Handy Tips from Pathfinder

Handy Tips For Managing Your Mortgage

Documents to Keep with Your Mortgage Payment Record

You should prepare a separate reference file for each Mortgage you own. The file should contain copies of the note, Mortgage, requests for notice (from senior lien holders), title insurance policy, casualty insurance rider, borrower correspondence, etc. However, because of the critical and irreplaceable character of the note itself, the original note should always be kept in a safe deposit box or equivalent.

Importance of Payment Records

Accurate written payment records (like this one) are crucial in enforcing the terms of your Mortgage upon default and being able to collect late charges. Disputes as to when payments occurred and the exact amount paid can virtually be eliminated if accurate records are kept. In the event of a foreclosure, you will be required to verify the nature of the borrower’s default from your records. Additionally, the availability of accurate records (particularly if kept by a third party) can aid in establishing the value of a Mortgage offered for sale. It is a good idea to deposit payment checks into the same bank account each month.

The Payment Record should be kept in a systematic manner. A procedure should be established where you will record on the day of receipt, all pertinent information including amount of payment, late charges, remaining balance and the recording individuals initials. The latter is important if the record is ever needed in a legal proceeding.

If the borrower provides you with a written request for an annual accounting of his payments, you must provide one per year free of charge. If your Mortgage is secured by property containing four or fewer residential units, you are required to automatically provide an annual accounting before 60 days after the end of the calendar year. In both cases, if there is an impound account connected with the Mortgage payments to and from the impound account must also be reported. If you have given the borrower a monthly statement or passbook, the requirements of the law are considered satisfied.

Calculating the Principal Paydown On Amortized Notes

Amortized Mortgages are those in which the required payment includes monies in addition to interest which reduce the remaining principal balance. No matter what type of Mortgage you have, it is important to know the proper breakdown between interest and repayment of principal since your taxes can only be calculated based on the proper annual allocation. Many escrow companies offer the service of providing an amortization schedule for a given Mortgage. The amortization schedule shows the interest expense and principal reduction attributable to each payment made. If you are good with a financial calculator or have access to amortization tables you can prepare your own amortization schedule. In addition, some independent consultants can provide this service. If you are having trouble finding a company that will provide a schedule, feel free to call PATHFINDER at (888) 722-1566  or (386) 872-7601.

Senior Mortgage Notification

If you are a junior lender (a 2nd, 3rd or 4th Mortgage holder), a letter should be written to all senior lenders advising them of your address and telephone number and that you are also a lender on the property. Assure them that you recognize your responsibility to protect senior lenders, and state your willingness to step in to cover any defaults. Such a letter, coupled with a request that you be notified of any default, often goes a long way toward encouraging the senior lender’s goodwill.

Securing the senior lender’s goodwill can be invaluable if the borrower defaults on his obligations. Unless the senior lender is agreeable to some other arrangement, the borrower’s failure to keep up his payments will ordinarily compel you to step in and tender the delinquent funds. Furthermore, unless you have the senior lender’s cooperation, it is possible you may not be informed of a default on his loan until he gets around to commencing actual foreclosure, possibly after as many as 6 months or more past due payments and late charges have accumulated. And unless the senior lender is obliging enough to coordinate his efforts with you, the borrower’s delinquency in senior loan payments, taxes, and/or association dues and consequent legal action by the senior lender may further subordinate your Mortgage and increase your collection risk.

Converting Your Note To Cash

If you would like to sell your Mortgage, call PATHFINDER MORTGAGE AND INVESTMENTS, INC..  We purchase promissory notes secured by First and Second Mortgages.  For more information on our services or to receive a quote, please call PATHFINDER MORTGAGE AND INVESTMENTS, INC. at (888) 722-1566  or (386) 872-7601.