Can bank void mortgage if checking account is transferred?

November 4, 2010 08:15 by Consumer Ed

Dear Consumer Ed:

I have a mortgage and a checking account with the same bank. The mortgage payments are up- to-date and have never been late. If I decide to change my checking account to another financial institution, can the bank rescind my mortgage loan?

Consumer Ed says:

That depends on the terms of your mortgage agreement. Some loans require the borrower to maintain an account (with a minimum balance) at the lending institution as a condition of the loan. If you have agreed to maintain an account at the bank, and you close it, you could be in default of your obligations under the loan agreement. I would encourage you to contact your Lender to discuss the specifics of your loan requirements. If you are required to maintain a checking account with the financial institution, ask your bank to show you the specific provision in your mortgage contract. Verify whether failure to maintain a checking account alone is sufficient cause for the bank to cancel your mortgage.  Discuss whether, given your excellent payment history, the bank would consider amending your mortgage contract to say that you are not required to maintain a checking account with their institution.  If your bank will not remove this provision, find out the minimum amount you can keep in the checking account, and withdraw the rest to another bank.  Then, as long as you maintain the minimum checking balance with your current bank, you can safely build up your savings elsewhere.

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Selling a time share

November 4, 2010 08:07 by Consumer Ed

Dear Consumer Ed:

My parents own a time share. They rarely go there, and I have no interest in buying it from them. But the monthly maintenance fees are killing them.  They want to get out, but they don’t know how.  They got a letter from a company that says they will take the timeshare off their hands if they pay $2000 and sign over the deed.  Do you think they should accept this offer?

Consumer Ed says:

Use extreme caution when confronted with offers such as these.  Some time share “resellers” are actually scammers who accept large payments from time share owners, but never file the deed or pay any maintenance fees.  The time share owner may not discover he has been scammed until he is sued for past due maintenance fees. 

Your parents should consider the following alternatives:

  • Ask the resort’s developer, resort manager or owner’s association if they have a newsletter, website or bulletin board where owners can advertise their timeshare for resale.
  • Avoid paying money to a reseller upfront.  If possible, find a reseller that takes its fee after the timeshare is sold. If you must pay a fee in advance, ask about refunds. Get refund policies and promises in writing.
  • Ask if the reseller’s agents are licensed to sell real estate where your timeshare is located. If so, verify it with the Real Estate Commission. Deal only with licensed real estate brokers and agents, and ask for references from satisfied clients.
  • Read the contract thoroughly and make sure you understand everything before you sign.
  • Contact the Better Business Bureau to check the company’s reputation.  Ask if any complaints are on file.
  • If you sell your deed, let the resort know who now owns your timeshare and who to bill for the maintenance fees and taxes.
  • Check public records to verify that the deed has been filed in the new owner’s name.

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Regulations on air conditioners

November 4, 2010 08:00 by Consumer Ed

Dear Consumer Ed: 

I heard I have to replace my home air conditioner because of Environmental Protection Agency (EPA) regulations. Is that true?

Consumer Ed says:

No, EPA regulations do not require homeowners to replace their existing home air conditioners, even if the air conditioner needs major repairs.

The EPA is banning R-22, the refrigerant used in nearly all home air conditioners made before January 1, 2010. Because R-22 depletes the Earth’s protective ozone layer, EPA is gradually reducing amounts of that chemical that can be produced. In fact, EPA’s regulations ban manufacturers from making new air conditioners that use R-22.

However, to preserve the useful life of R-22 equipment consumers have already purchased, the EPA allows R-22 to be used to service existing air conditioners.  You are not required to switch to a more efficient air conditioner nor one that uses a different refrigerant. But you will eventually need to replace your equipment, since the EPA will continue to reduce the amounts of R-22 available, reaching a level near zero in 2020.

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