HOC Existing Loan Customers
The lender that took your loan application is the originating lender.
The company that receives your mortgage payments is the servicer. This company collects and posts your monthly payments, pays the property taxes, hazard insurance and mortgage insurance, provides payoff figures if you are paying off your loan.
While the originating lender and the servicer may be the same company, more often than not, they are different. You will be informed when the servicer of your mortgage changes. The borrower does not choose the servicer.
The loans made through the HOC Mortgage Purchase Program do not all have the same terms and conditions. HOC has had several different programs over the years for both first mortgages and secondary financing.
What is a first mortgage and a second mortgage?
The first mortgage is the big loan you get to purchase your home. Typically a second mortgage (or third) is a smaller loan for a shorter period of time for closing cost assistance or possibly a downpayment. The reference to first or second or third is to their legal priority. The first mortgage is in first position to be paid if there is a default. When a first mortgage is paid off, the loan that is in second position automatically becomes first unless it is paid off or subordinated to another first.
Can I purchase another home using HOC financing?
No. HOC’s program is only for people purchasing their first home. If you wish to buy another house, you will need to use regular “market” lending.
When can I remove mortgage insurance?
In 1998, the law permitted borrowers to have their mortgage insurance, whether private or FHA, removed from their loan when their remaining balance reached 78% of the value of the house. HOC defined “value” to mean the lower of the original sales price or appraised amount. This rule still applies to conventional mortgages (not government insured). Beginning in April 1, 2013, new FHA insured loans will carry monthly mortgage insurance until the mortgage is paid off. FHA loans already made are not subject to the new requirement.
What is escrow?
Escrow is a term used to mean the collection of certain fees which are then held in reserve by the servicer to pay a third party upon an anniversary date. Property taxes, hazard insurance, mortgage insurance (if applicable) are typical escrows which are part of your monthly payment. The service collects them from you and will pay the property taxes, hazard insurance and mortgage insurance when due.
What is an escrow analysis?
An escrow analysis is an annual review of the amounts being collected from you and the amounts being paid for taxes and insurance to determine if the proper amounts are being collected. The servicer is required to give the borrower an analysis of the escrow account once a year. Sometimes, if property taxes and insurance costs rise, the amount of escrow will have to be increased to pay the future bill. In addition, there may also be a shortage from the previous year because more was due to pay than was being collected. If, on the other hand, these expenses reduced, you may receive a surplus, although this is less common.
Can I change my hazard (fire) insurance company?
Yes. You can change this company at any time. You must let your servicer know, however, so the servicer will know what company to pay. The new hazard insurer probably will take care of this for you. You will probably have to pay the premium for a year in advance.
Can I refinance my HOC loan?
HOC loans allow you to refinance your first mortgage without penalty and at any time. HOC itself does not do refinancing. When you refinance, you pay off one mortgage and start a new one.
If your property is an MPDU there is a limit on how much you may refinance. You must abide by the MPDU covenants on your property. You are not allowed, per MPDU regulation, to hold more total debt on your MPDU than the value of your home. You must have the county calculate the value of your MPDU. If your property is not an MPDU but a market property and “underwater”, i.e. you owe more than the value of your home, you will have difficulty refinancing as you will owe more than you will receive from the new lender as a new loan. That means you would have to take cash to settlement to refinance.
What is subordination?
Subordination is a term which refers to secondary financing. It means to keep a second or third loan in the same position when a first mortgage is being paid off and a new first mortgage is to be made.
HOC’s secondary financing for closing costs are second or third loans. Sometimes they can be subordinated and sometimes they cannot. If they cannot be subordinated, the loan must be paid off when you pay off the first. You have to request subordination through HOC.
Payoff figures for the secondary loans are obtained from the servicer, Bogman, Inc, which is where you send your payments for the secondary loans.
What if I have trouble making my mortgage payment?
You should contact your servicer at once if you are having trouble making your mortgage payment. As unpleasant as it may be to call the servicer and talk about problems, the longer you delay in talking to the servicer, the less help the servicer can offer. A solution may be the sale of your home. If all else fails, foreclosure becomes the solution of last resort.
What is a short sale?
This is the sale of your property for less than you owe on the mortgage. It requires the advance consent of the servicer. It is not a foreclosure but is often used to prevent a foreclosure.
What is foreclosure?
This is a legal process in which the lender puts the property up for public sale when you have stopped making your mortgage payments. In Maryland, a lender cannot foreclose before 120 days after the initial default.
What is Loan Modification?
A loan modification is a change in some term of the mortgage either permanently or temporarily to avert a foreclosure. A modification is usually not done if the borrower does not have the financial means to adhere to the terms of the modification.
What is my responsibility with homeowners associations or condominiums?
You are responsible for paying the homeowners association and/or condominium dues and any assessments they may charge. These fees are not part of the monthly mortgage payment.
If you become delinquent with your homeowners association or condominium fees, either body may also foreclose and take back your property.
Can I remove someone from the loan?
Only the servicer can authorize someone to be removed from the loan. The mortgage note signed at settlement creates the obligation to repay the loan. All parties that originally signed the mortgage note are equally responsible for the mortgage payment. A party will not be removed from the loan unless the remaining party or parties can demonstrate that they have as much or more ability to repay as the original signers.
Can I add someone to title?
You are able to add people to the title without the lender’s consent. This is done by the recording of a new deed at the court house. Someone who is added to title after the loan has been made, will be taking title subject to the terms and conditions stated in the deed of trust on record at the time.
Can I remove someone from title?
You can remove someone from title without the lender’s consent. Removal from title, however, does not remove someone from the loan if they signed the mortgage note. If you want to remove someone altogether, a refinance of the mortgage with a new mortgage in different names is the preferred method.