- The mortgage application states where you work and your income. Your loan documents state that you will maintain the property, pay property taxes when they are due and maintain homeowner's insurance naming the mortgage company as the lender. It includes information on your date of birth, your previous job history, your liquid assets and other relevant data. It also provides information on your co-borrower (if applicable).
- If any of the information you provided was incorrect and the lender used that information to approve your loan, you are in breach of your contract. If you let your homeowner's insurance policy lapse or you do not pay your property taxes when they are due, you are in breach of your contract. This is also true if you fail to pay your mortgage payment when it is due.
- Your lender has several options when you breach your contract. If you are in default because you have not made your mortgage payments, he can start a foreclosure proceeding against your home. He has the option of foreclosing for any breach of your agreement, but he will often resort to less drastic action if the offense involves non-payment of property taxes or letting your insurance lapse. He can require that you pay your property taxes each month with your house payment, if you are late paying your property taxes, and he can obtain a forced insurance policy if you fail to renew your homeowner's policy. This type of policy typically costs three or four times what you were paying and it only protects the lender.
- Always provide complete and accurate information when you apply for a home loan. Make sure you pay your property taxes when they are due and pay your renewal on your homeowner's policy promptly. If your lender adds a forced policy or starts a foreclosure proceeding it will be costly to clear things up. You may have to pay attorney's fees and various other fees if you default in any way.
Mortgage Loan Application
Breach of Contract
Remedies
Summary
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