Tuesday, August 14, 2007

Reader inquiries: bankrupt mortgages and the Texas car credit

I have been getting a lot of directs to the site with questions input into Google. I thought I would make some comments on the two most common.

First, a common question is "What if my mortgage company goes bankrupt?" - some people, from their searches, seem to think that their mortgage might be forgiven! Actually, it will just be sold to some other bank. Your lender in bankruptcy should send you a letter notifying you of the transfer. In any case, it is up to you to continue making payments to the right place. So if you see your mortgage company about to fold, call them up. If you send the check to the old bank after your mortgage transfers, it won't be applied to your mortgage. The bank might even cash it, leaving you scrambling for 2 payments in a single month while waiting for a refund (because as we all know, once a company gets your money they will drag their feet giving it back). Maybe they are legally required to pass on the check, who knows. If you assume they'd send on the check instead of cashing it just because they are legally required to, I guess you haven't dealt with big banks very often!

The good news is that whatever bank buys your loan will be forced to fulfill the terms you signed with the first bank. Some things, like how they handle extra principle payments may change, so if you are paying down your mortgage make sure to inquire about any new rules. Escrow requirements might also change, but I do not know how the new bank is legally bound to those terms. Insurance requirements might also change, and again I would call the bank and ask. If you do find changes to your loan terms, it might be a good idea to contact an attorney if the bank refuses to play nice. Whatever you do, keep paying your mortgage!

Second, there have been a lot of inquiries about the new Texas car credit coming into effect in December. Some news outlets have been giving slightly incorrect or missing information, so go to the source, http://www.tceq.state.tx.us/. Details can be found here. Only certain counties, in which your vehicle must be registered, apply. San Antonio and El Paso, for example, do not appear to be participating in the program. Please note that this is not a new program. Actually, it has been around since 2001, they are just increasing the voucher value that you can get.

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