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ARM Loans
Assumptions
Homeowners Insurance
Mortgage or FHA Insurance
Payments
Property Taxes
Year-end Statement
Contacting Indymac Bank
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What is an Adjustable Rate Mortgage (ARM)?
An Adjustable Rate Mortgage has an interest rate that can change periodically. The amount of the first change is based on an index. Subsequent changes depend on economic conditions and may create payment increases or decreases during the life of the loan. The ARM note stipulates how often your interest rate and payment will change, as well as the index to be used. The changed rate will be used to calculate your principal and interest payment within the boundaries of any payment rate caps that will apply to your loan.
An ARM usually offers a lower initial interest rate than a fixed-rate loan. You may be able to qualify for a larger loan amount with an ARM because the credit decision can be based on current income and the first year's monthly payments, which will most likely be lower.
One disadvantage to an ARM is that an increase in interest rates may cause your monthly principal and interest payments to be higher.
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How is the interest rate calculated on an ARM loan?
Most ARM loans calculate the interest rate adjustment by adding a margin to the index. The index is a published rate such as the weekly one-year Treasury bill or the 11th Federal Reserve District cost of funds. Changes in the index may cause changes in your interest rate. The type of index to be used is determined at the time of application.
The margin is a fixed value that is added to the index to calculate the new interest rate on your loan. This value is stated in your ARM note. The result of the calculation may or may not be rounded. This factor is also outlined and agreed to when your sign your ARM note.
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What is the ARM adjustment period?
The frequency with which your interest rate may change is called the initial note adjustment period. The most common ARM adjustment periods are every 6 months or every 12 months. The frequency of ARM adjustments is established at the time of application and the terms will be outlined in your ARM note.
There are ARM products available where the initial interest rate will be fixed for the 1st, 3rd, 5th, 7th or 10th years, and then adjust annually thereafter for the life of the loan. There are also loan products available where the interest rate changes monthly, but the principal and interest payment change annually.
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What is an interest rate cap?
An interest rate cap limits the amount your interest rate can change at each adjustment. There can be two types of interest rate caps:
- Periodic change caps, which limit the amount your rate may increase or decrease at each rate change.
- Life of loan caps (also referred to as the ceiling and the floor), which specify the highest or lowest the interest rate, can ever be on your loan.
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What is a payment cap?
A payment cap limits the amount the principal and interest payment on your loan can increase or decrease at each payment change. Typically, at every 5th payment change, you will be required to make a fully amortizing principal and interest payment.
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What is negative amortization?
Negative amortization occurs when interest rates change more frequently than payments or where payment changes are capped. Your payment may not be sufficient to cover the interest accruing on your loan. If this happens, the principal balance will grow by the amount of unpaid interest because you are borrowing from the equity in your home to pay this interest.
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Can I convert my loan from an ARM to a fixed rate loan?
Unless your loan documents specifically allow for this option, you may not convert your loan to a fixed rate loan without paying off your current mortgage and refinancing to a fixed rate mortgage. If your loan documents do provide for this option, they will specify when you can exercise this option and how the fixed rate will be determined. The conversion rates are typically published on the first business day of the month. These rates are available by calling customer service at 1-800-781-7399. A conversion rate fee is due and payable at the time of conversion.
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Why did my index go down, but the interest rate go up?
There are two situations in which your interest rate can go up when the index goes down.
- If your initial interest rate was a discounted rate it will rise by at least the amount of the margin on the first adjustment date, no matter where the index is moving.
- If the prior interest rate adjustments were limited by a periodic change cap or life-of-loan cap, the next change may be to a higher rate even if the index goes down. The following example will illustrate how this can occur:
The initial rate on your loan was discounted to 6.00% from the fully indexed rate of 7.50% (5.50% index plus a 2.00% margin). If, on the first rate change the index has decreased from 5.50% to 5.25%, your interest rate will still increase because the new interest rate is now calculated by using the fully indexed rate (no more discount), which is 5.25% index plus 2.00% margin, which equals 7.25%. Thus the index can actually go down (e.g. from 5.50% to 5.25%), but the interest rate that determines your payment goes up (from 6.00% to 7.25%).
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What are my three payment options on a FlexPay loan?
- Option one is the minimum required principal and interest payment amount you can make.
- Option two is an interest only payment. This option can only be made if it is greater than option one.
- Option three is a fully amortizing principal and interest payment. This option is only available if it is greater than option one or two.
There may be times when all three options are not available. If option one is more than an interest-only payment, you may have only options one and three. If option one is equal to or greater than a fully amortizing principal and interest payment, you will only have option one available.
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Why is my interest rate going down, but my principal and interest payment is going up?
This is a common occurrence with FlexPay or negative amortization loans. It will be the case if the payment cap limited the previous principal and interest payment. Also, since the interest rate is changing monthly, the previous interest rate is not indicative of the interest rate used to calculate the principal and interest payment at the last adjustment.
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I recently sold my loan on an assumption. What interest am I entitled to claim?
That agreement was made between you and the party that assumed your loan. The date provided to us as the date the seller last made a payment, is the date we will use to calculate the interest. For example, if your last payment was made for May, we would give you credit for payments made that calendar year through May's payment. The assuming party will get credit for the interest paid from June through the end of the year.
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What type of insurance is required on my property?
If the home is owner-occupied you are required to carry a homeowner's policy with extended coverage.
