what happens when a borrower pays less?

[mrslunar]

What is the name of your state (only U.S. law)? CA

I am leasing a home that is being foreclosed on.

I contacted the owner to see what she had to say about the foreclosure and she stated that the reason the loan shows as being in default is that when the mortgage rate adjusted, she wasn't aware of the new amount of payment and continued to make the OLD payment amount. She said that it's "standard" for lenders to then hold the money in an escrow account if it's not the correct amount and NOT credit it towards the loan. So, she's stated, she simply has to make up the difference and the loan will then be current

Is anyone aware of this rule of lenders? Is it true that this practice is standard and common? Or is it another part of the scam my landlord is running?

Edit to add:
The loan was refinanced this year, so within the past 8 months, is that enough time for a mortgage rate to adjust?

Thanks.

 

[dmiller12]

Is anyone aware of this rule of lenders? Is it true that this practice is standard and common?

This is common practice if a partial payment is received. The money is held in a suspense account.

Or is it another part of the scam my landlord is running?

Sounds a little fishy to me.

The loan was refinanced this year, so within the past 8 months, is that enough time for a mortgage rate to adjust?

Again, sounds fishy but it could be a 6 month adjustable or something. I wouldn't get too comfortable there.

 

[mrslunar]

This is common practice if a partial payment is received. The money is held in a suspense account.

.

They would hold payments and then allow the home get foreclosed on? (just wanting to clarify)

Yes, fishy, we're not planning on staying, just researching to cover our bases.

 

[dmiller12]

They would hold payments and then allow the home get foreclosed on?

Well yes. If necessary.

Keep in mind, just because the LL is not paying the mortgage, you are still responsible to abide by the terms of your lease. Make sure if you do leave, you give proper notice and clean the place. After you've cleaned it, do a walk through with the LL and have them sign off that all is well.