Monday, October 29, 2018

Lenders And The "Right To Inspect"

For the most part, when I visit the home of someone who's fallen behind on their mortgage payment, the debtor is cooperative or at worst noncommittal when I explain why I'm there.

However, there have been a few occasions where the debtor has told me I have no right to photograph their home or attempt to talk to them in regards to their delinquency. This is sometimes accompanied by threats to call the police or consult their attorney.

In cases like this, I don't attempt to argue. I simply thank them for their time and note what happened when I turn in my report. One of the prime rules of this business is to always be courteous and to avoid arguing with the debtor.

Are they on sound legal ground to send me on my way?

There are endless online discussions regarding this topic, touching on privacy and trespassing laws, and the legality of the lender sending out an inspector to visit a "private" property. The layman's consensus seems to be that the lender has no legal standing upon which to send people out to "spy"on a home and its occupants.

This is incorrect. Somewhere in the mountain of documents that comprise a mortgage loan, it's a virtual guarantee there will be wording to the effect that the lender can indeed send someone out to inspect the property in order to verify the condition of the home and whether it is occupied or vacant.

You actually aren't truly the owner of the property until your mortgage loan is paid off. Until then, you and the lender are essentially co-owners, and under certain conditions they have the authority to send out an inspector to visit.

The inspection is generally triggered when the borrower falls behind a certain number of days on their payment and the bank is unable to reach them. Justifiably concerned over the status of the property, they will then retain a field services company, who dispatches a professional inspector to the address.

The primary purpose of the field inspector's visit is to ascertain whether the property is still occupied, and if so, to determine if the borrower is still the occupant.

The inspector will obtain outside photos of the property and write up a brief condition report. They will attempt to establish contact with the borrower or a third party at the property for the purpose of delivering a sealed letter from the bank to the borrower.

These inspections will continue until the borrower and the lender actually reconnect to work on a resolution concerning the delinquency, or the bank decides to foreclose.

You might be surprised to learn that on a good number of my visits, I find that the property in question has actually been vacated. For whatever reason, the borrower has decided to just walk away rather than seek a resolution with the lender In other cases, I have learned that the borrower is actually deceased!

I've even had several instances where the borrower has moved out and is renting the property to someone, while not making their mortgage payment. (This could also potentially be a violation of their agreement with the lender, but that's a whole 'nuther post.)

Should you ever find yourself behind on your mortgage payment and an inspector shows up, please remember they are there to complete an assignment that is within the lender's legal purvey to order.

Keep in mind that you are probably going to be charged for the inspector's visit, so don't avoid them.That's right! Whatever the bank has to pay the field services company is likely going to be added to your balance due.

It's best to engage with the inspector so the bank can work with you to get things back on track.  Banks will move heaven and earth to avoid a foreclosure, so talk to your lender and seek a resolution.

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