Can my mortgage company do that?

Question

We received a letter from our mortgage company that states they are raising out mortgage payment, but the interest has remained the same. Can that happen without consulting us? Shortly after, we did receive a statement with the "new" monthly amount due. We are talking $700.00 more a month. We have contacted the company and no one returns our calls or responds to our faxes. We have been sending in our original payment amount until we can get answers.

Is this right? I am looking for serious answers only. Thanks for the help.

A little more info...If this helps.
My loan was sold to another company. When the new company bought it, they claimed I was behind on payments. I sent a letter to the new company from the old lender, stating I was current when sold. From there, it has been a disaster. My property taxes did go up along with the overall cost of my home. The letter from the new lender does not specify why the payments have been raised and I can NOT get answers. We can only assume at this point, that the new lender is still showing (even with the proof) that we are behind on payments and they are trying to cover those costs by raising out monthly payment. There is a lawyer on the case, but she is having NO luck getting return calls either. Our "new" lender is EMC Mortgage. They have someone falling asleep in the accounting department. I have sent copies of deposited ckecks as well. I am NOT late on any payments and they will not respond...What do you do?

Answer 1

Be very careful about paying only the original amount and ignoring the letter seeking an increased amount.
If there is a clause in the contract that you have overlooked, then you may find that you are now in DEFAULT of the contract, and there could be serious legal / financial consequences.
Get a solicitor / lawyer (or conveyancer if you guys have them) to look over your contract, AND do it as a matter of urgency.

Answer 2

Does the company have an escrow account to pay your taxes and insurance? Did those rates go up? They certainly should have explained WHY they want to increase the monthly payment. My taxes and insurance went up, hence the monthly payment increased, but this was all explained to me in a letter. I would continue paying the original amount until you get some answers. Try to find a different phone number for the company asap and contact them. Are you sure you do not have an ARM? Adjustable Rate Mortgage?

Answer 3

What probably happened is, when your taxes went up, nobody told your lender. During this time, your escrow account started draining, because when you start it, you have reserves deposited in there. When it starts to show a defecit, that's when your lender is contacted, and they have to change your payment to get that escrow account caught back up. That's what you're seeing with the higher payment. It's only a temporary thing, but $700 is a pretty large chunk of change. My advice to you is to refinance your mortgage, but keep in mind that interest rates have gone up since you got it, as have your property taxes, so keeping the same payment may not be possible.

Answer 4

This has happened to me several times, although not for that much at one time. It is an Escrow adjustment. If your local Liberal politicians are raising your taxes, the mortgage company will raise your monthly Escrow amount thus raising your monthly mortgage payment. The first bill will include any arrears they paid on your behalf, so this $700 bump may be a lump sum arrears payment request, or they may be telling you that your annual Escrow amount will increase by $700 and that you can pay $XX now and your monthly payment will go up a small amount, or you can spread this out over the term of the loan and your payments will go up $XX a month which is usually a greater amount. Make sure your reading the notice correctly.

Answer 5

They are right in that it is standard practice. There are generally lenders that acquire mortgages and there are lenders that service mortgages. The acquisition company is the company you close with; the company you may make your first payment to. They receive the underwriting and closing costs, but do not want the hassle of servicing the loan. They then sell it to a lender that services loans. That company will service the loan and collect the interest and any applicabe charges (such as late fees, etc). All of this is done based on the companies abilities and desires; some companies acquire and not service, some don't acquire but service.

Answer 6

If your interest rate is the same, it would appear that the taxes or escrow has changed based upon the tax assessors determination. $700 more a month is excessive and I would write to the county tax assessor and request a review. If the interest is the same, the payment should not change unless the taxes have changed or your insurance, and in your case the amount is excessive. It is possible that what you paid for your home is now different than the value determined by the tax office. 70% of those who challenge such are successful.

Answer 7

You need to carefully read your original mortgage contract. If you got involved in an 'interest only' mortgage for a specified period of time, with principal kicking in after a specified time, you are getting what you signed for.

You might want to check with whomever originated this loan for you for a full explanation of the contractual obligation.

Answer 8

Read your paperwork. There may be a clause in there that allows them to change the term, or length of the loan, which would raise the total monthly payment even though the interest rate is unchanged.

Answer 9

Give us more details... Were you in an interest only loan and you just left the IO period and now you're paying principal as well? What is the name of the lender? Are they reputable?

Answer 10

My guess is that they are adjusting the funds held in escrow for your taxes.

Were you late on any mortgage payments??