Posts Tagged Mortgage
One very important rule to have and to stick to religiously when paying any expenses for your Owners:
DO NOT pay any expenses for your Owners unless you are also receiving the statements or bills for those same expenses.
This may sound very elementary to you but unless you are receiving the invoices for the accounts you are responsible for keeping current, you have no way of knowing that the account is in fact current. Think about this, on the first of May you mail in a mortgage payment for your Owner. It gets lost in the mail and a late fee is assessed. On the first of June, you mail in the June payment. This one gets to the mortgage company but is applied to the May payment which, as far as the mortgage company is concerned is 30 days past due. The Owner is still receiving the statement from the mortgage company and you didn’t receive the statement, so you have no idea that everything with this account is not perfect. This goes on for several months, before your uninvolved Owner decides to open one of his mortgage statements. He sees that there is a past due balance of the last month’s mortgage payment and the late fee from May which has continued to carry forward. Not only is your Owner upset and your reputation is tarnished, but now the Owner has several “30 days past due” notations on his credit report. You will probably end up paying the late fee and begging and pleading with the mortgage company to remove the negative notations on his credit report. This quickly becomes very time consuming, costly and negative to your relationship with your Owner. Just make it simple, let your Owner know that you would love to pay whatever expenses he or she wants you to pay, BUT you have to have the statements mailed to your address in order for you to be able to do an excellent job for them. Remember, you can always offer to send the Owner a copy of the mortgage statement with his monthly statement.
Be sure to check the monthly statement to ensure that everything is current and that there are no balances brought forward from the previous month. Another thing to be sure to check is that you are making the correct payment amount. In this past several years, there were a lot of adjustable mortgages written in our marketplace. Some of these adjust monthly, some quarterly, some yearly and some after a number of years.
Many mortgages may also allow the option each month to pay one of three or four different ways for the mortgage. If your Owner has one of these loans you will want to discuss these options with them before you start making their mortgage payments for them. Here is a description of some of the options your Owner may be faced with:
Minimum Payment – is the lowest payment amount and is typically a negative amortization (you are not paying enough interest to keep up with the rate being charged) payment and the loan balance next month will be higher than it was this month. Paying the minimum payment also may carry with it some zingers for your Owner later on in time.
Interest Only – This payment is higher than the minimum payment and pays only the interest which has accrued on the loan over the past month. This payment method will keep pace with the interest rate so your Owner will not end up owing more next month than he did this month. The thing to know with this option is that it is just what it says; interest only and you will not be paying any of the principle loan amount down . . . . only the interest.
30 Year Amortized Payment – This payment is higher again than the interest only option and does pay down a portion of the principle amount of the loan each month. If you continue to pay using this option for 30 years, the loan on the home will be paid off at the end of that period of time.
15 Year Amortized Payment – This payment is higher again than the 30 year amortized payment. The reason for that is that it pays down even more of the principle amount of the loan each month than the 30 year amortized payment. If you continue to pay using this option for 15 years, the loan on the home will be paid off at the end of that period of time.
Again, be sure to discuss these options with your Owner. You don’t want to be paying the minimum payment causing the loan amount to get larger while the Owner thinks you are paying his loan off all this time making the balance get smaller . . . or vice versa.
Home Owners Associations
Again, do not agree to make these payments either, unless you are receiving the monthly statements. While the stakes are higher with a mortgage payment, an HOA can be relentless with their late fees, interest assessments, pre-lien fees and filing liens against the property. The way they are set up, it takes very little time to accrue a very large amount of these penalties and the HOA management company does not have the authority to waive the fees . . . even in the case of a simple misunderstanding because you were not receiving the statements. Typically, to waive the fees, the issue has to go on the agenda for the next Board of Director’s meeting and they, and only they, may choose to waive a penalty or fee . . . and they generally will not!
If your Owner does not have their property taxes impounded in an escrow account with their mortgage company they may wish for you to pay them for them. This is not a big deal, but again, be sure that you receive the tax bills that you are to pay. We always try to audit our Owners’ accounts a couple of months before their property taxes are due. This way, if the account is not going to have enough money in it to pay the property taxes, we can give the Owner adequate time to get the funds to us. A short notice only causes stress on everyone, and we have no idea as to where the Owner has his funds. They may have the money in a fund or account that takes some time to access and if we minimize their time, it creates a crisis for everyone.
You will typically be ordering most, if not all, of the maintenance work being done on your Owners’ properties, so you will be receiving the invoices for the work performed. There are many ins and outs to managing the maintenance for them. The main thing is to let them know when maintenance needs to be done on their property. Whether they are an “involved” or an “uninvolved”, Owner, they will always appreciate at least a “heads up” as to what is going on.
When we pay anything on behalf of our Owners, we never mark anything up, and we always include a copy of the invoice or bill for the charge with their monthly statement. This does nothing but build trust for the Owner that you are not overcharging them for anything and that you are not adding fees or overhead charges to their expenses