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Mortgage Default Advice

Question: mortgage co paid 2008 tax bill in error?

I was planning to pay my tax bill in increments starting this month even though i know there will be late charges. Luckily I didn't make my first payment because i got a bill from the mortgage company saying they paid out of escrow my tax bill and gave me 30 days to pay them in full or else. I never set up escrow but i am obligating to pay my taxes but there is no way i can pay 3000 in 30 days. My mortage is uptodate. The mortgage company inferred that if i didn't pay i will be default on my mortgage since paying your tax bill is an obligation under the mortgage agreement. but I always pay but i can't pay it at once. Any advice on what to say to the mortgage company.
no negative responses. I've paid my taxes on time for 15 years. This year has been hard with alot of medical expenses for my children. I am a single mom. So anyone feels I am not responsible don't respond.

Answer: If you can get a cash advance on your credit card, or unsecured loan, and pay off the mortgage company on the taxes they paid, that would get the mortgage company off your back.

Otherwise, I would call or meet with someone at the mortgage company and tell them you cannot pay $3,000 in 30 days. Tell them you will pay whatever you were planning on paying on your taxes. The sooner you can pay it off, the better, since the mortgage company will be assessing interest or maybe penalties.

Or, you could volunteer to have future taxes escrowed, since that will protect the mortgage company in the future. Your mortgage payment will increase $250 a month. Maybe you can get them to agree to an increase of $500 a month for a year, to get the taxes settled within 12 months. Actually, they will pay themselves back the first six months, and then escrow the rest for next year's taxes.

When you do send in your regular mortgage payments, be sure to note on the check or other accompanying document that the amount of the regular payment is for principal and interest. Make sure that the mortgage company doesn't take your regular payment to pay for taxes, and cause you to default on your mortgage payments.

If they hassle you, you may want to consult an attorney.

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Mortgage Default Process

Question: What are the consequences of defaulting on your mortgage?

I am in the process of selling my house, but want to be out of it by December 2006 at the very latest.

Answer: Under no circumstances should you default on your mortgage. As well as the bank taking the steps outlined by the previous answerer, you will end up not being able to close on your house. Not being able to get credit for another mortgage for 10 years. It will drag down your credit rating so badly, that you will be lucky to get any credit from anywhere. And your other creditors may begin demanding the whole of the money owing to them instead of waiting for you to default on payments to them as well. If you have to beg for a loan from your family and friends to cover the mortgage payments until your house is sold, then this is what you should do.

If you absolutely do not have any other way to get the money, then going to the bank that holds the mortgage and explaining your dilemma completely and honestly is a lot better than just letting them find out when you default. They may just step in and take over the selling process so they get all their money owing no matter what. But they will not cheat you out of your ecquity (if you have any).

Doing anything honestly is a lot better than doing anything dishonestly.

Michigan Mortgage Modification--"The Modification Process"

Mortgage Default Wiki

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