Mortgage Companies Aren't Paying Home Taxes On Time

Elaine Meinel Supkis

Several devoted readers of this blog have notified me of a real estate scam that has given them serious financial worries. These scams are signs that mortgage companies and banks are having severe financial difficulties and are literally papering them over by not keeping up their own obligations in paying taxes withheld and other sneaky tricks like not honoring rebates, for example.

From the BBC:

A coalition of civil rights groups in the US has called on sub-prime lenders to stop repossessing borrowers' homes.
They want a six-month moratorium on foreclosures and say the industry should move borrowers onto loans with more favourable terms.

Sub-prime lenders provide loans such as mortgages to people with poor credit records, but they tend to charge higher rates of interest.

Most of these poor people were lured into contracts with the Snidely Whiplashes of the banking/hedge fund Axis of Evil that had rebates and payment of closing costs and other goodies including that all-important low, low interest rates up front but which were backloaded like an old donkey with super-high interest rates, high penalties and laggard payment of property taxes plus the all important insurance of the property scams.

These tricks have proliferated during the bubble and now that the bubble has popped, these tricks are the mainstay of these bankers because they need them to make up for all the bankruptcies that are cascading in numbers and in price.

Any economic downturn produces a flood of bankruptcies. A rich neighbor of mine who lived in a fabulous mansion and drove a Jaguar turned into bankruptcy hell when the dot.coms popped. I watched him go under, his life pretty much destroyed at the age of only 59 years old.

But what is going on today is, the economy is supposedly booming and we see an absolute tsunami of defaults that are now pulling under larger and larger banks and lending corporations. All the lenders are scared to death right now and they have resorted to crummy tricks played on the helpless to save themselves.

I treasure my readers and am very angry some are being exploited by these banking entities:

You know, my mortgage company did not pay my property taxes last fall. They never notified me, nor did the sheriff's office until they sent me a letter giving me 30 days notice to pay or my house would be auctioned off. The tax had ballooned from $490 to over $600. "Fees" you see.

I have lived here 14 years and never had anything like this happen to me. They paid after my boss called them, but the sheriff's office could not provide me with a paper receipt! The best they could do was make a screen shot of my account on their computer and print that out and mail it to me. Can you believe that?

I am still worried my house will appear in the paper next week as "in default", and all I have is an unsigned photocopy of a computer screen. Plus, I do not know how much money was taken from my escrow account.

I am really surprised by all this. I almost lost my house because of someone else's "clerical" error and maybe an extra hundred dollars to boot. I did not know a person could pay their own taxes if they had a mortgage. I may go that route in the future.

Posted by: DeVaul | April 04, 2007 at 10:49 PM

DeVaul-

The same thing happened to my sister. She raised hell with the mortgage company. I suggest you do the same. And - if you have a somewhat reasonable Congress person - and your mortgage company is engaged in interstate commerce - let them know - and find out if your state has a consumer protection agency - and on and on - - - if they screwed you - you can bet you're not alone.

Very bad sign - cash flow problems. I wouldn't assume it's a clerical error.

But I am a pain in the ass.

Posted by: D. F. Facti | April 04, 2007 at 11:36 PM

How can I raise hell? It IS the state! It is the Kentucky Housing Corporation, a state funded entity designed to help people with disabilities own homes. I would have to attack the STATE!

Two private mortgage companies owned my mortgage for many years before they got swallowed up and then somehow my mortgage landed in the laps of the KHC, who promptly tried to claim I was in default because they failed to automatically deduct my house payment from my checking account after they got my loan. That was 2 or 3 years ago, so this is now the second serious "clerical" mistake they have made on my mortgage.

It was the Commonwealth of Kentucky, who cannot fund the pension for its workers or teachers anymore, that was playing around with my mortgage. They could care less if I raise hell. They already disowned me in court.

Today, I got a letter from the Commonwealth Credit Union (a bank for state workers) telling me that my home equity loan will go up 2% -- AGAIN! This is a direct violation of the contract I have with them and they know it. They can only raise the interest 2% total "over the life of the loan". They already did that. Now their doing it again!

I cannot believe I have to deal with fraud from institutions that I never had problems with in the past. My home equity loan will soon be at 8.25% after years of sitting at 6.25% -- the maximum they could raise it too under my contract with them.

Damn! Now I have to get my boss to make another emergency call for me, and this time I don't think they are going to back down. I may have to go to court on this one or I might just transfer the whole loan to my Chase card at 5% interest.

For some reason, Chase never screwed me. Everyone else has, or has tried to. Bank of America is nothing but outright fraud. Their fine print is designed to cheat old people who cannot read it. I just cancelled my card with them. I doubt I would ever use it anyway.

I think this is revenge for refusing to take out more loans from my credit union at 12% interest. They have bombarded me with checks-in-the-mail in the last few months and I shredded them all.

Damn! There is no reward for trying to remain solvent!

Posted by: DeVaul | April 05, 2007 at 11:50 AM

DeVaul, since you are disabled, there are organizations that can help. Here in New York, when my half-deaf husband suffered a severe brain injury, we had to sue the state. Our lawyer said we would make a lot of money in a lawsuit only if the Supreme Court rules in favor of a man who was in an identical situation. The fascists in the Supreme Court, the same goon squad that voted to suspend the 2000 election, voted that state employees cannot sue a state for damages in a Federal court.

