Making mortgage principal pmts / Nationstar Mge experiences?

[Carson]

I have a two-part question.  We are refinancing our home and I am apprehensive with the lender our broker chose after googling for complaints. 

Anyone have any experiences with Nationstar?  Most of the complaints I am reading are about people requesting modifications/hardship situations, and I can understand the hard-nosed stance.  Another set of complaints revolves around escrow (we are opting out) and them forcing insurance on you which is a battle I am nervous about.

What I am mainly worried about is making extra principal payments.  The whole reason we are refinancing is to continue paying the same monthly amount but with lower interest rate.  By my calculations, we'd pay our loan off in 18 years, which would be great timing.  Does the lender HAVE to apply payments to principal if you direct that?  I'm just really worried and nervous, although our broker (DH coworker/friend) is trying to be reassuring.

[velochic]

I've never used them, but I have a question about one of the complaints... you say that they require insurance.  Do you mean PMI (mortgage insurance) or homeowner's insurance?

You need to get the loan terms in writing before you sign.  These will tell you how and if you can make extra payments to principal.  They do not HAVE to apply it that way, based on the terms of the loan.

[laohaire]

If I had to get a mortgage or refinance now, I would choose a local bank only.

It seems like there are major complaints about every single national mortgage lender out there. The industry is a mess.

I don't think a small, local bank is any guarantee of having no problems, but I do think it's generally a better choice.

[Carson]

Sorry...  I meant homeowner's insurance.  Of course every lender requires home owner's insurance (at least that I'm aware of) and documentation of such.  I am opting out of escrowing with them so I can just provide the certificate of ins to them I think.  Some of the complaints made it sound like Nationstar forced the borrowers to get homeowners insurance directly with them and just added it to their bill?  :confused: there are two sides to every story of course and I'm not sure what circumstances lead to that.

I will look at the loan documents and see if i can find the info about extra principal pmts.  I do admit to feeling a little stuck in this refi right now, but hope that it goes okay.

[Caneel]

Banks can (and do) force-place property insurance on borrowers when real estate is pledged as collateral. 

Force-placing actually may be required under some sort of banking law or regulation. I worked at a bank for several years and loans that had real estate collateral were reviewed annually at the time property insurance renewed.  If a borrower did not provide proof of insurance, the bank would call their insurance agent that day (no exceptions) and get a policy forced-placed on the property and bill the borrower.  It was a super-big deal that all real estate secured loans had proper insurance coverage becasue the bank would get in big trouble if the auditors found out the bank had real estate loans on the books with no insurance coverage.

If you do opt-out of escrow, just make sure to have proof of giving the bank your insurance renewal info.  Since the bank will be named as payee on the policy, an insurance certificate is automatically mailed to them but it would be a good idea of get a copy yourself and send it certified mail to the mortgage servicing department.

Make sure you read the fine print, I have heard some wacky stuff relating to extra to principle payments. 

When we refinanced, I needed to contact a seperate department to get a form to start the extra to principle payments.  Using that form, I needed to state the amount I was paying above the regular payment and that all extra monies were to be applied to principle.  Not a huge deal but the bank sure didn't make it easy.  I would need to do it again if I ever changed the extra payment amount.

I remember reading that some banks were changing customers a fee (like a $100) to set up an "extra" automatic withdraw, the bank would take the regular payment out of a checking or savings account but would count anything extra going towards principle as a seperate transaction.  The bank used this seperate transaction as an excuse to charge a fee.  The real motivation was to discourage people from setting up that extra principle payment.

Getting an attorney to review your loan docs might put your mind at ease. 

I have yet to hear about it but a former co-worker from my banking days says they predict pre-payment penalties will eventually show up on home loans.

If you have a normal, conforming mortgage, chances are you won't have any problems. 

So much of the current mortgage mess relates to people getting wacky loans - the no-money down deals, the adjustable rates, interest only payments and so on.  Those were developed and packaged by shady mortgage originators.  Outright fraud on the documentation side, borrowers or originators lying about income, falsifying documents, was another factor.

