subject: 3 Conditions Where Mortgage Payment Laws Will Be Applicable [print this page] Mortgage is the most common method of financing real estate business. Usually a mortgage is paid in installments that comprise of both interest and payments on the principle amount that was actually borrowed by the homeowner. There are various rules and regulations that govern the handling and financing of such mortgage loans. The mortgage payment laws are a couple of rules that administer mortgage payments. Some of the conditions where the mortgage payments laws will be applicable are as follows:
1.When your mortgage servicer changes: It often happens that your mortgage lender sells off the loan to a third-party which may be a bank, an investor or just a company that specializes in mortgage loan servicing. If this is the situation, then you must be notified in writing by your original lender as well as the new loan servicer. You must be informed about the date of transfer and the contact information of the new loan servicer. During this transfer, you will enjoy a 60 day grace period during which you cannot be charged any kind of late fee if you send any mortgage payment to the old servicer by mistake. According to the mortgage payment laws, your new loan servicer is supposed to honor the terms and conditions of your mortgage agreement with the original lender.
2.When you want to pre-pay: Pre-payment is when you pay off more than the minimum monthly payment in a way to reduce the impact of an expected interest rate hike. If you have taken an adjustable rate mortgage (ARM), then pre-payment may lower your monthly payments which are re-calculated every year along with the interest rates. If the homeowner prepays at least 45 days before an adjustment date, then the lender will have to use the reduced balance figure to evaluate the forthcoming years payment. This will lessen the impact of simultaneous fluctuations in interest rates.
3.When you are late on your payments: The late payment law specifies the way late payments are regulated. If you have already fallen behind on your monthly mortgage payments and then you decide to send in some additional payments in order to prepay, then the extra amount will first be added to the late charges. After the late charges are covered, the amount will be added to the loan balance. Late charges are usually 5% of the payment amount. Mortgage payments are identified as late if it is made after the due date. Check your agreement for the grace period.
The mortgage payment laws are governed by state statutory and common law. Try to have these laws on your finger tips to avoid being exploited by mortgage lenders.
by: Cahet
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