DEAR BENNY: My loan, with a failed institution, was sold by the FDIC. After two years of servicing my loan, the new lender demanded payment for an alleged late-charge balance transferred with my loan. However, it also stated that there were no history records. I was never late, and this year the new lender admitted the late charges were not verified and made a partial refund. The FDIC has been in the loop. Who’s at fault in this scenario and what are my legal options? –Carl
DEAR CARL: If the new lender does not have your loan history, then you are not obligated to pay any late fees. No court will force you to pay that which a lender cannot prove. If you already made the payment, and you have proof, demand that the lender either refund the balance or credit your loan balance with that amount.
But this raises a more difficult question: Are you sure that the new lender has the correct loan balance for your account? Ask the lender to send you all of the information it has relating to your loan. If possible, I would try to retrace the history of your loan payments from the very first time you sent in a check. At the end of each year, lenders are required to send you a tax form indicating how much mortgage interest you have paid. Sometime, these forms also show the then-current loan balance.
If you believe the lender’s information is incorrect, I would ask the lender to pay for an independent auditor who will review all of the records and come up with the exact amount that you currently owe. If the lender refuses to cooperate, contact the Federal Trade Commission and the Federal Reserve Board, as well as your state’s attorney general.
DEAR BENNY: When executing a lease with an option to purchase, subject to current financing, how does one protect himself/herself from the seller defaulting on his/her mortgage and sending the property into foreclosure? –Paul
DEAR PAUL: As I understand your question, the prospective tenant will enter into a lease with an option to purchase, but there is an existing loan already on the property. You are concerned that the lender may foreclose, which could effectively eliminate your right to buy the property.
State laws differ on the rights of tenants when their landlord’s property is foreclosed upon. So you would have to check this out with a local attorney. But there are a couple of ways that the tenant can try to be protected.
First, if state law permits, the lease with an option should be recorded among the land records where the property is located.
Second, the lease should require that the landlord provide you with periodic proof of payment, not only of the mortgage but also of any real estate tax or insurance premiums.
Third, the tenant should send a letter to the bank, advising that he/she is a tenant and requesting that the bank notify him/her should the property owner become delinquent. The letter should also state that the tenant has an option to purchase.
Nowadays, banks don’t want more foreclosures on their books. If they know that the tenant is interested in buying, I suspect that the bank will want to discuss the situation first with the tenant before any foreclosure actions is started.
DEAR BENNY: I have a 1st Note and Trust Deed on two acres of land. The owners have never missed a payment in approximately five years. Today I got a notice from the Bankruptcy Court that they filed "Chapter 13." How will that affect me and what should I do? They owe me approximately $30,000. –Anita
DEAR ANITA: If you have Internet access, go to http://www.uscourts.gov/bankruptcycourts/bankruptcybasics.html. There you will find some very helpful information. For example:
A Chapter 13 bankruptcy is also called a wage earner’s plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. If the debtor’s current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period "for cause."
You should also contact the bankruptcy court, as you will have to file a "proof of claim" so that the bankruptcy judge knows that you are owed money. Assuming that your deed of trust has been recorded among the land records where the property is located, you will have a greater priority than other creditors who are not secured.
This is just a very brief overview. The bankruptcy laws, which were recently amended, are complex, and you should consider retaining a bankruptcy attorney to guide you through the process.
With luck, you will ultimately get paid in full.
DEAR BENNY: We are in the process of building one home and selling our current home. I want to interview three real estate agents familiar to our area, but am unsure of the questions I should ask. Would you be able to take a few moments to share those questions for me? I would appreciate whatever you can do. –Victoria
DEAR VICTORIA: First — and I know brokers will object to this statement — I believe there is a built-in conflict of interest when the same real estate broker/agent represents you in both the selling of your house as well as the buying of another. That broker clearly wants to earn both commissions, and I can’t fault him/her for this. But sometimes such brokers try to pressure you into selling at a lower price so that you can afford to purchase the new one. Unless you are financially able to buy the new property even if you haven’t sold your current house, I don’t think it’s a good idea to use the same agent for both properties.
Questions you should ask: (1) How long have you been involved in real estate? (2) Have there been any complaints filed against you — either to a government agency or to the real estate trade group? (3) How many houses have you sold in the last two years? (4) Will you personally be working for me, or will you delegate responsibilities to someone else in your company? (5) How do you plan to market my house? Will you hold open houses (if that’s customary in your area) and if so, how often? (6) What do you think my house is worth? How did you arrive at this number? (7) Should I retain legal counsel to assist me in this process? (8) Do you (or your company) have any business relationships with lenders and/or title companies, and if so, do you get any commissions for referring me to them?
These are but a few questions to ask. The very first question you should ask at each of your interviews is: "Tell me about yourself and why should we hire you."
DEAR BENNY: Do you think this is a good time to buy a house? Do you think that house prices will go down more? I want to buy a house in area in New York. The house prices were $500,000-$600,000 in 2000/2001, $700,000-$800,000 in 2004, and about $1 million in 2006/07. Now, however, they have dropped to about $900,000. –Tina
DEAR TINA: As my readers know, I have two crystal balls on my desk and both are cloudy.
If you are in the market to buy a house to live in, this is a good time. Yes, the prices may go down more, but then again, they may not. Right now, mortgage interest rates are comfortably low; no one knows how long this will stay so affordable.
Readers should understand that buying a house is not a guaranteed investment, and your emphasis should be on whether this is the house in which you want to live. If it appreciates in value, more power to you, but you should not be looking at it solely as a great investment.
On the other hand, if you are looking to buy for investment purposes, my view is to hold off for several more months. It does not appear that the real estate market will rebound in the near future.
DEAR BENNY: Our sales agent added a contingency in the sale of our home contract that if we no longer wish to list our home we would have to reimburse the selling agent $495 to recoup his share of the funds lost in marketing our home. We signed a six-month sales contract and our home has been on the market for more than three months. We have had no visitors to see our house in the three months since signing the contract to list our property. Is the $495 a mild case of extortion or is it a sign of the slowing home-sale market? –Randy
DEAR RANDY: My cynical response is that it is both. But in fairness to your real estate agent, if he has been actively marketing your house, and has placed advertisements in your local newspapers, I think the agent is entitled to be paid this amount.
You signed a contract — called a "listing agreement" — and like any other contract you are bound by its terms.
If the agent has not actively been marketing the property, however, then you may have an argument that the fee is not justifiable.
My suggestion: Sit down with the agent and ask what work he did once the listing contract was entered into. If you are satisfied that the agent did make a valiant effort, then yes, you owe the money.
Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to email@example.com.
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