Wednesday, October 28, 2009

Money matters

Okay, pop quiz. You sell your house, move, get settled, then leave home for a couple of weeks and when you return you're still getting mortgage bills. Worse still, because they are being mailed to your old address, your account is already in collections. What do you do?

That one should be easy. You call your mortgage company. The mortgage company says they've never received the payoff. What do you do next?

That one should be easy, but it may not be for everyone. You call the title company that handled your closing. The title company says they cut the check a month and a half ago. What do you do?

You get a reference number to track the check. If you've got a good title company, they give this to you without asking. You then call your mortgage company with said number. Why do you have to call your mortgage company?

This is important. Only you can access your account information, so even though none of this is your fault, you need to be the one on the phone. The person at the mortgage company tries to transfer you to another department and the call drops. What now?

Keep calling, and calling, until you get to talk to another flesh and blood person. Said person asks for a bunch of information you don't have because your old mortgage statements are in storage. What do you do?

You could go get stuff out of storage, or you could ask to speak to a supervisor. I did the latter and we got my account information that way. After about 20 minutes on the phone with the supervisor, I got her to promise that the issue would be resolved. Now, what should you do before hanging up?

Get her direct phone number and a number assigned to your issue and its progress. What the heck does this have to do with writing?

More than you realize. Bills, mortgages, rent, and other finances are a part of life, and there's a clear line of demarcation between people who get money/customer service/asset management/etc. and people who don't. You can't afford to be someone who doesn't. This morning's exercise reminded me of another case that came across my desk when I was a lawyer. Non-Latter-day Saints (and even some Saints) may not know this, but if you work as a professional, you may be asked by priesthood leaders to counsel people who can't afford your services. You can say no, of course, but I always said yes. Let's run through this like an exercise.

Your mother dies and has a pile of debts. You are the executor of her will, what do you do?

Hire a lawyer, ideally. You can pay their fees out of the estate. If you don't, you must at least know that once you've exhausted the amount of money and assets she had at death, the creditors are out of luck. They can't ask for more money. What this person did was take out a mortgage to pay off the debts. Now, if you take out a mortgage, what do you need to know?

There are a ton of answers here, but let's stick with the basic ones. You need to know that you own the land you are mortgaging. This may sound silly, but if you've got family land that you assume is yours, hire a title company to run a title search just in case. In this case, the person's ancestor had sold the land. You should also make sure you are protected by title insurance (he wasn't), and you need to know the terms of the mortgage. In this case the title company were morons and the bank only found out that he'd mortgaged the neighbor's property when the neighbor complained. Rather than claim the money from the title company, the mortgagee went after the mortgagor (the guy I'm telling this story about) and foreclosed on his property. Now, you're in foreclosure, what do you do?

Try like crazy to pay off the debt. Get a buyer for your land, quick, or take out another loan. You also need to know whether or not your state limits debt collection to the value of the liened property, meaning, once the bank takes your house, can they still come after you? In New Mexico, they can. Say all other options fall through, the home is foreclosed upon. Who now owns the house?

The bank. You have to leave. Again, this may sound simple, this person didn't understand what had happened and was forcibly evicted. What made this case a real nightmare was that before he came to me, eighty five million other people talked to him about it and offered nonsensical advice. The guy had no clue what was going on, and a very long meeting with me didn't remedy that. He still thought he owned his house and that he should get some hired thugs to restore him to it (I did talk him out of that.) I then talked to other friends about the facts (keeping the person's name and other identifying detailes out of it, of course) and was shocked to find out that practically no one understood the scenario. My visiting teaching companion at the time - who is not a stupid person by any stretch of the imagination - got hung up on why the neighbors would be mad, because she thought the mortgage money would go to them "because it was their land". I learned that normal people really don't know much about mortgages, even though most have them.

My point? You can't afford to be a normal person. In fact, nobody can, but people who work project to project without a regular paycheck especially can't. If this kind of stuff scares you, get over that and learn it anyway. Whenever you do *any* kind of financial transaction, learn exactly what it is you're doing and how it works. Drive the loan broker/bank rep/whomever crazy if you have to. Go to their office and make them show it all to you point by point. It wouldn't hurt to take some classes in tax preparation and investing. And keep up the learning. Financial transactions evolve over time. Don't ever be that guy who just lets his accountant take care of it.

I've always prepared my own tax return and managed my own investments. I pay my credit cards off every month and the only debt we have is a mortgage (when we had one) and student loans. All other assets, like cars, we own outright. And no, the fact that my husband and I have had good jobs doesn't guarantee this. Only being on top of matters does. Always make sure you're on top of yours.

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