One of the more insidious and deceptive practices of the mortgage companies, in their relentless attempts to steal your home, is to pay your tax bill and then increase your monthly mortgage payment. Here's how it works:
My clients pay their local property, school and sewer taxes directly to the tax authorities. They pay their mortgage payments separately. Many of my clients get paid bonuses at the end of the year, which allows them to make these payments in late December of the year the tax is due. Other clients, who fell behind on their taxes have worked out repayment plans for the taxes with the tax authorities.
After years of successfully paying their taxes through one of the above scenarios, a new mortgage servicing company is now handling your account or your mortgage has been assigned to a new mortgage company. A servicing company does not own or hold the mortgage or the Note but its job is to process payments and keep track of your payments.
Once these vultures get involved, your ability to get rational answers to questions and cooperation with issues you may have becomes an exercise in futility.
The new Mortgage company or the loan servicer reviews the account and then determines that, since you are either behind on your tax payments, despite your history of a payment plan or that you haven't paid the taxes by the end of the year, that they will now pay all of the taxes. There are two problems with this:
- They don't discuss their plans with you before taking this action;
- They unilaterally increase your monthly payments. This increase often makes it impossible for my clients to make their mortgage payments because they cannot afford the new payment.
Here's how it works. After the mortgage people pay your taxes. They divide the total they paid for one year into twelve month increments and the charge you that amount each month in order to repay them. That may actually work for a lot of people but here's real kicker. They then decide that, since you are behind in one year, that they want to make sure you don't fall behind in future years, so they double the new amount you are being charged to make sure that next year's taxes are covered, too.
So, let's say your monthly, mortgage payment is $1500 a month. Your taxes are $3600 a year. Under our scenario, you will now be required to pay $1500 plus $300 for repayment plus $300 for next year's taxes for a total of $2100 a month. This means that your mortgage payment just increased by 40 percent per month.
I don't know many people who can afford that kind of hit on their finances. Interestingly, I get occasional calls from people who formerly worked for these companies and who are now being victimized by them. They are eager to tell about the mortgage companies' "dirty tricks", now that they lost their jobs. There was probably not much they could do while they had these jobs but I would hope that these folks, at least, made some effort to help their fellow citizens since it is obvious that our state and federal governments are too busy protecting the banks at your expense.