If a real state agent says says something a then sumthing else comes up. could there be something we could do?

Question

a friend of mine just bought another home. the real estate agent told him that his monthly payment already included his house ins. and it come out to be that the house hasn't had ins. for the past months and now are increasing the monthly payment because of that. is there something that can be done to avoid such a financial crash?? Or some legal action could be taken towards the agent that lied??

Answer 1

Typically a mortgage company collects escrow for property taxes and insurance as part of the monthly payment. They pay the taxes and insurance when they come due.

If the amount in escrow aren't enough to cover the costs or, as often happens, the taxes and insurance costs go up, the mortgage company will send out a notice and increase the escrow portion of the monthly payment.

It is actually very common for that monthly escrow portion to increase the first year. At closing the costs are based on estimates.

Are you sure the house had no insurance? The buyer is usually required to show up at the closing with a paid one-year insurance binder. The real estate agent has nothing to do with that. The monthly escrow payment is for the next year's insurance.

Answer 2

The mortgage broker I believe would be responsible for that. The agent had a duty to give correct information. You can call the Department of Real Estate (DRE). I have a seperate insurance policy that I pay direct, it is not included in the payment, it is sometimes cheaper to handle the insurance yourself. If the bank has obtained the insurance for you, chances are you are overpaying. They do not compare insurance prices. I pay $500 a year for homeowners' insurance, that is about $40 per month. I would say if they are paying more than $60-70 per month....get a seperate policy, you have every right to do so.

Answer 3

Your friend signed loan documents at closing that specified what the monthly payments would be, that is why you read everything and ask all of the questions you can think of at closing.

Besides, not having insurance on the home is a violation of the terms of the deed of trust and ithe insurance protects the borrower. I have trouble understanding why the fact that there was no insurance on the home didn't get caught in closing. Mortgage investors normally require proof of insurance at closing.