Boom. End of story.

When I go the stunning news, my husband barely able to stand or talk, my life in ruins, I stood on a street corner by where all the lawyers' offices are, crying my eyes out. But suddenly, a kind voice asked me if I neede help. A tremendously wonderful lady, my personal Angel, came wheeling up to me in her motorized chair. She took me to her office. She was a lawyer!

She decided to fight for us and we did win against the state in the bitter end. What a terrible fight that was! My husband looks normal on the outside. In court, she wheeled up to the judge and pointed at my husband and yelled, 'That man is more disabled than I am!'

The judge then had me get on the stand and tell everyone what it was like, caring for him. The judge even began to cry. He said, 'I don't need to hear anymore.' He then ruled in our favor, he said the case would take him six weeks to decide but when I got home, the phone rang.

He was on the line. 'The money is going to be delivered to you by courier tomorrow,' he said and he laughed. We were saved.

Please understand, everyone, there are many Angels out there, they do exist. They look like ordinary people. DeVaul, Here is a web page with a number of organizations for people like yourself, my husband has used various organizations on this list in the past. Deaf people do suffer from discrimination and can be abused because they can't argue easily on the phone, etc. If nothing else, finding an advocate is incredibly helpful. I am a very assured person who is well educated and even connected and even then, I was thwarted badly during my husband's illness!

And the millions and millions of lower income people who jumped on the real estate bandwagon need advocates and assistance! The game that Facti's sister and DeVaul suffered is a classic con game: not paying the taxes on a property, instead using it to make short-term investments and then paying the taxes at the last possible second.

This game can be quite lucrative. I used to play it years ago. In New York City, we (us landlords) discovered you could not bother paying taxes for up to 3 years and the interest rate the City charged was only 4% per annum. Interest rates in CDs was at that time a sizziling 9.45%! Haha! So we all played this game but it was dangerous. If you forget to pay the taxes and someone else pays, they get the properties!

One time, a developer lost track of this Greene Street Iron front loft in the center of Soho. My friend, Mr. Cohen and I watched it like a hawk as the due day approached. We then formed a consortium to buy it by paying the $60,000 in back taxes. Heh.

As I ran to City Hall to make our joint purchase, the owner's lawyer came sprinting after me, yelling. He shoved me aside and slapped down the money.

This game is OK if it is one's own properties. But the big bankers are doing this to MILLIONS of people! Many millions! And if they make just 1% profit on each person a month, this is a humungous amount of petty change. Remember: hedge funds feed off of stray pennies that pour out of many ripped pockets!

Of course, being run by a bunch of incompetent fools, these companies have so many tax scams going on, they lose track of them and end up exposing home owners to losing their homes. Suing these banks is nearly impossible.

But going to them and camping out front, passing leaflets explaining how they are ripping off people who faithfully pay their taxes can force them to do something besides call the cops. And cops aren't too happy about these banks pulling these tricks!

Indeed, printing up this story and showing it to state representatives, sending it to the governor, posting it at churches or schools, might motivate people to start talking about this criminal activity.

For the people who pay their mortgages pay the taxes each MONTH and the state and county collect it only ONCE A YEAR. This represents a gigantic gap in time, for 12 months, the kitty to pay the taxes piles up, making money for the lender, before going to the state.

I would propose the state collect this money EACH MONTH from loan operations so they will be forced to keep up to date rather than using it for gambling on international currency markets or using it to purchase other organizations and other leveraging operations.

That will pull their tails! For we all have to fight, all the time. This is a struggle to see who gets what and they want everything, locks, stocks and gun barrels. And we have to wrestle these out of their hands. The home is the American dream and it means dealing with bankers and tax collectors and all sorts of people. And these people are sharks, they always were. This is why the Chinese ideogram for 'tax collector' is a stick drawing of a man with devil's horns!

This is why 'mortgages' use the medieval French word for 'death' in them! Donald Trump isn't rich at all, he is leveraged up the hilt. I have what I own. He doesn't. Yet he is a hero on TV and I am not allowed to appear anymore (not since ABC told me I was bad news talking about the Hubbert Oil Peak years ago).

Here is the other scam that is suddenly getting much, much worse:

From Rip Off Hell:

Like a growing number of people out there who purchase consumer electronics, we are getting sick and tired of the rebate rip offs being perpetuated by entities that issue rebates (or fail to do so) on behalf of such companies as CompUSA and Fry's Electronics (to name only a couple) and the manufacturers whose products they sell. We're tired of being ripped off! And we're going to throw in our two cents right here and use the search engine popularity of our website to advertise our disgust with the situation.

