Thursday, October 20, 2011

Chain Reaction

Recently my husband and I began filling out will questionnaires, as preparation for making new wills. In the course of listing our assets, I remembered that eight years ago, when we paid off our mortgage, I had intended to check at the Clerk of Court’s office to make sure there were no remaining liens on our property, but had never actually done so.

When I first bought the house we now own jointly, I was a single mother unable to meet the requirements for a conventional mortgage. One of the conditions of an FHA loan is having to let the mortgage company escrow your taxes and insurance payments. I was disappointed at losing the interest I would have earned saving up on my own to pay taxes and insurance, but that’s the way it was.

My mortgage was with Semi-Local Mortgage Company, but after a few years, they sold it to Ginormous Mortgage Company with Tentacles Everywhere. By this time, I had married John, he had made a pre-payment on the mortgage roughly equal to my equity in the house and in return I made him a joint owner of the house. The prepayment saved us about 13 years of mortgage payments, so we saw no need to refinance.

After a few years in which miscommunications between Ginormous and my insurance company, Rockhead Insurance, meant that my insurance went unpaid for most of a year without my knowing, Ginormous sold my mortgage to Bit Off More Than It Could Chew Mortgage Company. BOMTICC, as I was to find out, had gobbled up mortgages in Louisiana, Arkansas, and Mississippi, more mortgages than it had the staff to handle. The taxes that were due in December of 1996 still hadn’t been paid by April of 1997. I kept getting demanding letters from the Sheriff’s Department  threatening to sell my house if the taxes weren’t paid. When I called BOMTICC to complain, their answer was some variation of “we’ll get around to it”.

In the meantime, hubby and I had just paid off a line of credit from First Avatar Bank but not closed out the account yet. The amount of the LOC was just short of the amount needed to pay off the mortgage. If I could get it increased, we could pay off BOMTICC and be done with them. By this time, First Avatar had been bought out by Second Avatar Bank, and the person I spoke to had a better idea. We could close out the line of credit and refinance our mortgage with them for $125 in closing costs. It would be a conventional mortgage, meaning we could pay our own taxes and insurance. As I kept telling people, nobody was more motivated to pay my taxes and insurance than I was.

BOMTICC finally paid our taxes about two weeks before the threatened sheriff’s sale (and one week before I would have paid them myself.) We refinanced with Second Avatar, and in April of 2003, paid the mortgage off completely. Second Avatar sent us a letter congratulating us and promising to send the necessary information to the Clerk of Court’s office removing the lien on the house. 

And I really meant to check that it had been done, but forgot. Fortunately, what I did remember to do every year is pay insurance and taxes.

So this morning (only eight years later), we finally checked with the Clerk of Court, only to find that while Second Avatar had removed the lien on our house, as had Semi-Local, Ginormous, and BOMTICC, the line of credit from First Avatar still showed up as a lien.

By this time, First and Second Avatar banks are now Third Avatar Bank. I carried all my paperwork for the LOC, the Second Avatar mortgage, and the copy of what the COC’s office has showing the lien and went to Third Avatar to get them to confirm that the LOC is paid in full and closed. The nice bank employee dealing with me was a little perplexed but gamely looked up account numbers, to no avail. He called Bank Services, and they gamely looked up account numbers to no avail. To me this means, “yeah, the account is closed”, but I need something official in writing.

Finally, he was referred to the bank’s Home Equity Services department, who can research the account and  (if all goes well) confirm that it is closed and paid in full. It will take a week to ten days to hear back from them, but I am assured by bank employee that he will keep after them. Bank employee is about the size of Shaquille O’Neal, so I suspect that having him keep after someone is very effective. Still, we have his card in case we need to call and nag. 

Because otherwise by time this all gets sorted out, the bank is likely to be Fourth Avatar National Bank.


  1. What's a lien? What's escrow?

  2. A lien is "a right to keep possession of property belonging to another person until a debt owed by that person is discharged". If you use your house (or any other real estate) to secure a loan, the lender holds a lien on your property until you pay the lender. In our case, we paid the lender the amount that was on the line of credit, but since the line of credit was not formally closed out, the (now non-existent) bank still holds a lien on our property.

    Escrow is money that is held in trust or as a security, in this case, it is money that I paid along with my mortgage payment that was held in an escrow account to pay my taxes and insurance. The mortgage company added up the annual amount of my taxes and insurance, divided that amount by twelve, and added that amount to my mortgage payment. Then once a year, they paid my insurance and taxes. Except in some cases, as I wrote about, they didn't.

    Once I had a conventional loan, I added up the annual amount of my taxes and insurance, divided that amount by twelve, and put the money into a savings account every month so I would have the money to pay my taxes and insurance. I got to keep the interest on the savings account, and I actually paid the insurance and taxes every year, unlike Ginormous and BOMTICC. I still do.