Thursday, March 23, 2017

hey...give your lender a break!!!

Your lender gave you the money in exchange for your promise to repay it with interest.  Don't get mad when they get grumpy when you want them to modify terms without cause, okay?

I closed a transaction last week and the sellers were just fuming over their mortgage lender.  First the mortgage payoff letter included $1200 in interest.  What crooks!  I calmly explained that since the February mortgage payment hadn't yet been paid, the lender was collecting the interest owed for the month of January.

In case you didn't know, mortgage interest is paid in arrears.  That means you are always paying for the previous month so when you pay off a mortgage, you will always be playing catch up with the interest.  It's normal and should be expected.

Okay, so they weren't happy about that but they did understand.  Then they started really expressing anger that their mortgage lender wouldn't allow them to freeze their payments.  I couldn't quite understand what that meant.  Turns out that they thought it was completely acceptable to stop making mortgage payments once they decided to sell the property.


Yes, when they decided to sell, they called their mortgage lender and asked for a freeze in the payment process.  Of course the lender said no.

Mind you there is no financial distress here, no subprime crapola, no default pending,  just a simple unrealistic expectation that their mortgage lender would go along with this plan.

The property being conveyed was an investment property with a positive cash flow.  I just couldn't get any clarity on why they thought their mortgage lender should take a vacation in the promise of repayment other than the news of mortgage modifications out there in the media.

I'll probably not see this kind of pretzel logic again...

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