Rec'd letter from 1st to pay my property taxes...

[crucifixion]

So in April 2008 I missed my first property tax, about $3K. Next was in Nov 2008, another $3K. I've been debating walking away for almost a year now but because I have perfect credit and have never been late on any bills (except these ppty taxes) I've been delaying missing my mortgage payments. Plus now I'm renting my place now so can't really just let it go to foreclosure.

So anyways, rec'd a letter today from my first that says "during a recent review of your property taxes we have discovered that delinquencies exist and are payable."

It goes on to say that if I don't pay my property taxes, then
"they will either set up an escrow account to collect past due amounts or they will increase my monthly mortgage payments to repay the advances and to collect for monthly escrow deposit"

Is this just a bunch of hot air? Or can they really increase my mortgage payments? I don't see how they can do that. I don't have PMI. First is with WFB and property taxes are due to Ventura County, CA.

I know Prof Shays says that we shouldn't pay our property taxes if we eventually will let our place go to foreclosure since the state can't go after you personally for 5 years.

If that is the case, then can the state really pressure my first to increase my mortgage payments in order to pay back past property taxes?

I'm really confused here why WFB would send this too me. Do I have to worry or is it all talk?

[crucifixion]

professor? anyone?

[crucifixion]

professor? anyone?

[frank55]

I received a letter from wfb last year just like what you described and yes they can increase your payment. The reason that your payment would go up is because they will pay off your taxes that are delinquent and also set up an impound account for future taxes. This is why your payment will increase because from now on thy will collect your taxes in advance for the year and then they will pay them. Remember your house payment on your loan is increasing because they are now collecting the taxes. If you pay the taxes that are delinquent then your payment won't increase because they won't set up an inpound account for you. hope that helps.

P.S I paid my delinquent taxes this past year and they did not set up an inpound for me. Now that I have decided to let them foreclose on my rentals I didn't pay the taxes that were due this past december or the ones that are due in April.

[HopingtoFind]

It is not the state that pressures your lender to payoff delinquent taxes and therefore increase your monthly payment... property taxes are actually on a county level. The lender simply protects their interests because if they foreclose, property taxes are the first in line to be paid off anyway...
And actually if the property gets foreclosed as a result of delinquent taxes all other liens get wiped out.. so lenders are simply protecting themselves...

[crucifixion]

So what is my timeline looking at? Will they increase my next payment in feb or will they wait till i miss my third ppty payment in april, which means they'd increase my may payments?

[CaWalker]

crucifixion, if you are going to start missing payments or have already done so, it wouldn't matter if they increase the payments or not. If they do increase it, it'll in your favor as you show that you can't make the increased payments.

[crucifixion]

I'm "planning" on missing my payments. Have been debating over a year now but have been making my payments and just getting by in life. Part of the problem is that I have always been responsible and have +750 credit score; and on top of that the main problem is that I'm currently renting out my house to renters, so I would like to start missing payments once my renters are almost moving out, and not right now. I don't want to be forced to stop missing payments yet.

[crucifixion]

In addition, I'm also concerned about the change in my firsts balance. Right now, its still the same loan terms as when I bought the house. I know if I refi'd it I'd lose my protection and the lenders could come after me personally. Would that still apply if the lender adjusted my mortgage balance because I didn't pay my property taxes? Techinically its a change in balance of principle and in fact it could be seen that its almost like a refi since the bank is modifying thier loan to absorb the property taxes, so then might my loan become recourse?

[ProfessorShays]

The fact that the lender chooses to advance the funds to pay your taxes and in doing so increases the amount they are owed does not change the "non-recourse" nature of your loan.

Daniel

[crucifixion]

Well after ignoring the last couple of letters, the 1st has finally added back my back taxes....they set up an escrow and it has about $8K in it now. One thing I don't understand is that my payment increased by one cent. Yes, $0.01. Now I don't know if that's because its the first payment and next month my payment will go up $500 or so. How does this work? Does the $8K get added to my $340K and the increase to my monthly payments will be marginal? Or will my monthly payment increase by a few hundred???

[ProfessorShays]

When an escrow (impound) has been established and properly funded, your monthly payment should increase from just principal and interest (PI) to principal, interest, taxes, and insurance (PITI). The approximate amount of this increase can be estimated by adding 1/12th of the annual insurance premium and 1/12th of the annual real property taxes. Obviously you loan servicer didn't have a real good understanding of establishing the new payment amount. I don't find that surprising, given how well they do at other functions.

