Couple can't find their mortgage lender

Nation's Housing

No one wants to cash the monthly check

August 22, 1999|By Kenneth R. Harney

WILL ANYBODY out there admit to being Stan and Alice Smith's home mortgage lender? Will anybody agree to cash their monthly mortgage payment check of $678.76?

This is no joke, and Stan Smith, a retired Army master sergeant who lives in Strasburg, Va., has consulted lawyers, visited courthouses in two states, and filed complaints with the attorney general of Virginia, the Ohio Division of Financial Institutions and the federal Department of Housing and Urban Development.

But for the past four months, the Smiths haven't been able to do something that most homeowners consider utterly basic: Locate a lender who'll admit to being their lender.

The Smiths have a mortgage. They just don't have a lender.

Their story illustrates just how mind-bogglingly fouled up a simple transaction such as getting -- and paying -- a mortgage can become.

Last fall, the Smiths refinanced their home with L. L. Funding Corp., a lender with offices in Annapolis and Fairfax, Va.

The Smiths made their payments on time for November, December and January, and the checks were cashed by L. L. Funding. But on Jan. 29, 1999, Stan Smith says, he received a phone call from a subsidiary of Provident Bank in Cincinnati, Ohio, informing him that Provident Consumer Financial Services now owned his loan. The cal ler asked him to send future payments to Provident.

Several days later, Smith received two "welcome" brochures from Provident.

Smith says he received neither a phone call from L. L. Funding nor a formal written transfer notice from Provident. Under federal law, lenders selling or transferring mortgages are required to provide written notice to borrowers in advance of any transfer, and acquiring lenders must send written notice to borrowers confirming the change.

When Smith tried to contact L. L. Funding for clarification, he found the company's Virginia office closed and empty, and the phone of the Maryland office disconnected.

A Provident spokesman said he believed that the bank provided the Smiths adequate notification.

For the next three months, the Smiths mailed in, and Provident cashed, their $678.76 checks.

But in June, Smith discovered that Provident hadn't cashed his May or June checks. When he inquired, he says, he was told that the bank no longer had an account number for his loan. At that point, according to Smith, the bank told him to stop sending payments to Provident, but offered no suggestions as to where to redirect them.

Provident subsequently returned the uncashed checks by mail, and promised refunds for the three mortgage checks it had cashed.

Smith says he is still owed a refund for April, but the Provident spokesman says the bank owes Smith nothing further.

Since June, Stan and Alice Smith have had no lender ask them for their mortgage payment and have been setting aside the funds just in case.

And, while having a payment-free home mortgage might sound idyllic to most homeowners, Smith is uncomfortable. "I'm just concerned that we're going to get this letter someday saying, hey, we're going to foreclose on you because you haven't paid for six months," he says.

Moreover, he's visited his county real estate recordation office and discovered that a lien for the full amount of the mortgage is still recorded against his home in the name of L. L. Funding. Should he need to sell the property, he couldn't provide clear title to the buyer.

Who really owns the Smiths' loan? Individuals identified in court filings as officers of L. L. Funding, Dr. Patwinder Sidhu and Darius Panah, could not be located for comment. A lawyer who represented the firm in a bankruptcy defense says the firm has ceased doing business.

Maryland financial regulators say they are interested in contacting whoever represents the firm to discuss possible violations of state licensing rules.

A spokesman says Provident "assumed we owned the mortgage" when L. L. Funding went out of business. The bank had provided a credit line to L. L. Funding and held loans such as the Smiths' as collateral until L. L. Funding sold the mortgages. Subsequently, L. L. Funding "provided documentation that indicated we did not own the loan," the spokesman says. He suspects that the intended buyer of the Smiths' loan was ContiMortgage Corp., a large investor based in Pennsylvania.

ContiMortgage sued L. L. Funding in February over a $710,000 claim, but its lawyer said last week that it has "no litigation at this time" against L. L. Funding. The ContiMortgage lawyer declined to discuss the Smiths' case.

Where does that leave the Smiths? Still waiting for a lender.

Kenneth R. Harney is a syndicated columnist. Send letters care of the Washington Post Writers Group, 1150 15th St. N.W., Washington, D.C. 20071.

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