Your Mortgage File

A Drive Called Spartan

A Drive Called Spartan

I share information on this blog to create awareness around the mortgage process.  It’s mostly technical.

I feel compelled to write about another aspect of home ownership — neighbors.

The storm that hit the Black Hills of South Dakota on October 4th, 2013  caught everyone off guard, even mother nature.  Heavy fall snow fell early that night.  I slipped off to bed expecting to wake up with 10 to 14 inches.

Instead, I woke at 4 a.m. to deafening silence. Our fan was off.  No lights, no heat.  The electricity was out.

I gazed through the window at a blizzard of white snow.  Even this early, with sunlight hours away, one could see as though there were a full moon.  I felt it would be worse than predicted.

Hours later we stepped outside.

It sounded like open hunting as limbs cracked and popped under the load.   The street became a meeting area as neighbors gathered to survey the situation.

Every few minutes we’d say, “There goes another one.”

The trees, still full of leaves, had boughs bent low.  They hung ominously over roofs, cars, and power lines. It was only a matter of time before electricity ceased for over 25,000 people.

The snow grew deeper into the evening and the temperature dropped — heat became a worry. We sat in the car, my wife and two girls, warming up and charging the cell phones. We called parents and discussed options but the last thing we wanted to do was venture into the blizzard.  We concluded it was time to light some candles, gather blankets and huddle together for the evening.

That’s when our neighbor’s son, who on a visit, marched across the snow and banged on our door.

“Let’s go,” he said. “You’re staying with us tonight.  We have a natural gas fireplace and stove. We have heat.”

I am a proud, independent spirit. But this was no the time for bravery, especially with two small girls.

“Ok,” I said.

“Seriously. You need to come.”

So, we hauled our stuff through the two feet of snow to a warm house and even warmer people.  Their hospitality was storybook. They cooked us a warm meal and engaged us in conversation until we felt as though they were family.

We slept soundly and unconcerned. Let it snow.

And snow it did. Yet another foot and a half.

The following morning it stopped and the work began.  The neighborhood, half still without power, once again met in the street.

There were shovels and snowblowers, adults and children, and a whole lot of child laughter. We had over forty inches of wet, heavy snow to move.

After five hours we had cleared ten driveways. Our motivation: Broncos vs. Cowboys.

The guy on the corner owned a pizza shop that never lost power. With the roads partially clear, he slipped down and baked some pizza.

With the work done we congregated, 20 people strong, into one house where the real warmth radiated from the souls of the people who banded together in a time of need.  How proud I was at that moment to be part of a neighborhood that cared for each other, that offered what service they had for the benefit of those in need.   That was, and is, a drive called Spartan.

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How It Works, Your Mortgage File

Homeowner’s Insurance Claims

Here are some photos of a recent storm that dumped over 40 inches of snow on our communities.

lead-south-dakota, lots of snow, deep snow

Storm

This fall storm caught mother nature off guard.

The trees hadn’t dropped their leaves and the wet, heavy snow wreaked havoc. Only a few hours into the storm and it sounded like hunting season.  Popping echoed everywhere as branches collapsed under the weight.  They landed on the sidewalk, roofs, cars, and across power lines.  Over 25,000 people lost power. Some for days.

Our neighbor’s roof buckled under the weight and a failing roof truss split the sheet rock .

Another noticed a sagging, brown spot on the ceiling.  A few days later contractors punched holes there and drained three gallons of water.

Flat commercial roofs collected thousands of pounds of weight.  This structure wasn’t up to the challenge.

TMone

Only months earlier, hail stones like these punched holes in roofs and shattered glass.  They dinged siding and destroyed gutters.

hailstones

Home damage sickens us.  We’re much happier shoveling snow than working with contractors and insurance companies.  Not to mention  tangling with our mortgage servicer over insurance money.

When you have a lien on your property the lender has a vested interest in making sure your home gets repaired.

Why?

Let’s say your roof caved in and three foot of snow now rests in your kitchen. To top it off, it melts and drips through your sub-floor creating a swimming pool in your basement.

You are uninsured, owe a significant amount on the home, and don’t have savings to cover the damage.

So, you default and walk away from the home leaving the lender with a soggy, worthless piece of collateral.  A lose, lose.

Now, let’s say you are insured.  Your insurance company will foot the bill.  Better news, you’ll be getting a new kitchen!

But, the check is made out to you and your lender which disgusts you.  They need to endorse it in which case they’ll hold the money.

Contact the servicing department right away.  Ask them what steps you need to follow.  They’ll want all kinds of information like a contractor estimate, lien releases for work complete, and inspections.

Be patient with them, especially if they are responsive and good natured.  Like you, they are protecting their collateral.

Do they have a right to hold your money? 

Most mortgages have a clause that allows the lender to control these proceeds.  You are better off learning what their expectations are upfront to avoid frustrations down the road.

In any event, button up and stay warm this winter.

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Mortgage Philosophy, Your Mortgage File

Should I Omit Information? Is that Fraud?

Is it Fraud

Is it Fraud

A discussion on ethics grew heated between several staff members a short while ago.

 

Ethics are subject to the scenario in which they apply.  Omitting pertinent information from a loan file is considered fraud, but what if you are omitting information to help make the process smoother for the borrower.

Example: A borrower has a few overdraft charges on his bank statement. It’s clear from other accounts that he has the ability to save money and this appears like a simple mistake.

Overdraft charges, however, are considered a red flag to an underwriter. Questions crop up:

Does this potential borrower have the capacity to budget for a mortgage payment?

Do they mismanage money?

Will this affect their ability to make timely payments?

His loan is otherwise flawless.

Do you omit the bank statement and ask his bank to prepare a verification of deposit (which only shows the current and average balance)?

In this case, you would be omitting any evidence of an overdraft.  You won’t have to bother the borrower and the underwriters won’t ask questions.

Do you address the overdrafts upfront but asking the borrower to explain them?

As intrusive as this is, you are also lending them a lot of money.  Shouldn’t they be asked about the overdraft and required to explain it?

In life, don’t we all judge these situations on the margin?  What are the risks?   Is it to great? Will it be construed as fraud? Is it harmful?

photo credit: JD Hancock via photopin cc

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