Lender Changed the Borrowers Name on Mortgage

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Lender Changed the Borrowers Name on Mortgage

Account Closed
Investor · San Antonio, TX · Member since 2014 · 142 posts · 104 votes

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.

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  • Account Closed
    San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
    11y

    From a law class I took, I believe any court action would consider this a scrivener's error (clerk's error) - where the written documents have an error on them, that is an obvious error and so would not be enforceable.

    As far as them doing this and any impropriety, well, if they did it deliberately, that would be fraud, in my opinion.  But, they have been behaving as if all of the documents are correct.  

    And since you could always provide the correct documents and proof that you've made your payments and the payments have been correctly credited to your account, I'm not sure it's worth paying a lawyer over this issue, really.  

    If there's an issue when you finally pay it off, and you need the documentation to be correct, that would be the time to pay a lawyer, in my opinion.

    But, to sue them for fraud or for them to have committed a crime, you'd have to show that they had "intent" to defraud you, and their actions have not shown any incorrect behavior other than putting a wrong name on a document - which they haven't tried to take advantage of in any way.

    So, to me, it seems annoying, but not worth worrying about at this point.

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  • Account Closed
    OP
    Investor · San Antonio, TX · Member since 2014 · 142 posts · 104 votes
    11y

    @Account Closed  Hi Sue, thanks for your comments.  As I said in my post, they've applied the payments correctly, and at least right now, I have no reason to think that there will be a problem when the loan is paid off.

    However, it's clearly not a scrivener's error.  I mean, the entire name on the mortgage was changed from the original borrower to the name of a trust with a corporate trustee.  Now, as I said, I have not experienced anything negative, at least not that I know of at this time.

    But like you said, it's hard to see how they are "defrauding" me, they just changed the name.  But I would guess that this was completely improper, there probably is some type of penalty for it, maybe from the regulators.   And I think there are ways I could have been damaged by this change, I just didn't happen to experience it.

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  • Account Closed
    San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
    11y

    @Account Closed  I don't understand why the insurance policy was in the name of a trust, and not your name or the original owner's name?

    And maybe someone was irritated with you and changed the name, but again, maybe some clerk thought it was a mistake and "fixed" it.

    But, it looks like they're ready to communicate with you to fix the error.  So, call them up and tell them the mistake is theirs and they need to fix it.  Maybe that's all it will take.

    You'd have to decide if reporting them to some regulatory body is worth it.  They'll just claim ignorance of who did it or say it was an error.  I think you should save your money with regard to calling your lawyer, and maybe wait to do that if there's a problem getting the paperwork corrected.

    I commend you for not bending to the demands of all of these lenders to assume the loan over the years.  Good on you!  Well done not falling for their bluffs :-)

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