Even if you’re up to date on payments, don’t ignore taxes or transfer the loan.
Los Angeles Times December 7, 2008
Reporting from Washington – Not making your [tax ed.] payments is just one way to lose your house. Take the case of Aaron Powell, a member of a right-wing militia group who a few years back refused to pay his property taxes. Powell bet his 110-acre New Hampshire farm on his ideology and lost. The lender foreclosed.
Everyone has to pay taxes, federal or state, property and personal. But your roof can be snatched from over you if you don’t maintain adequate homeowner’s insurance or if you make major alterations to the property without your lender’s approval. Your mortgage even could be considered in default if you allow the house to deteriorate, fail to pay a contractor for work, or transfer the loan to someone else without permission.
After all, as long as the loan is “performing”- the borrower is making the payments – lenders are often unwilling to initiate a process that is so expensive they are bound to incur losses, not to mention the wrath of judges who don’t take kindly to putting people out of their homes when their payments are current.
Still, even a cursory reading of the standard mortgage document – the one you hardly glanced at when you were asked to sign dozens of papers at closing – reveals numerous grounds on which a lender could take action.
A “due on sale” clause can be found in most mortgages, and the courts have consistently enforced it.
Some folks try to skirt the rule by transferring the mortgage to a new owner along with the house without the lender’s prior approval. But that’s verboten, too. Indeed, the courts have held that the financial security of the lender could be endangered if the loan is transferred to someone who does not have the wherewithal to repay it. (Editor’s note: this is called buying the property Subject To the existing financing)
As the Powell example shows, lenders also tend to get worked up when the property taxes aren’t paid. Because a tax lien has priority over every other debt, including the first mortgage, such situations put the lender’s investment squarely at risk. The eventual result of an uncured tax default is a tax-lien foreclosure that extinguishes the mortgage.
Actually, you’re not even supposed to make alterations without the lender’s consent.
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Coach Mitch’s REFLECTIONS™
The Golden Rule
“Those who have the gold, make the rules.” I’m sure that you’ve heard this rule before.It’s also called, The Law of the Jungle.
Banks use their power
Bankers know that they have the upper hand and they use it to manipulate the situation all the time. Just look at the latest financial crises.The banks get a gift of $700 billion taxpayer dollars and they don’t even loan out the monies.
My first loan
If you look under the snakes’ belly, you will see bankers right alongside lawyers. That is where they live and prosper. Bankers are a proud member of The Miscreant Class. They are probably a founding member.
The very first loan I brokered woke me up with a slap. At the closing table, the bank said that my client had to pay a $5000 fee. “It’s not on the Good Faith Estimate of Closing Costs,” I said indignantly. The bank said, “If your client wants the loan, he will have to come up with another $5000.” “Where am I supposed to get that kind of money?” asked my client. “That’s your problem.” said the banker. Nice.Very nice.
My client looked at me, as if to say, “Well, do something!” I could only look at him sheepishly. What could I do?
The Mafia has it right
When people steal from you, take out their eyes. However, banks can call theft anything they want, like a “fee.”
They laugh at US
Believe me when I tell you that, behind closed doors, the bankers tell stories how they have taken advantage of schnooks, oops, I mean customers.
Another deal – you won’t believe it!
A little old lady was in foreclosure. I worked on the deal and found a way to get the house and keep the lady in the house on a life estate and bring the bank current.
The bank’s foreclosure service officer, a 24 year old, still cutting his teeth, after leading me along for four months, said “No, we’re not going to do your deal.” “Why not?” I asked. “Because I want to go down to the bar after work and tell the other foreclosure officers that I threw a little old lady out into the snow on Christmas day.”
I am not kidding – that is what he said.
Question. How do you work with a person like that? Aren’t we each supposed to be reasonable? The supposition is that you are working with someone who wants to do a deal. How are we to deal with this type of vicious, narcissistic, unethical mentality?
I cannot deal with it
I had to get out of the System.I had to do something where I had control.If you didn’t previously know why I am rabid on the subject of maintaining control, now you understand better.To this day, every time I think about it, what that little snot nose did still bothers me.
My specialty was getting loans for people with bad credit people. That’s most people, BTW. Other loan brokers would routinely charge 8 – 10 points of the loan. That is a hefty charge. I never went above 3 three points for the same loan. Those mortgage brokers would laugh at me, call me stupid, crazy and in general, they disrespected me, for not taking full advantage of the situation that those folks were in.
I would listen to some of these jokers talk; congratulating themselves on how they “stuck it to” someone.They laughed.I noticed that they also spoke disparagingly of their spouse, their kids, their boss, etc.
I didn’t want to be like them
These loan officers spoke of loan applicants as if they were just little green dollar bills, and stupid to be paying such high fees. They looked down on others.I saw that they treated their kids and spouse badly and If I took their attitude, I would turn into a piece of crap, just like them.
I needed a better way
So do you, I’m guessing. Throughout these blogs, I continually speak of treating tax delinquents with empathy. We all get into trouble. It could happen to you, G-d forbid.
Many of these tax delinquents are beaten down so far that they take very little for their properties. Don’t beat them down more.Give them what they want. Remember, Coach Mitch says, “Just say ‘Yes’. “™
Coach Mitch’s “Ridiculously Simple System…”™ is a better way to do business.You help yourself as you help those who no one else is bothering to help.
See Coach Mitch’s “Ridiculously Simple System…”™ for details.
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