Illegal Fees are Often Added to a Homeowner’s Indebtedness in Foreclosure Cases
Almost every mortgage has a provision allowing a homeowner to reinstate a defaulted mortgage by paying what is due and owing as of the time of the default. This provision applies even if the loan has been accelerated (i.e., everything borrowed is immediately declared to be due), and even if the loan is in foreclosure.
Paying Back What’s Owed
Granted, many borrowers do not have the financial ability to reinstate a loan. You can imagine that on a typical $1,500 loan payment, paying 4, 5, or 6 months worth of unpaid mortgage (or more) all at once is simply out of reach financially for many.
What makes paying these amounts even more out of reach is the interest, fines and fees that are tacked on to balances owed. These can add thousands of dollars to what you need to bring your loan current.
If you are seeking to reinstate your loan, you can request from the bank or servicer (or the plaintiff, if the loan is in foreclosure) a statement showing what needs to be paid to bring the loan current.
Amounts are Often Incorrect
Sadly but not surprisingly, in many cases the reinstatement amount that is given by banks to homeowners is often incorrect, or may include charges that you do not have to pay to reinstate the loan.
For example, in many cases, banks will give homeowners reinstatement amounts that include “trustee fees,” or “servicer fees.” These fees are not authorized by loan documents in most cases, yet they are often included on reinstatement quotes anyway.
In some cases, banks will include future or estimated costs. For example, banks or servicers often include anticipated attorney’s fees or anticipated costs, as part of a payoff–essentially, adding a cost or indebtedness that has not even been incurred yet.
Sometimes, to reinstate banks will put an extra month on the statement for the upcoming month, or a month in the future, essentially asking for payment of not just what is due and owing, but for what amounts to an advance payment.
You Have a Right to Reinstate
The right to reinstate is a contractual one, built into the loan documents. That means that when a bank misstates a reinstatement quote, it technically is violating the mortgage, and impeding on your right or ability to reinstate.
Worse is that while you are arguing with the bank about what the extra and anticipated costs are, your foreclosure case is going on, incurring more attorney’s fees, and of course the monthly mortgage becomes due again, adding to what you need to come up with to reinstate the loan and possibly jeopardizing your ability to do so.
If you do have an argument over what is needed to reinstate a loan, you can anticipate that whoever you are talking to may have no idea how to answer your questions. In many cases things like “trustee fees” are fees allegedly incurred by or owed to a securitized trust trustee, totally different than the servicer, which may be totally different than the foreclosing bank. So many players makes it that much more difficult to just get simple questions answered.
At Jacobs Legal in Miami, we fight banks that foreclose on homeowners. Contact us to schedule your free initial consultation if you have a foreclosure case filed against you.