Financing in Pine Bluff>Question Details

Shiningstar01, Home Buyer in Pine Bluff, AR

my Parents purchased a home in 1987 on a fixed interest rate but they purchased the house through the broker since then my father passed a way my

Asked by Shiningstar01, Pine Bluff, AR Mon Nov 23, 2009

mother has taken over things and has found out that the mortgage company has changed the rate over the years what are her rights is this a breech of contract on the company's part

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1
Hello Shining star and thanks for your question.

I find it very hard to believe that a fixed rate loan has been modified without your parents consent even after the passage of 20 years. More likely what has happened is that the escrow account, which the bank charges for items such as property tax, mortgage insurance, and property insurance, has increased over the years to pay for ever increasing costs of insuring the home and paying property taxes. So, for example, the mortgage payment that your mother may be paying could be:

$2000 for monthly mortgage
$100 for property insurance
$60 for mortgage insurance
$200 for property taxes
Total $2360 per month

The following year, as property taxes increase or insurance costs increase, the cost may be:

$2000 for monthly mortgage
$140 for property insurance
$60 for mortgage insurance
$210 for property taxes
Total $2410 per month

If one were simply to look at the monthly mortgage payment, it certainly does appear that the interest rate is increasing yearly, but looking solely at the mortgage amount of $2000, the amount remains the same--as it should in a fixed interest rate loan.

To ensure that your mother is still in the same loan, plan to contact the bank or lender for more information. Chances are that there was a misunderstanding in how the loan payments are structured, but if it truly does appear that the bank has breached its loan contract, then the matter should be referred to an attorney for a legal opinion regarding your mother's options against the bank.

Good luck!!

Sincerely,
Grace Morioka, SRES, e-Pro
Area Pro Realty
0 votes Thank Flag Link Mon Nov 23, 2009
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