With house prices on the rise and interest rates low, financial experts say capitalizing on your home equity could be a smart investment.
John Salberg, who works as a teacher, tried to do just that with his four bedroom, two bathroom home near Campbell. He has owned his San Jose home for about 10 years. According to Zillow, the value of his home has increased by a few hundred thousand dollars over the past year.
In January, Salberg applied for a home equity line of credit. But in March, the bank dropped a bombshell on him: it discovered that Salberg already had two mortgages on his house.
âI don’t have two,â Salberg told NBC Bay Area Responds. “I know for a fact that I only have one. In fact, I just refinanced in December.”
It turns out that Salberg had a mortgage of $ 765,000 that he was aware of and he was paying off another mortgage of $ 765,600 that he had no idea about.
This news came as a shock to him.
âI didn’t understand why there would be two mortgages on my file,â he said.
The bank wouldn’t give him his line of credit until he factored in the additional mortgage of $ 765,600. In the long run, an issue like this could prevent Salberg from selling his house, so starting in March he tried to fix it.
âConservatively, [I would guess I made]15 to 20 phone calls, âhe recalls. âAnd those phone calls lasted 45 minutes to an hour each. “
Salberg got his mortgage from Change Home Mortgage. He needed the company to remove the shadow mortgage, but says customer service staff took no action.
In June, Salberg turned to NBC Bay Area Responds for help.
We have seen three clues to this mortgage mystery.
First: The bank hadn’t called in debt collectors or reported Salberg’s credit report for failing to pay off the second loan.
Second: The mortgages were dated one day apart, just when Salberg refinanced his house last year.
Third: the two mortgages were almost the same amount.
NBC Bay Area Responds contacted Change Home Mortgage. His lawyer responded to us immediately. Less than a month after our investigation, Change Home Mortgage canceled the erroneous mortgage.
âYou did a miracle for me,â Salberg told NBC Bay Area Responds.
Change Home Mortgage sent NBC Bay Area a statement that said:
“The error in this case was caused by a national title insurance company. When the management of Change Lending became aware of the situation, we immediately worked on behalf of the borrower to help resolve the issue through the securities company to the satisfaction of the client.
Jacob Channel, senior economic analyst at Lending Tree, called Salberg’s experience “one in a million.”
âSorry to say, John, I haven’t heard that this happens to other people – or at least frequently,â Channel said.
Nonetheless, here’s a recommendation for every time you buy, sell, or refinance a home: Check court records a few weeks after closing. Next, check that your deed and mortgage are registered correctly.
If not, Channel advises, “I will act as quickly as possible.”
âI would probably give up whatever I was doing and contact my lender,â he continued.
Salberg agrees 765,000%.
âFollow the trail, just to cover yourself,â he recommended.
Salberg said he was finally able to get his home equity line of credit.
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