Q. I have an adjustable-rate home loan. I did not know that my lender sold my loan to an investor, who will not let me refinance into a fixed 30-year loan. This month my payment will go up to at least $3,000. Do they have the right to increase my monthly payment without notifying me? Is there anything I can do?
A. Do you have a copy of the promissory note that you signed when you first bought your house? If not, you have the right to get a copy from the lender or the company that is currently servicing your loan. (That is the company to whom you make your monthly payment.)
Read that document very carefully. If you don’t understand it, ask a lawyer for assistance. I cannot believe that your monthly payment can legally increase to $3,000, although I am not providing a legal opinion since I have not seen that document.
But when a homebuyer obtains an adjustable-rate mortgage, that means that the rate may go up (or down) depending on the term of the note. Typically, a loan can adjust in one, three or five years. The shorter the adjustment period, the lower the initial interest rate is. But, as the old saying goes, you get what you pay for. Your rate may increase on a yearly basis with a one-year adjustable.
Some adjustable-rate loans have two caps (or ceilings): (1) how much the rate can increase (or decrease) on any adjustment period, and (2) the maximum rate that the loan can ever go to.
But many adjustable loans have no such ceiling or cap. It is important for anyone considering such a loan to carefully review and understand exactly how that loan works.
While the lender must advise you in advance (usually 45 days before the adjustment period) of your new monthly payment, you have no choice in the matter: You signed a legal document and are bound by its terms.
However, because of the size of the monthly increase, you should immediately seek legal assistance. Your loan document may authorize such an increase, but it seems unreasonable and highly unlikely.
Q. My father died five years ago and left his home to my mom and me. The home is historic, about 70 years old, and has cathedral, open-beam ceilings. The home has had a series of four roof leaks that I have patched up; the roof is 20 years old.
Roofers don’t offer much of a warranty for their work based on the age of the home. Our tenant is asking for a rent reduction based on the ongoing roof leak problems. We have offered to pay the tenant’s moving expenses and allow the lease to be broken, but the tenant doesn’t want to go. So I am faced with a costly roof replacement or unreliable/unwarranted but cheaper repairs.
What are the landlord-tenant laws dealing with this issue? Our attorney is drawing a blank.
A. Perhaps you should find a different attorney in your area who has knowledge of and experience with the laws in your jurisdiction.
The landlord-tenant laws are very different from state to state. However, I suspect that in every jurisdiction, if you have a leaking roof, your tenant has the right to complain, and ask that you either fix the problem or reduce the rent.
You have made a good-faith offer to the tenant, which was rejected. This may be a defense, should the tenant decide to file a lawsuit against you. But you do not want to get involved in litigation; many jurisdictions have free (pro-bono) attorneys (or even law students) who will assist tenants.
My suggestion: Perhaps you can make the tenant an offer he/she cannot refuse. When I represent landlords, we often tell the tenant, “If you move out in 30 days, we will give you your last month’s rent back plus XX dollars; if you move out in 60 days, we will only give you back your last month’s rent.”
But I am a little confused. If you are prepared to do the costly repairs, why can’t you do that while the tenant is still in the property? What do you gain by asking the tenant to leave? Why lose a good, paying tenant?
Q. I own an investment condominium with a business partner. Both of our names are on the title as joint tenants. However, only his name is on the financing.
We are in the process of short-selling the property. I know that there will be a negative impact to my business partner’s credit rating. Will there be any negative impact whatsoever to me?
A. Interesting question. I don’t usually get involved with determining how credit scores and ratings are determined, so I really don’t have an answer for you.
However, one would think that since you are not involved in the financing, and did not sign the promissory note or the deed of trust (the mortgage document), your credit would not be impacted.
If any of my readers have experience with credit ratings, I welcome your comments.
