DEAR BENNY: I have an adjustable-rate home loan. I did not know that my lender sold my loan to an investor, who will not let me refinance into a fixed 30-year loan. This month my payment will go up to at least $3,000. Do they have the right to increase my monthly payment without notifying me? Is there anything I can do? –Karen
DEAR KAREN: Do you have a copy of the promissory note that you signed when you first bought your house? If not, you have the right to get a copy from the lender or the company that is currently servicing your loan. (That is the company to whom you make your monthly payment.)
Read that document very carefully. If you don’t understand it, ask a lawyer for assistance. I cannot believe that your monthly payment can legally increase to $3,000, although I am not providing a legal opinion since I have not seen that document.
But when a homebuyer obtains an adjustable-rate mortgage, that means that the rate may go up (or down) depending on the term of the note. Typically, a loan can adjust in one, three or five years. The shorter the adjustment period, the lower the initial interest rate is. But, as the old saying goes, you get what you pay for! Your rate may increase on a yearly basis with a one-year adjustable.
Some adjustable-rate loans have two caps (or ceilings): (1) how much the rate can increase (or decrease) on any adjustment period, and (2) the maximum rate that the loan can ever go to.
But many adjustable loans have no such ceiling or cap. It is important for anyone considering such a loan to carefully review and understand exactly how that loan works. While the lender must advise you in advance (usually 45 days before the adjustment period) of your new monthly payment, you have no choice in the matter: You signed a legal document and are bound by its terms.
However, because of the size of the monthly increase, you should immediately seek legal assistance. Your loan document may authorize such an increase, but it seems unreasonable and highly unlikely.
DEAR BENNY: My father died five years ago and left his home to my mom and me. The home is historic, about 70 years old, and has cathedral, open-beam ceilings. The home has had a series of four roof leaks that I have patched up; the roof is 20 years old.
Roofers don’t offer much of a warranty for their work based on the age of the home. Our tenant is asking for a rent reduction based on the ongoing roof-leak problems. We have offered to pay the tenant’s moving expenses and allow the lease to be broken, but the tenant doesn’t want to go. So I am faced with a costly roof replacement or unreliable/unwarranted but cheaper repairs.
What are the landlord-tenant laws dealing with this issue? Our attorney is drawing a blank. –Ann
DEAR ANN: Perhaps you should find a different attorney in your area who has knowledge of and experience with the laws in your jurisdiction. The landlord-tenant laws are very different from state to state. Where I practice law in the District of Columbia, the laws are extremely tenant-favorable. On the other hand, in Virginia, the laws are either neutral or pro-landlord.
However, I suspect that in every jurisdiction, if you have a leaking roof, your tenant has the right to complain and ask that you either fix the problem or reduce the rent.
You have made a good-faith offer to the tenant, which was rejected. This may be a defense, should the tenant decide to file a lawsuit against you. But you do not want to get involved in litigation; many jurisdictions have free (pro bono) attorneys (or even law students) who will assist tenants.
My suggestion: Perhaps you can make the tenant an offer he/she cannot refuse. When I represent landlords, we often tell the tenant, "If you move out in 30 days, we will give you your last month’s rent back plus X dollars; if you move out in 60 days, we will only give you back your last month’s rent."
But I am a little confused. If you are prepared to do the costly repairs, why can’t you do that while the tenant is still in the property? What do you gain by asking the tenant to leave? Why lose a good, paying tenant?
DEAR BENNY: My stepfather left my mother in the early 1960s. She is still in the house that they purchased (jointly) when they were married. My mother paid off the mortgage and continues to pay the property taxes. My stepfather is still alive, but unfortunately he suffers from mental illness. We are concerned that should something happen to my mother, would he be able to return to claim the house? –Conrad
DEAR CONRAD: The first thing you should do is determine how your stepfather and mother hold title. It may be possible to change the title so that each of them holds title as tenants in common. This means that on your mother’s death, for example, her share of the property will be distributed in accordance with her last will and testament. And if your mother does not have such a document, I strongly suggest that she talk with an attorney and have one drafted and signed as soon as possible.
This way, you will at least inherit half of the property.
If that does not work, your mother may have to file suit against you stepfather, claiming reimbursement for half of the expenses she has incurred, such as real estate taxes, insurance, repairs, etc. There is probably a statute of limitations in your state that would limit the number of years that she can claim, so it may be prudent for her to seek legal advice now and proceed to take all protective steps.
This is not an easy situation, and your stepfather’s mental and physical status will be a major hurdle in a court of law. But clearly you want to protect your mother — and possibly your inheritance — so don’t put this off too long.
DEAR BENNY: I own an investment condominium with a business partner. Both of our names are on the title as joint tenants. However, only his name is on the financing. We are in the process of short-selling the property. I know that there will be a negative impact to my business partner’s credit rating. Will there be any negative impact whatsoever to me? –Steve
DEAR STEVE: Interesting question. I don’t usually get involved with determining how credit scores and ratings are determined, so I really don’t have an answer for you.
However, one would think that since you are not involved in the financing, and did not sign the promissory note or the deed of trust (the mortgage document), your credit would not be impacted.
If any of my readers have experience with credit ratings, I welcome your comments.
DEAR BENNY: I seem to have misplaced my HUD-1 form when we bought our house back in 1972. What can I do to obtain a copy and where? –Carol
DEAR CAROL: In case my readers do not know what a HUD-1 form is, let me explain. In 1974, when the Real Estate Settlement Procedures Act became federal law, the Department of Housing and Urban Development was authorized to develop a standard settlement statement. That document is known as a HUD-1.
HUD revised the form effective Jan. 1, 2010, presumably to provide consumers more information about the settlement process and the costs they have to pay in order to buy their house.
So, don’t look for a HUD-1 for your 1972 purchase. That form was not in existence before 1974. You should just be looking for a simple settlement statement.
However, I suspect that you will never find it. The escrow (title) company that conducted your settlement may be out of business or has destroyed their old files.
If your original lender is still around, it may have your file, but based on the length of time that has passed, I doubt it.
My suggestion: Try to recreate your costs as best you can. Do you keep back checks? If so, that may assist you.
And do you really need that document? Usually, it is important to determine if you will have to pay any capital gains tax when you sell a house. Talk with your accountant about your situation. You may be eligible for the up-to $250,000 (or $500,000 if you are married and file a joint tax return) exclusion of gain, and will not have to worry about the information on your settlement statement.