security information online and opening up a fake credit card in your name. It now includes medical identity theft (where someone gets ahold of your insurance information and gets medical treatment in your name), bank fraud (where someone can empty a bank or brokerage account) and a growing amount of real estate identity theft (where property can be bought, sold, financed and refinanced in your name, and you’ll never know that your equity has been stripped).
If you get a notification that your loan was sold and are informed that you must make payments to another company, it is incumbent on you, the borrower, to confirm that the loan has indeed been sold. You have to pick up the phone and call your current lender and ask them to confirm whether your loan was sold or not. You also ask them to confirm who the new loan servicer is for your loan. If you take this simple step, you can avoid quite a bit of pain down the road and ensure that you pay the right loan servicer.
Did you ever call your lender to confirm the transfer? Your current lender (the lender you had four or more years ago) would have the information to confirm that they sold the loan and could give you the information on who is the new loan servicer.
What we don’t know is whether someone was trying to scam you. There are plenty of bad actors out there that try to get homeowners to send their mortgage payments to scam companies. The homeowner only finds out about the scam when the rightful lender calls to find out why the borrower has failed to make loan payments on the loan.
Let’s imagine that your loan was sold, and the new lender lost all traces of your loan. Even if that’s the case, you can and should still make the tax payments on your loan. Most governmental agencies that bill homeowners for real estate taxes send their tax bills to the homeowners. They also send an electronic copy of the tax bill to the loan servicing company. When things are working correctly, the loan servicer gets the notice that taxes are due, and they pay the taxes out of funds the homeowner has deposited with the lender in the tax escrow.