Whether these companies like CompUSA and Fry's Electronics are to blame, or blame also lies with the companies producing the products they sell (for instance, Microsoft and Thermaltake), there is still what we feel an unacknowledged and near conspiratorial cooperation amongst these entities that allows the rip offs to continue. It seems as though the majority of rebate rip-offs are done in collusion with those hard-to-identify, third-party rebate centers who are supposed to actually issue the rebates. I'm sure it's the rebate centers themselves who should shoulder the initial direct blame. After all, they are the ones in the position of allowing or denying rebate claims. But hey, it's a team effort here! They're likely all in it together, to at least a certain extent. I mention both CompUSA and Fry's Electronics, as well as Microsoft and Thermaltake, because I was recently denied rebates by all when in fact I had adhered very strictly to their requirements for submitting the rebates. Yet the rebate centers sent notices informing me that I had not properly documented the rebate requirements or not made purchases within the rebate deadlines (both false).

Just writing stuff online is very effective. People read this stuff and they they yell. I am impatiently waiting for the rebate for the family cell phone plan we have. They got to play with my $50 for six weeks and time is now up and where is it?

I am rather pissed off. Enough to visit their sales staff and spend the day driving away customers, yelling about this. This tactic is an old one, by the way. They can't stand having someone screw up the new chumps they are trying to reel in.

Way back in 1969, my father was sold a lemon by an American car manufacturer. The dealer wouldn't give my dad a new car. So I hiked over and walked into the showroom and began arguing about this, I had his car out front with a sign, 'This is a LEMON' on it. We argued for about two hours and I have a tremendously loud voice, growing up with six siblings, when the sales staff noticed everyone was running away!

Heh. So the owner of the dealership yelled, 'I'm going to have you arrested!' And I yelled, 'Good! This will make the NEWS!' For my father is fairly famous. The man flipped out and went off, got me the keys to a new car and threw them at me. I laughed as I drove off.

My father never bought another car from him. Indeed, he refused to buy any American cars.

And so it goes! In the long run, cheating customers is terrible! Don't do it! Gah!!!! Thank you.

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Comments

[JSmith]

From the linke BBC article: "The civil rights groups say that a predicted wave of foreclosures stems from "reckless and unaffordable loans", for which the lenders must bear some responsibility."

I'll agree with that. Sub-prime loans were made to people who weren't what any normal bank would call creditworthy. (However, the "sub-prime" market is a very small fraction of the entire US mortgage industry.)

DeVaul: "They paid after my boss called them, but the sheriff's office could not provide me with a paper receipt! The best they could do was make a screen shot of my account on their computer and print that out and mail it to me. Can you believe that?"

Who in hell can't print a receipt?!

"It is the Kentucky Housing Corporation, a state funded entity..."

Oh. That explains it.

"For some reason, Chase never screwed me."

Chase actually isn't a bad organization to deal with - our mortgage was with Chase.

[Canuck]

In contrast I got a call from my bank a few years ago. It was the unit of the bank that dealt with the tax portion of our mortgage payment. They inquired whether I was aware that I could garner some increased interest by handling my own tax payment. They told me that there was interest accrued in my tax account but that I could likely get a better rate if I handled it myself. That would be the Royal Bank of Canada, which has well established US operations FYI.

[DeVaul]

Well, it was the sheriff who could not print me a receipt after informing my boss that the bill had been paid, but I have no doubt that KHC would not be able to give me a real receipt either.

[Elaine Meinel Supkis]

Correct, Canuck. I always paid my own taxes. Usually, when making the mortgage, that is the time to negotiate this. But then, I always was putting down more than 50% of the cost of the property so no bank ever argued with me.

The average buyer doesn't have enough leverage to do this, unfortunately.

Smith, Chase Manhattan is one bank I never argued with. Must be the Rockefeller influence.

[Daliwood]

Unfortunately, my mortgage co. (Countrywide) wouldn't let me decline an escrow account for taxes and insurance--unless I was willing to pay 1.5% more on the home loan rate.

Last year, my insurance company decided that my home had appreciated by 25% in 1 year and jacked up the premium, and they further decided that I wasn't allowed to insure the house for less than THEY thought it was worth (that's utter BS). I fought them for weeks and finally got the premium down, but Countrywide had already paid the bill, so they adjusted my escrow payment upward to compensate for the larger bill. I still haven't been able to get Countrywide to lower the escrow payment, despite their assurances that they would.

My worst mortgage experience, however, came with GMAC (now the owners of that lovely lender Ditech). My mortgage was sold to them, and I had nothing but problems with them--the worst of which was "accidentally" debiting my checking account for 2 house payments in 1 month. It took me almost a year to get the money back, and I never got all of it.

I no longer allow any company to have debit authhority on my account for automatic payments. I learned the hard way that you're giving away full access to your money with little or no recourse when there's a "mistake."

[DeVaul]

Wow! That is awful, but I guess that explains why I always have an "escrow shortage". My insurance and property taxes all went up even though my house is the same. I actually lost money during the housing boom.

I tried to get my mortgage company (again, KHC) to remove the PMI insurance because I have nearly one half equity in my home. They refused, saying I did not qualify for removal of this tax.

Every year now I have an escrow shortage.

[best home loan]

Here in the Chicago area it is about 10 degrees below zero, the coldest night of the year. But I’m starting to see signs of Spring. Well, maybe not Spring, but I do see signs that we are going to have a Spring buying market this year. Traditionally January is the slowest time of the year in the real estate and mortgage market.