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Broker makes mistake, tries to change mortgage terms after papers are signed
Q: When we refinanced our house last month we were told we wouldn't need mortgage insurance, even though we refinanced more than 80 percent of the appraised value. After the papers were signed, our mortgage broker said he made a mistake and we must pay $130 a month mortgage insurance. He then offered a couple of financial concessions, which we declined. Now he wants to rewrite our new conventional 30-year loan so we won't have mortgage insurance, but this means taking a smaller first mortgage for 30 years, plus a second mortgage for the balance that's amortized for 30 years but has a $30,000 balloon payment after 15 years, plus a higher interest rate. What are our rights?
A: Mark Thomson, spokesman for the state's Department of Financial Institutions, suspects he knows what happened here. Lenders commonly require mortgage insurance if your stake in your house is less than 20 percent. That happens if you put down 5 or 10 percent, or refinance taking out an amount that leaves you with less than 20 percent equity, as you did. But this is no simple requirement on the lenders' part.
Most loans are quickly sold by banks and brokers, and the big buyers of these loans are the ones who require mortgage insurance. Thus it's not just that your lender made a mistake, it's that without mortgage insurance your lender cannot now sell your loan - and may not have the wherewithal to keep it.
Still, Thomson says, "a contract is a contract. I can't give legal advice, but as far as I know, once you've signed a contract, if they forgot to put something in the contract, that's their problem." Thus, he says, you're within your rights to hold out until the broker makes you a deal you can live with. Before you sign again on the dotted line, Thomson advises you to run the numbers to make sure the new deal is satisfactory. If you're still not sure, you might want to have your financial adviser do an analysis.
: Most yards in our neighborhood are well-kept. The exception is a rental across the street. The owners live out of the country and the management company has said it would do something about the yard, but that never happens. We plan to sell our house soon. What can we do about this, and shouldn't there be something in a rental contract that specifies renters must keep up the yard, and if they don't, the manager must?
A: Dean Foggitt, designated broker of Brink Property Management in Bellevue, says most rental contracts do indeed have a clause like you mentioned. Problem is, you, as an outsider, have no clout to get it enforced because it's a civil contract solely between landlord, tenant and management company. "Other than trying to track down the owners and writing them a letter, there's not much you can do," Foggitt says. (That's unless you're in a neighborhood with covenants regarding yard maintenance; if so, take your case to the homeowners' association.)
Still, before giving up, he suggests you cordially explain to the tenants how important their yard is to you because of your upcoming house sale. "The tenant might feel bad enough to do something about it." If that doesn't work and you're convinced the yard's condition will affect your sale, then the realistic solution is to do the work yourself, mentally filing it under the "good deeds done / life's not fair" category. But you'll want to get the neighbor's permission first.
Q: In reading the language on a trust deed, I discovered the word "hereditaments." It's my understanding that hereditaments includes not only land and everything on it, but also personal property. In the event of foreclosure, does this mean that not only the property will be ordered sold, but also such personal goods as trucks, cars and trailers?
A: For a definition of hereditament, we turned to local attorney Alan Tonnon's book, "The Complete Guide to Washington Real Estate Practices." A hereditament, he writes, is every kind of inheritable property that's attached to the land, as well as, for example, the right to receive future rents or insurance proceeds tied to that property. Larry Glosser, also a local lawyer, says that in a foreclosure you'd lose only "real property," such as a house, barn or shed. Although it's inheritable, personal property, like a car, would be excluded because it's not attached to your land.
One possible exception: if you'd used personal property (vehicles, for example) as collateral for your loan. Even then you wouldn't lose these belongings as part of the foreclosure; your lender would have to take them through a separate legal action.
Home Forum answers readers' questions every Sunday in the Home / Real Estate section. Send questions to Home Forum, Seattle Times, P.O. Box 70, Seattle, WA 98111, or call 206-464-8510 to leave your questions on Home Forum's recorded line. The e-mail address is erhodes@seattletimes.com
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