Can a mortgage company ask your neighbors about you if your payment is late?

February 8, 2013 00:52 by Consumer Ed

Dear Consumer Ed: 

Can a mortgage company call your neighbors when you are late on your payment and ask questions about you?      

Consumer Ed says: 

It depends on what you mean by “mortgage company”—whether that company that is your mortgage lender, your loan servicer, or both.  Your mortgage lender is the company that actually loaned you the money to purchase your home; your loan servicer is the company that handles the day-to-day aspects of your loans following the original disbursement.  Your mortgage lender and loan servicer can be the same company.  If you do not know who your loan servicer is you can check this on your monthly billing statement. Or you can call the MERS Servicer Identification System at 888-679-6377, or visit the MERS website at www.mersinc.org/information-for-homeowners/my-mortgage-info.

If your mortgage company is your loan servicer, but not your mortgage lender, these phone calls to your neighbors are regulated by the Fair Debt Collection Practices Act (“FDCPA”).   Under the FDCPA, it is legal for a third-party debt collector (such as a loan servicer) to call your neighbors, provided the content of the conversation is limited to three inquiries—your home address, your home phone number, and where you work.  All other inquiries are illegal.  It is also illegal for a third-party loan servicer, in making such inquiries, to disclose the fact that you are late on your payments or any other confidential information.

If your mortgage company is both your loan servicer and your mortgage lender, the restrictions set out in the FDCPA will not apply.  This is because technically the mortgage company is your creditor, rather than a “third-party” debt collector. 

However, there are other regulations recently put into place by the Consumer Financial Protection Bureau (“CFPB”), the federal agency charged with oversight of all financial institutions, which apply to communications between covered financial entities and third parties.  Under the new CFPB regulations tighter rules will apply. Thus, regardless of whether the company was your mortgage lender or your loan servicer, if the company and the communication it had with your neighbor falls within CFPB regulations, then the company is required to give you notice and an opportunity to opt-out of its third-party disclosure procedures before releasing information about you to your neighbors or other unaffiliated third parties.   

You can learn more about these new federal regulations by visiting the CFPB’s web site at www.consumerfinance.gov/regulations.  If you believe your mortgage company and/or loan servicing company have disclosed protected information about you in a way that violates the law, you can to file a complaint with the CFPB at https://help.consumerfinance.gov/app/mortgage/ask.

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Does maintaining a neglected property give me ownership rights?

July 10, 2012 01:35 by Consumer Ed

Dear Consumer Ed:  

There’s an empty lot next to our house. The owner doesn’t maintain it, and we end up trimming the vines and hedges that would otherwise grow over our fence.  If we continue to maintain that property, will we eventually own it?

Consumer Ed says: 

You’re thinking of adverse possession—and no, you won’t gain ownership to your neighbor’s property simply by maintaining the hedges and vines that come onto your property.  Generally, when an adjacent neighbor fails to maintain her property, it’s a good idea to talk with her first, or send her a written note asking if she could please address the out-of-control vegetation.  If she isn’t willing to do so, then it’s best to file a complaint with your city or county authorities.  Many cities and counties have ordinances requiring property maintenance.  To determine if your local government authority has such a requirement, visit its official website; if there’s no official website, or if you can’t find the ordinances there, you can go to www.municode.com, select your state of residence, then search by city or county.  If your neighbor is violating any of the local property maintenance laws, your filing a complaint could result in her receiving a violation notice requiring her to comply with those laws or face a fine.

That being said, there are circumstances where you may eventually be able to gain legal ownership to property through adverse possession.  You should consult with a lawyer to get a better understanding of these circumstances.  Generally, however, in Georgia, you can acquire property through adverse possession only if all the following criteria are satisfied:  you actually possess the property (i.e., live on it or otherwise show that you’re claiming it); your possession of the property is “open and notorious” (meaning you don’t make any attempt to hide your possession from either the owner or the public at large, and the owner doesn’t dispute your claim or make any attempt to interrupt your possession); your possession of the property is exclusive (no one else is occupying or otherwise staking claim to the property); you possess the property without interruption for the entire period of time required by state law; and your possession is accompanied by a claim of right (which simply means you’ve actually claimed the property as your own).  In Georgia, ownership of adversely possessed property can be gained if you comply with all the preceding requirements for 20 years, or seven years if the property is possessed under color of title.  Color of title simply means that a person has a reasonable belief that s/he has an actual right to possess the property.

These requirements are in place to protect the actual property owner, so that s/he will have adequate notice of a potential adverse possession.  Based on the information you provided, your circumstances would not support any ownership claims to your neighbor’s property.

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Supplier to sub-subcontractor filing lien on house

May 24, 2012 23:48 by Consumer Ed

Dear Consumer Ed: 

A supplier to a sub-subcontractor filed a mechanic’s lien on my house.  I have paid the contractor, and he has paid all of his bills.  Yet my house is being held under a “cloud” from an unknown vendor to an unknown sub-subcontractor. The amount is just over $2,000.  What are my options when dealing with a business that is trying to intimidate me into paying twice?

Consumer Ed says: 

First, please recognize that there is a possibility this is a fraudulent Claim of Lien.  Some scammers place mechanic's liens on real property in an attempt to get money when the house is later sold, claiming that money was owed for work done on the house, which in reality was never done.  This type of scam is not uncommon.

Further, if the party which filed the Claim of Lien meets the legal definition of “a supplier to a sub-subcontractor” as you state, then a possible issue arises as to whether the supplier is contractually too remote to have the right to make out a valid lien claim. The test is whether your contractor knew of the supplier’s connection to the construction work at the time the materials were furnished.

If the supplier did make itself known to your contractor, then it becomes vital to determine if the contractor properly paid over monies ultimately owed the supplier and, if not, then you can be held responsible for ensuring that anyone contributing labor or materials to improve your property gets paid.  Fortunately, the law provides ways that you may in some cases be able to use to get rid of a claim of lien that is improperly worded or filed. If you or your attorney identifies a defect in the lien, you may be able to convince the lien claimant to cancel the lien or, failing that, you can then file a Notice of Contest.  Examples of possible defects include, but are not limited to:  not filing the Claim of Lien within 90 days of completion of the work; failure to send a copy of the Claim of Lien via registered or certified mail or overnight delivery to the property owner within two business days after filing; and incorrectly identifying the property, its location or the name of the property owner. It is also possible that either the supplier or a party in the chain above the supplier has provided a partial waiver of lien in return for receiving a partial payment, and this should be ascertained as well.

A Notice of Contest is a document which can be filed in the real estate records of your county and mailed to the lien claimant, demanding that the lien claimant file suit or have the lien expire within 60 days. Forms for the Notice of Contest are contained in Title 44 of the Georgia Code.

If you are not planning to move in the next year, and the Claim of Lien is for a low dollar amount that you do not expect the lien claimant to file suit over, then you may want to just wait it out until the lien expires on its own within twelve months.  A lot of liens are wiped out this way each year, because the party who filed the lien claim never files a lawsuit.  This is especially true if the amount of the lien does not warrant the expense of a lawsuit.

If you do intend to sell your home soon, you may want to bond off the lien claim.  The lien claim will then be against the bond instead of your home.

In any event, because the subject of mechanic’s liens is quite complex, this is especially a matter about which qualified legal advice should be sought before acting.

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