Daniel

[crucifixion]

Maaaaaaaaan.
So now I got my new first payment...payment went up from $1597 to $2782. I mean really, $1200 increase? They basically added in the last 3 property tax payments I owed, plus they set it up so my payments include future property tax.

Its like, I've made 100% of my payments since I got the loan in 2005 and now they hit me with this property tax increase.

So what are my options? Theres no way I can make the full payment, so I'm thinking for April to just pay the original $1597 like I've been doing for 4 years. Or is making the $1597 the same as $0 to them since its not the payment in full? If so, then should I not make the payment?

See here is my predicament. I'm buying a new house but that will take me about 2 months to complete, and once I do, I'm going to let this old house go to foreclosure. I just need to keep up and keep my credit up until the loan and everything clears for my new house. So will I be able to buy myself some time by making the $1597 or will my credit get impacted negatively the same way whether I pay $1597 or I pay $0

[Schwinn]

Crucifiction,
Based on your plan to buy another home and then let this one foreclose, you should read this post about "buy and bail":
Buy & Bail

Schwinn

[crucifixion]

^^^ yes, actually I read that a long time ago and in fact, it was reading that which led me to my current plan. I hadn't heard of Buy & Bail before, but after reading it, I realized it was a great option. So I had read that maybe 8-10 months ago.

Are you suggesting Buy & Bail is a good or bad option?

[Schwinn]

I'm not saying it's good or bad or passing judgement in any way. I just thought it would be an interesting thread based on your plan.

A relative of mine did a buy and bail about 10 years ago after her divorce, without anything other than the foreclosure. We are in Ohio which is a recourse state, they didn't come after her for a difficiency judgement either. But now with more people buying and bailing it's good to know what the outcome could be, because many say it is considered mortgage fraud. Just to be prepared, I would suggest consulting an attorney before you follow through.

I absolutely understand the logic behind your plan. We are all starting to understand the logic of big business and we have to put personal feelings aside and make what is the best long term decision for ourselves and our families.

Good luck,
Schwinn

[crucifixion]

^^^ yeah but I dont even live in the city with the old house anymore and I want to buy a new house in my new city, so we'll see what happens.

As far as my original questions- does anyone know what will happen if I only pay my first the $1597 not the new payment with property tax? Will my credit get impacted? Will they start the foreclosure process?

[dogatemy]

There seems to be quite a bit of debate about this issue. After consulting with a couple of attorneys on the topic there seems to be a consensus. The only way the government would be willing to investigate and charge someone for Buy & Bail is if they falsified/doctored documents. For example.. falsified paystubs, bank statements or some other clear indication of malicious intent. So.. As long she answers truthfully on all her loan documents and she did not falsify a rental contract then it is nearly impossible to convict someone of Mortgage Fraud. The only other 'catch 22' is if the applicant stated on her loan documents that she did not intend to occupy the home and eventually occupied the home because the current home went into foreclosure. As a matter of contract law it is nearly impossible to convict on the basis of 'intent'.

We did an informal poll here at the office asking how many would be willing to convict a non-investor even if someone did lie on their mortgage application. Out of 11 people there were only 6 willing to 'consider' a conviction. Even those who would be willing to convict said it would have to be 'document fraud' (doctored paystubs, falsified bank statements, etc).

The motion to convict the CEO of any major bank passed without debate.

[Irish Gal]

Love the jury pool surveys !

[crucifixion]

As far as my original questions- does anyone know what will happen if I only pay my first the $1597 not the new payment with property tax? Will my credit get impacted? Will they start the foreclosure process?

[crucifixion]

Anyone? Professor?

[crucifixion]

Does anyone know what will happen if I only pay my first the $1597 not the new payment with property tax? Will my credit get impacted? Will they start the foreclosure process?

[tryingtostay]

I would call your lender and tell them you can not afford to pay that full amount. Tell them you need it broken up into smaller payments. Talk to them before not paying the full amount, make sure they note on your account that this increase is too much. I'd suggest to them you could pay xxx each month for the property taxes but anything above that is out of reach. I'd go straight to the VPs of your loan company, or the loan retention department. Skip the customer service number and the out of country calls.

I think they may be less likely to start the foreclosure process if they know you are working with them. Or ask to be put into a loan mod package so you can have affordable payments.

(Yes, I am skipping the part about your second house )

bottom line is, your payments went up, and you can't afford those payments, and you need to ask their help to make it manageable for you. (whether it is to manage for 2 months or 30 years....)