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Termyn8or -> RE: Mortgage Insurance (4/29/2008 3:59:47 PM)
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Seeks, one possibility is that they charged a year in advance for PMI, (built into the closing costs) but that would still mean your PMI would have been like $85 a month, which is high. But if your credit was not good it does not surprise me.
I know that years ago most PMI was tied directly to the loan amount, but that could have changed. Alot of things have changed. I really don't know anyone who had to pay PMI in about the last 20 years almost. It has been discussed, butr that's about it. Wait I do know someone who is probably paying it now. I could call them up.
Speaking of which Seeks, if you refied you might be getting some more checks in the mail. For overpayment of insurance premiums and property taxes. Many times tyhey require a year, but these costs are built into the monthly payment. The original money sits in escrow, which is a wonderful process by which someone else collects interest on your money, although for the actual sale they don't get much because the funds have to be totally liquid. But when you are talking insurance and taxes, you just replenish it every month. The original money sits there.
Now that I think of it though, when that is the case the PMI underwriter is not subrogated for taxes and insurance right away if you default.
It all depends on the contract.
And when in doubt, refer to the last sentence above. A lender can require just about anything they want.
I deem this worth mentioning (Merc you devil, I am sure you know about this).
Be careful when you are about to overextend yourself. Lender have enjoyed a little know revision in the UCC (of 1991) that gives them a pretty good advantage, although they use it very rarely.
The revision was the "Option To Accelerate At Will" clause. This applies to all loan agreements since 1991, and is part of basic contract law, which for the uninformed is the UCC in the US.
A lender can foreclose or call any debt payabe in full at any given time if the lender believes that the debtor has become unable to pay. The lender does not have to bring any facts into court for this, it is strictly the lender's sayso. They do not need to provide any evidence at all, just state it and that is it. You have no defense and no recourse whatsoever.
What that means is that if you default on any credit card, debit card, sears card, gas card, anything, they can foreclose on your house. I have not heard of this happening to anyone but I saw the law and that is how it is written. It hasn't been invoked on anyone I know, and I am sure they use it very rarely. But it is law in the US.
At the best of intentions, it was probably meant to address the situation when someone goes to prison for example. With our incarceration rate would that surprise you ? Not me.
But when you have like five CCs, six gas cards and about four other recurring charges every month, if one of them forgets to send you a bill and you overlook it, they can foreclose on your house. That's the law.
Luckily it only happened to me once, I really did not get a bill, and I know there was a balance. Ya get this funny feeling, like 'why is there so much money in checking ?'.
I called them, they said they sent the bill. I got the address info for an envelope and addressed it and inquired about the minimum payment and then said 'this is not a barcoded envelope, I hope it gets there in time'.
In other words I make goddam sure they get their money. The horror story about them taking your house for a $45 gas card bill, while true, they simply don't do it. I just wanted everyone to know that they can.
But we are likely to see this implemented more in the future. Let's say you have two CCs and a gas card for your favorite brand. Let's say you are carrying about four grand on each of the CCs and pay off the gas cards every month. Let's say you live in an apartment so there is no mortgage to worry about right ?
There is still something to worry about. If you fail to pay that stupid hundred bucks to Shell or Marathon or something, and they report it on your credit, legally your CCs can just demand your whole balance as the next month's payment. And then you are not likely to pay so it goes into default and I am seeing default rates of 23% and more. In other words three hundred worth of payments becomes six hundred even if they decide to allow you to pay it that way. But they can legally, if you owe eight grand, just make that the minimum payment.
You are ruined.
If they have ever used it blatantly, I am not aware, but if they never use it and never intend to, why is it written into law ?
Hmmmm, I was trying to get the numbers on it so you could actually see it but I ran across this. It seems that like with many other things, it has been going on for longer than many people thought :
"A term providing that one party or his successor in interest may accelerate payment or performance or require collateral or additional collateral “at will” or “when he deems himself insecure” or in words of similar import shall be construed to mean that he shall have power to do only if he in good faith believes that the prospect of payment or performance is impaired. The burden of establishing lack of good faith is on the party against whom the power has been exercised.
Effective Date: 07-01-1962
The wording introduced in 1991 is largely the same. But read the last sentence.
So think about that when you see ads for "No payments for five years" and junk like that.
T
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