Lender Changed the Borrowers Name on Mortgage
Back in 1995 or so I informally assumed a mortgage. By "informally" I mean "subject to". The property was deeded to me and I started paying the mortgage. I got insurance consistent with the deed, and named the lender as beneficiary on the policy.
The lender at the time was Chase. The loan was an FHA loan originated in 1987. If you will recall, these loans were freely assumable, that is, could be assumed by anyone without the need to qualify. There was no due on sale clause in FHA loans at the time. That later changed in late 1990. I didn't do the assumption because in my earlier days I did not want to be responsible for the loan. So I simply left it in the other persons name. I had the deed which was all I wanted.
Well Chase hated this situation. So after sending me a letter demanding that I assume the loan, which I ignored, they eventually sold the loan. I went through this process with yet another lender who sold the loan, until the mortgage ended up with Midland Mortgage. They hated the situation too, and therefore they threatened to call the loan. I told them there was no due on sale clause, which they ultimately agreed with.Periodically they would sent me a letter asking that I assume the loan, I always ignored them.
At some point, the letters stopped. I don't recall when it was exactly, but at some point, someone with Midland Mortgage simply changed the name on the loan. Lol. If they couldn't get me to change my insurance to match their loan, then they decided they would simply change the name on the loan to match the policy. I just ignored it, I was busy with other things and it didn't especially make any difference to me.
So a number of years went by in that status. I now have about 2 years left on the loan. Today I received a letter from Midland Mortgage which said my policy did not match the name on the loan! So I looked, it appears they simply dropped part of the name, perhaps mistakenly. I checked my policy, it reads as it always has. And their loan reads the same way online at least, so I imagine it's just a mistake.
But I was irritated by the letter for some reason. So I got to thinking, what right did they ever have to begin with to change the name on the loan? So that's the purpose of this long winded post, is to get some opinions as to whether the lender could/should do this, whether it was legal for them, and what type of consequences are there to having taken this action, if any. I'm going to call my lawyer Monday, but I'm interested as to what you folks have to say about it. I'm not worried about the deed, they've been applying my payments correctly for years. I just wonder about the propriety of changing the name on the mortgage.