Hold mortgage lender accountable

DEAR BOB: CitiMortgage holds our home loan. They told us they do not guarantee they will pay our property taxes from our escrow account on time within the discount period. Is this legal? It seems to me the mortgage company, which requires us to have an escrow impound account, should be responsible to pay the taxes on time. What recourse do I have? - MeLynda R.

DEAR MELYNDA: Your e-mail is shocking. I suggest you write a polite letter to CitiMortgage and insist either your escrow impound account be cancelled or CitiMortgage agree to pay your property taxes on time to avoid any penalties.

Then monitor your escrow account closely to be certain the lender charges you only the property tax amount and you are assessed any penalty for the lender's late property tax payment.

When a mortgage lender requires its borrowers to have a property tax escrow impound account, there is no valid reason for the lender to not pay the property taxes on time to take advantage of any discounts.

If necessary, take CitiMortgage to local small claims court for any lost discount or penalty its negligence costs you.

DEAR BOB: It looks like I can sell my home for $525,000 or more. After paying the sales commission, and paying off my credit cards and car loans, I will have enough to buy a nice home in a lower-cost community. What will my taxes be? - Bruce G.

DEAR BRUCE: It doesn't matter that you plan to buy a lower-cost replacement home. All that matters is the difference between your home's adjusted cost basis and your adjusted sale price. Uncle Sam doesn't care if you want to spend the sales proceeds on a trip to Tahiti or any other exotic pleasure.

To qualify for up to $250,000 tax-free principal residence sale profits (up to $500,000 for a qualified married couple filing jointly), Internal Revenue Code 121 requires you (and your spouse) to have owned and occupied your home at least 24 of the 60 months before its sale.

DEAR BOB: I took care of my ailing mother who had her home in trust. She has passed on. My dad is the trustee. Under the terms of the trust, I am to get the house. But my father is not cooperating by giving me information. How long does he have to put the house title into my name? Also, there is a mortgage. Will that loan be paid off or does it need to be refinanced to be put into my name? - Lynne K.

DEAR LYNNE: A living trust trustee has a "reasonable time" after the trustor's death to distribute the living trust assets. Wise trustees wait several months to be certain all debts of the decedent are paid before distributing living trust assets.

Unless there are unusual circumstances, after six months the living trust trustee should distribute the assets according to the terms of the living trust. If there is a mortgage on the living trust property that you are to receive, you will acquire that property subject to its mortgage.

As an heir, the mortgage lender must allow you to take over the mortgage payments and cannot enforce a due on sale clause. After waiting at least six months, if your father refuses to transfer the title to you, it might become necessary for you to file a quiet title lawsuit to obtain title. For details, please consult a local probate attorney.

What are people saying about mortgages today:

Rates on 30-year mortgages edged down last week to a seven-month low. Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages fell to 6.3 percent, down slightly from 6.31 percent two weeks ago. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Bank of Hawaii, Central Pacific Bank, Territorial Savings Bank and Wells Fargo Home Mortgages all cut their 30-year mortgage rates to 5.75 percent this week.

Most people think of a mortgage as a means to an end. After all, you buy a house, not a home loan. But a mortgage is much more than the path to homeownership. It is a financial instrument that must be managed, just like any other financial investment.