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Surprise! You Owe Us Money

Written by Peter G. Miller on Monday, 16 July 2007 7:00 pm
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You can imagine my surprise when in the morning's mail there arrived a note which said I was late on my mortgage payment.

"Several attempts to contact you by phone and mail regarding a delinquency of your mortgage account have elicited no satisfactory response on your part to remedy this situation," said the letter, ominously.

"At this time your mortgage is PAST DUE in the amount of $xxxx.xx. This amount represents your 05/05/07- 06/05/07 installments of $xxxx.xx plus $xxx.xx in late fees and/or insufficient funds charges." And more.

"THIS ACCOUNT WILL BE REPORTED AS DELINQUENT TO THE NATIONAL CREDIT BUREAUS IN TEN DAYS."

Oh my, whatever to do?

What made this letter especially interesting is that I have no account with this lender. Mind you, I would be okay sending them a check had they provided me with a loan, but that's not the case. I have never heard of the lender, their mortgage or the glorious property which presumably secures someone else's financing.

Given that the country is awash in a growing number of foreclosures and delinquencies -- and not wishing to join such ranks -- you can bet this letter caught my attention.

When receiving such missives, whether correct or not, it's imperative to immediately respond. I called the handy 800-number and spoke with a very nice person who was both helpful and puzzled.

As much as it's good to promptly respond, it's also good to respond cautiously. For instance, I did not provide a Social Security number or any other information over the phone. Since the lender has the account they should have such information on hand. If they want me to confirm a number they have that's fine -- but they won't get any information from me.

After looking through a variety of forms and folders -- and asking if I was sure I didn't own property at beautiful Landfill Meadows or whatever it was called -- the mortgage rep determined that there was indeed a mix-up of some sort.

So far, so good. Problem almost solved -- but not quite.

The promise to contact "national credit bureaus" if the bill is unpaid is significant. The cost to borrow money depends on good credit and a negative report is not something to take lightly.

These days when financial mistakes are made it's a good idea to check and see if the problem is identity theft. Did the lender's records show that someone with my name and address had actually obtained a loan from them? If yes, we then have a serious matter.

If you have an identity theft concern you're entitled to take a number of steps to protect your name and credit. The Federal Trade Commission has excellent material online that discusses identity theft, plus they show your rights under FACTA -- the Fair and Accurate Credit Transactions Act .

At my request, the good folks at the mortgage company are sending a letter to confirm that I am not, in fact, late on any payment -- indeed, I don't owe them a dime and have no account with them.

And as much I have faith in the lender's administrative process, you can bet that in a few weeks I will check my credit report on AnnualCreditReport.com , the credit information site created under FACTA.

There I will retrieve a free copy of my credit report without any requirement to buy a credit "protection" plan or otherwise spend a dime.

I do, however, have some belief that the lender will follow through. The reason is that the dunning letter was actually quite reasonable.

"In order to return your mortgage account to a current status, prevent the accrual of additional late charges, a default or foreclosure report to the national credit bureaus, the referral of your account to a collection agency and any future legal action we offer various payment options," said their missive.

The recipient was then offered the opportunity to pay the bill over a period of several months.

This makes a lot of sense. The lender will lose if the property is foreclosed -- for a single-family home a typical loss is on the order of $40,000 -- thus everyone is best served by figuring out a way to modify the loan.

And repaying a mortgage, after all, is not unfair. Borrowed money should be repaid -- especially by the person who actually did the borrowing....

For more articles by Peter G. Miller, please press here .

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