John Woodard says the notice from his new mortgage company looked like typical junk mail.
But it wasn't. It was a letter telling him that his recently refinanced loan had been sold to another lender.
By the time the Rosedale homeowner realized he had been paying the wrong lender, he owed thousands of dollars in late fees and he soon racked up more in lawyer bills from fending off foreclosure.
"My mortgage company never notified me to send the checks somewhere else," he said. "I did get something in the mail from the new company, but it looked like an advertisement so I thought it was junk."
Woodard's story is a cautionary tale in the age of bankrupt mortgage companies and failing lenders.
Mortgages have long been packaged and sold to investors as securities, sometimes just weeks after they are issued. But a crisis brought on by record loan defaults in the subprime market has led more than 100 lenders - including American Home Mortgage and New Century Financial, two of the largest subprime lenders - to file for bankruptcy or close up shop.
Many of these lenders end up selling their loans, which means there are a lot more mortgages passed onto others, sometimes more than once within months.
Industry professionals say homeowners, even those who do not fall in the subprime category and whose lenders appear solvent, need to be vigilant since it is the borrower's responsibility to ensure their mortgages, and their insurance and taxes, are paid on time even if their loans are sold.
Homeowners should read their mail and e-mail and listen to phone calls notifying them of a change of lender or a late payment. They need to read all their statements for inaccuracies and keep records of their payments in case of a discrepancy.
In Woodard's case, good recordkeeping and swift action upon news of the foreclosure, as well as some financial help from his daughter, saved his house, said his lawyer, Mark F. Scurti.
Woodard had refinanced his $89,000 Rosedale house in January, seeking a lower payment. But soon after, his new lender sold its entire mortgage business to another lender.
Although he continued to pay, Woodard ended up in foreclosure because the payments were not getting to the right place.
