Scripps Howard News Service
Beware if your mortgage is bought by Chase Manhattan Mortgage. Here's one man's horror story that still has not been settled a year after the company bought his mortgage. Chase sent him a letter as soon as it got his mortgage, saying it had no proof that he had homeowner's insurance. He didn't respond, not entirely understanding the request. After all, he knew he had insurance.
Another letter got his attention, big time. Chase said it was buying him an insurance policy for the incredible sum of $2,400 (he does not live in a mansion). He swiftly sent proof--by mail and fax--that he already had homeowner's insurance.
But in March of this year, when he got an escrow statement, it showed that Chase had made an insurance payment out of his account to his real insurance company, Fireman's Fund, and also paid $2,400 to the firm Chase had chosen to insure him.
These payments wiped out his escrow account, so the next time he made a regular mortgage payment Chase said he had come up short because of the shortage in the escrow fund and it charged him a $66 late fee. He screamed, telephoned and stormed and Chase refunded the late fee and promised to fix the problem, acknowledging it knows he has insurance with Fireman's.
As of June, the $2,400 still had not been refunded to his account.
In response to a query about this case, Chase spokeswoman Judy Miller said the company sends three letters to customers over 90 days when it doesn't have proof of a homeowner's insurance policy. In the case of this customer, she claimed that he didn't send proof of insurance in time to avoid the $2,400 fee but that the situation will be straightened out on his next monthly statement.
How can you avoid such a nightmare? Miller said if your mortgage is sold to a new servicer, call your insurance company to make sure the new lender's name and address are on the policy. If not, ask the insurer to send proof of your policy to the new lender. A simple step could save you from a similar headache.
