Advertisement
YOU ARE HERE: LAT HomeCollections

YOUR MONEY | Q&A | MONEY TALK / CARLA LAZZARESCHI

To Avoid Borrowing Trouble, Ask to Get Mortgage Payment Statements More Often

August 25, 1996|CARLA LAZZARESCHI

Q We are currently making additional principal payments on the mortgage for a piece of investment property and are concerned that these payments be properly credited. We have asked the bank repeatedly to give us a monthly statement detailing how our payment each month has been applied toward principal and interest and stating the current outstanding unpaid principal amount. The bank has ignored our letters. What can we do? Is there a law covering this?

--R.O.

*

A In California, banks are required only to provide borrowers with an annual statement that details how their payments over the previous 12 months were allocated between interest and principal. The annual notice must also state the loan balance outstanding at the end of the period it covers. Typically these notices are mailed in late December or early January to assist homeowners with their income tax preparations.

What does this mean to you? It means that if you save these statements you can determine with a little subtraction whether your additional principal payments are generally being correctly credited to your account from year to year. For precision, you would still need monthly statements--and you should be able to get them.

Don't rely on a letter to some bank employee. Visit your bank and ask to speak to an executive from the loan servicing department. All borrowers are entitled to ask at any time for a "demand statement," a term for the document that gives a loan's unpaid balance--although the bank can charge for that. If you get a statement each month for several months, you should be able to determine if your payments are being properly applied.

Our banking sources say most banks are far more cooperative than yours. In fact, many lenders provide the information you are seeking by sending a "bill and receipt" as the regular monthly statement. This is an option, however, not a legal requirement.

If you remain unsatisfied with your treatment by the bank, you should complain in writing to the bank president. If your letter is ignored, you should intensify your efforts by filing a formal complaint with the state or federal agency that regulates the bank. With so many banks focusing their marketing efforts (and ad campaigns) on customer service, it seems you should have been able to expect better treatment.

Exception Applies Only to Nursing Home

Q The law requires that you live in a home at least three of the previous five years in order to use the $125,000 profit exclusion available to home sellers over age 55. I know an exception is allowed for a homeowner who must enter a nursing home. What about a retirement home? Is an exception granted for entering one of those?

--V.C.

*

A No. The exception applies only to licensed nursing care facilities and only to taxpayers over age 55 who become so physically or mentally debilitated that they require care at one of these facilities. In such cases, these taxpayers are permitted to count time spent in the nursing home as time spent in their own homes for purposes of profit-exclusion eligibility.

Disability and Drawing Social Security Early

Q My husband was forced to sell his business because of severe health problems. He is 55 years old. Is there any way he can begin collecting Social Security now? Or must he wait until he turns 62?

--S.C.V.

*

A Taxpayers who have accumulated a minimum number of Social Security credits before becoming "severely disabled" may receive monthly benefits equal to the amount permitted by their contributions into the system. The payment is not reduced because it starts earlier than the normal retirement age. To qualify for disability benefits, you must have earned a minimum number of credits for your age, including some credits in recent years.

What constitutes a disability? The government says you must be so severely impaired, either physically or mentally, that you cannot perform any substantial gainful work. The impairment must be expected to last at least 12 months or to hasten your death. The determination must be based on medical evidence from your physician that is reviewed by a local Social Security representative.

Disability payments do not begin until five full calendar months after the event that rendered you unable to work. For example, if you became disabled Jan. 15, the first benefit would be for July and would be paid in August. Had you received disability payments within the previous five years, though, a second waiting period would not be imposed. Disability payments can be paid retroactively for up to 12 months, not including the waiting period.

Carla Lazzareschi cannot answer inquiries individually but will respond in this column to financial questions of general interest. Write to Money Talk, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053. Or send e-mail to carla.lazzareschi@latimes.com

Advertisement
Los Angeles Times Articles
|
|
|