WKYT Investigates | Mortgage mix-up

One family was in a bind over a delinquent property tax bill they thought was paid.
WKYT Investigates | Mortgage mix-up
Published: Dec. 9, 2021 at 3:15 PM EST
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STANFORD, Ky. (WKYT) - When the letter first landed in their mailbox, Emily and Jason Merrick didn’t know what to think.

“I honestly thought she was joking when she handed it to me,” Jason Merrick said. “I thought it was a scam.”

It wasn’t.

Instead it was the first surprise of many in the nightmare surrounding this Lincoln County family’s dream home - a consequential reminder that ignorance isn’t always bliss.

“No,” Emily Merrick said. “Ignorance can make you lose your home.”

After a mix-up by their mortgage company, the Merricks found themselves in a bind over a delinquent property tax bill they thought was paid. When WKYT’s Garrett Wymer first spoke with them, they were facing possible foreclosure proceedings if they didn’t pay off the lien against their property.

“Some sleepless nights over this,” Emily Merrick said at the time. “Just general concern trying to make sure the children understand we’ll do everything we can to keep our house.”

The problem was that the mortgage company used the Merricks’ money in escrow to pay 2020 property taxes on the wrong house, instead paying for two properties several miles down the road.

And the Merricks say they didn’t even know it until October when they received a letter informing them that a company had bought the delinquent debt on their home in a tax sale.

But that delinquent debt was news to them, too.

Because of another mix-up, county records still had the Merricks’ old address on file, meaning previous legal notifications likely ended up at their old home, well past the expiration date of mail forwarding services.

“It’s just been mind-boggling to try to sort out, to try to connect all the dots,” Jason Merrick said.

By the time the Merricks discovered what was happening, it was too far along in the process to be an easy - or inexpensive - fix.

To pay off the lien, the Merricks owed the purchase price of the debt, plus interest and other fees, adding up to more than $3,500 - more than double the original property tax amount on their 12-acre property.

The Merricks filed a complaint with the Consumer Financial Protection Bureau. They asked the mortgage company, PHH Mortgage Services, to make them pay back only the original tax amount, not the additional charges from a mistake, they were previously told, was not their fault.

Initially, the mortgage company refused, placing blame on the county and writing in their response that “we found no error on our part.”

At that time, PHH offered to advance the money to pay off the lien so the Merricks wouldn’t lose their home, but then the company would recalculate how much would be needed to put in escrow, all but ensuring a substantial increase to the Merricks’ monthly mortgage payment in order to cover the large bill.

That was something the Merricks told WKYT that with five kids - and Emily her own health issues - that was something they could ill afford. They said they did not understand why more wasn’t being done to help them when they were told before it wasn’t their mistake.

WKYT Investigates reached out to PHH Mortgage Services via email, outlining the situation and asking what was being done to remedy it. A spokesperson for Ocwen Financial Corporation, PHH’s parent company, responded quickly, confirming receipt of the email and saying he had asked his team to look into it.

Two days later, that same spokesperson, Dico Akseraylian, told WKYT’s Garrett Wymer that after looking into it further, the company had diagnosed the issue - finding that their third-party data company made an error when the mortgage was first transferred to PHH in July 2020.

The company reversed its initial stance from the response to the complaint, now saying the Merricks would not be responsible for the additional charges, and overnighted a check to pay off the lien.

Akseraylian called the issue an isolated error that they had taken action to address, and he apologized to the Merricks for having to go through the process.

In a follow-up phone conversation, Emily Merrick told WKYT’s Garrett Wymer that she is happy the issue was resolved without leaving them on the hook for the additional fees that more than doubled their tax bill, but she still hoped that the escrow adjustments to cover the tax amount would not be too hard to handle.

That’s because the money that should have been used for the Merricks’ 2020 property taxes, having been sent back to the mortgage company because it was the wrong total for the properties being paid for, had been previously refunded to them as an “escrow surplus.” (They say, at the time, they asked PHH for more details, but now realize they should have paid closer attention. And given their situation, particularly with Emily not working because of health issues, that money was quickly put to other uses, they said.)

Still, in this holiday season, the Merricks say they are grateful their home has been brought back from the brink of foreclosure proceedings against them.

And they are still sharing their story to warn other homeowners: “Don’t always trust your mortgage company to handle it,” Emily Merrick said.

It remains an important reminder, they said, because even after the initial records were updated at the county level, the mortgage company made the same mistake a second time - paying taxes on the same wrong properties again for 2021.

That too is now being taken care of, they said.

“Thousands and thousands of properties in every county work just fine,” Jason Merrick said. “But there’s always a few that go wrong. And you may wake up to find one day it’s you.”

The bottom line: It doesn’t hurt to double-check.

In Mississippi, a family’s home sold for $236 in a delinquent tax sale after their home was built on the wrong lot, meaning they were paying taxes on an empty lot instead of their home.

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