[Caneel]

Originally Posted by Carson 

Sorry...  I meant homeowner's insurance.  Of course every lender requires home owner's insurance (at least that I'm aware of) and documentation of such.  I am opting out of escrowing with them so I can just provide the certificate of ins to them I think.  Some of the complaints made it sound like Nationstar forced the borrowers to get homeowners insurance directly with them and just added it to their bill?  :confused: there are two sides to every story of course and I'm not sure what circumstances lead to that.

I will look at the loan documents and see if i can find the info about extra principal pmts.  I do admit to feeling a little stuck in this refi right now, but hope that it goes okay.

What probably happened, and I put forth this scenario because I saw it happen regularly, is the bank runs a report on Jan 1 looking for any insurance that expired on Dec 31.  500  loans come up showing as having expired insurance.  The person in that department forwards the list of loans to the department that monitors compliance and they force-place insurance of all 500 properties and send the bill to the borrower/homeowner.  The bank's attitude is one of 'you let your insurance lapse, you figure it out."

Now, maybe 99% of those borrowers had current insurance coverage.  Maybe State Farm Insurance was late in sending out insurance certificates.  Or maybe the bank employee in the servicing department in charge of updating the loan system fell behind in his/her work.   Maybe cartons full of mail were left unopenned.  (I personally experienced all three where I worked) 

Point being, Big Bank doesn't look very hard to verify if there might be an explaination for why some computer report is showing John and Suzy Doe as letting their property insurance lapse, Big Bank just slaps it on the loan and charges the Doe's.  If the Does do indeed have proper coverage, let them prove it and we will worry about refunding the fee later.

[Carson]

That's the term, forced place insurance.  Thank you, I appreciate it.

I didn't find anything about making principle payments in the loan docs.  I might give them a call and see. 

I am so conflicted - this really could end up being fine or it could be a nightmare with a different lender, but as the PP said, big mortgage is in trouble all around.  It just sucks, it's a difference of $400/month which is pretty significant.  I really wish our current lender offered the same terms.

[MyTwoAs]

I don't have much experience with Nationstar Mortgage yet but my loan was just sold to them by CitiMortgage.  I also Googled the company and saw a lot of the bad reports you did - escrow screw ups, payments drastically increasing, etc and I was nervous.  I just made my first payment to them and they were very friendly - they actually called to welcome me as a customer.  My escrow analysis matches that of CitiMortgage and they already have a copy of my insurance policy on file.  Since I don't have any choice in the matter I'm just going to be diligent about making sure everything is squared away with them.  My CitiMortgage loan was about 5 years old, fixed-rate, not a subprime, not a modification, etc - just a straightforward conventional loan.  I haven't attempted to make extra payments to them, yet, but I believe I read something about the process on their website.

Hopefully I continue to only have positive things to say about Nationstar.  Good luck with your decision!

[Carson]

Thanks, myTwoAs. You bring up a good point , even if I were with a different lender or even with this one, I could be sold somewhere else at some point out of my control. We have a very conventional and in a bank's eyes 'good' loan and so I am wondering if they aren't looking for more loans like that in their portfolio. I'm encouraged by your experience, even though it's been minimal.  :)  I agree, I think reading about the pitfalls just makes me want to ensure everything is squared away from the get-go.  

I was looking at the info on how to make a payment and I saw the addresses but nothing about making extra principal pmts, I'll report back when I give them a call.

[bobandjess99]

Our loan was sold to them about 2 years ago?  We have not had any issues.  Everything stayed the same from our original loan (we didnt refinance throught hem, just our original mortgage was sold to them) and we have had no issues.  We pay on time every month. 

[mattemma04]

We recently did a refi with a local bank.Even before we signed the closing papers they sold it to fannie mae. The bank services the loan for fannie mae.

We do a straight payment with no escrow for tax or home insurance. We got letters demanding proof of payment for the property  taxes,and proof of coverage for home insurance.Given 30-60 days after which they will create an escrow to cover those things. Very annoying,but we faxed copies and hopefully all is well.

The bank was very inept when it came to setting up an auto-deduct from our checking account,and we noticed they don't even take the money out on the speficied day. Atleast being a local bank we can just go there and make a principal payment on the mortgage. I tried doing that with my student loan(sent a letter)and they never applied all of it to the principle.

For the home insurance we also had to list the mortgage company EXACTLY like the bank wanted it listed.

Best wishes whatever company you choose!