Hat tip to Rob for pointing this article out. It’s been a work-focused week for me and I’m not generating enough story ideas on my own.
The Wall Street Journal Online has a short story about American Home Mortgage Investment Corp. and Freddie Mac.
In documents filed with the U.S. Bankruptcy Court in Wilmington, Del., Freddie Mac said it seized $7 million that homeowners sent to American Home to cover principal and interest payments, property taxes and insurance just before the company’s Aug. 6 collapse. American Home quit making payments to tax authorities and insurance companies Aug. 24….In an interview last week, Ginnie Mae’s senior vice president, Theodore B. Foster, said Ginnie Mae had seized from American Home some of the insurance and tax payments collected from homeowners. “What’s occurred is that we have the money, but AHM hasn’t been able to or willing to pay the taxes and insurance, and they have the loan records,” Mr. Foster said. “Therefore, we don’t know who to pay, and we don’t know how much.”
This is very bad.
1) If you are a borrower of AHM, you may be delinquent on your property taxes because they aren’t paying them through your escrow account. Try to find out what you owe the county by going directly to your Tax Assessor’s office and paying the bill. Same goes for your home insurance or PMI. (I couldn’t figure out what kind of ‘insurance’ was meant by the article.)
2) If you don’t, your local government may seize your property and auction it off at a tax foreclosure sale, even if you are paying your mortgage on time. It’s better here to actually over pay your taxes because at least the county can’t come and get you.
When Rob first sent me this, all I could think was that this doesn’t effect me directly. I don’t have AHM. I don’t own stock in Freddie Mac. (I digress for a deep irony, my friend works for Freddie and he lives out of his van! He’s literally homeless! LOL! By choice. “Strictly by choice.” – Say Anything)
However, the greater implications really frighten me. County governments could have short falls in revenue. It could be a sign of a recession coming. Rising homelessness. Not fun. I have vague memories of the recession of the early ’80’s and I don’t relish the thought of tough times ahead.
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{ 3 comments… read them below or add one }
this is SO disturbing! i’d rather have the responsibility of paying my taxes and insurance myself – at least that way i’d know they were paid, instead of having to trust some middleman to do it.
I’ve got visions of The House of Sand and Fog in my head.
This is great point as alot of the media was telling people not to worry if their mortgage company went bankrupt…
Wow. I feel for these folks. I am so glad that now we get (have) to pay our own tax bill rather than have it escrowed with our mortgage payments. I self-escrow, putting in 1/12 a month so when the bill is due we can pay; same for our homeowner insurance. With our previous mortgages, we had to trust our mortgage holder to pay these bills. So I would always call them when the bills were coming due to “remind” them. I don’t know bankruptcy law, but some court official needs to get in there, look at accounts and make these payments. If you’re in an area where you could be hit by a hurricane and your insurance lapses, you’re screwed! No one will issue a policy with a storm on the horizon.