mortgage cancellaton after recession period

When you sign your loan docs you sign about 5 or 6 different forms stating that you will assist in correcting any information that may be incorrect on the loan. So it is very possible that they can call your note due and request that you pay the loan in full if you do not cooperate.

also the recission period is for you not the lender.

The mortgage company's reason for cancellation is they forgot to set up an escrow account which they said they did not realize is required on a government funded loan. Does this make sense?

It sounds like they screwed up big time. So I am assuming this is either a FHA or VA loan, correct? Did they payoff your previous mortgage or is this a purchase? It doesn't make a whole lot of sense at all. Do you have a copy of your HUD-1 ? If you do look at it and see if they collected reserves for taxes and insurance.. Check that out and let me know I am very interested in how this turns out. There is no way that should have ever happened. The title company and the lender both should be 100% aware when they approve the HUD for closing if there is an escrow account or not. And anyone that has been in this business for even a week would know that you need to set up an escrow account on any type of government subsidized mortgage.

Posted: 04 Feb 2010 05:38 am Post subject:

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It sounds like they screwed up big time. So I am assuming this is either a FHA or VA loan, correct? Did they payoff your previous mortgage or is this a purchase? It doesn't make a whole lot of sense at all. Do you have a copy of your HUD-1 ? If you do look at it and see if they collected reserves for taxes and insurance.. Check that out and let me know I am very interested in how this turns out. There is no way that should have ever happened. The title company and the lender both should be 100% aware when they approve the HUD for closing if there is an escrow account or not. And anyone that has been in this business for even a week would know that you need to set up an escrow account on any type of government subsidized mortgage.

yes it is a fha loan, actually it is a refinance through citimortgage. they hold our current mortgage and approached us about refinancing and lowering our interest rate and loan term from 20 yrs to 15. yes they paid off our current loan and no they did not collect reserves for taxes and insurance. we closed on 1/28/10 and they called yesterday, 2/3/10 and told us they loan was invalid, they were shredding the documents, we had to set up an escrow account and redo the mortgage. because we do not want to escrow our taxes, they said they would return our application fee and reinstate our original mortgage and lets forget this ever happened. needless to say we are disappointed in the outcome.

i've never heard of a lender cancelling a mortgage in that sense. as brad pointed out, rescission is strictly a customer right. lenders have no such right of rescission.

this is pretty bizarre, but then we seem to see all sorts of bizarre behavior in the mortgage industry in the last couple of years or so.