If the home is non-owner occupied you must carry a fire policy. This type of policy may also be referred to as a landlord's or commercial policy.
If the home is a Condominium or Town home, please check with your homeowners association to verify what type of coverage the association's policy provides. Most association policies do not provide interior structural or personal content coverage. You will need to have a separate unit owner's policy.
If any of the structures are located in a Special Flood Hazard Area you are required to have flood insurance.
While you are not required to carry it, Earthquake and/or Windstorm Insurance should be considered in some locations.
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What amount of coverage do I need to have?
Your basic insurance coverage must be equal to the lesser of the outstanding loan balance, replacement value of the structure or the maximum amount allowed by law.
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How do I change my insurance company?
If you wish to change insurance companies, you or your insurance agent must provide us with a copy of the new policy and your authorization to accept the new company. You must contact the old company to cancel the old policy effective when the new policy begins.
Please provide your new agent with your loan number, and the following loss payee/mortgagee clause:
IndyMac Bank FSB, Its Successors and/or Assigns
P.O. Box 2971
Phoenix, AZ 85062-2971
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What information do I need to provide my agent?
Please provide your agent with your loan number, and the following loss payee/mortgagee clause:
IndyMac Bank FSB, Its Successors and/or Assigns
P.O. Box 2971
Phoenix, AZ 85062-2971
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I pay my own insurance. Why do I have to provide you with insurance information?
The terms of your loan agreement require evidence of continuous insurance coverage. Therefore, we must receive proof of coverage or we may have to lender-place insurance on the property.
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What is lender-place insurance?
Lender-place insurance is coverage that the lender obtains (at your expense) to protect its interest in the property. Because the coverage goes into force without an inspection of the home, the policy is more expensive than regular homeowner's insurance policies. The force-place policy does not cover your personal possessions or provide liability protection.
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My home was damaged and I received a check from my insurance company endorsed to Indymac Bank. What do I do?
Please contact our insurance claims department at 1-888-680-6808 for instructions. Do NOT send your claim check with your mortgage payment.
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Where do I send information regarding my Homeowners Insurance?
IndyMac Bank FSB, Its Successors and/or Assigns
P.O. Box 2971
Phoenix, AZ 85062-2971
Fax number 1-(866) 806-8177
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What is Optional Insurance?
We consider this to be credit life, disability or accidental death insurance. This is sold by Indymac Bank and an independent insurance company and will be included with the mortgage payment. This is not a requirement of the mortgage and can be cancelled at anytime after written authorization is received from the borrower.
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What is FHA Insurance?
For loans insured by the Federal Housing Administration (FHA) insurance is required on all loans, regardless of the down payment amount.
This type of insurance is different than other types of insurance purchased by a borrower, and should not be confused with credit life, property or casualty insurance. Mortgagors cannot file a claim against the policy.
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Can I Cancel FHA Insurance?
Depending on when your loan was closed, FHA Insurance may be canceled when certain conditions are met. If you loan was closed on or after January 1, 2001, FHA's annual insurance premiums will be automatically canceled under the following conditions:
- If the term of the loan is over 15 years, the premiums will be automatically canceled when the loan to value ratio(LTV) reaches 78%, provided the premiums have been paid for the last 5 years.
- If the term of the loan is 15 years or less, the premiums will be automatically canceled when the loan to value ratio (LTV) reaches 78%, regardless of the length of time you have paid annual mortgage insurance premiums.
- You may also request to have FHA Mortgage Insurance canceled in the event you make principal curtailments (i.e. prepayment of principal amount) such that the loan to value ratio (LTV) is reduced to 78% provided:
- It has been at least five years since your loan closed (unless loan has original term of 15 years or less.)
- You have not been more than 30 days delinquent on your mortgage payment during the previous twelve months.
- You submit your request to us in writing.
FHA loans closed before January 1, 2001 are not eligible for Mortgage Insurance cancellation until the loan is paid in full.
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What is Mortgage Insurance?
Mortgage insurance (MI) is required depending on the terms and conditions of your loan. MI protects a lender against some financial loss if a borrower defaults on the mortgage loan.
This type of insurance is different from other types of insurance purchased by a borrower, and should not be confused with credit life, property or casualty insurance. Mortgagors cannot file a claim against the policy.
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How is the Loan To Value calculated?
The first amount needed to determine the loan to value (LTV) is the lesser of purchase price and appraised value. This is determined from the price paid from the home or the value the appraiser deemed the home was worth at the time of underwriting the mortgage. (If the loan is a refinance or in New York these amounts will be the same.) The formula for calculating the LTV is the current loan balance divided by the lesser amount of purchase price or appraised value.
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Can I Cancel Mortgage Insurance?
Mortgage Insurance may be cancelled when certain conditions are met. These conditions are specific to your loan, the federal law and state statutes governing where the property is located and the investor guidelines pertaining to your loan are followed. Although the following are not all the conditions for the cancellation of PMI, they are the most common:
Automatic Termination is done when the loan to value is at 78.0% and has meet standard requirement listed below and based on property descriptions of single family primary residence or second homes.
- A minimum number of consecutive monthly mortgage payments (this may vary from 24 months to 60 months).
- A good payment record with no delinquencies within the 24 months preceding your request for cancellation of PMI.
- If your loan is less than two years old structural improvements only can be considered as the increase in value to meet an 80.0% LTV.
- If your loan is more than two years and less than five years old, and the LTV is 75% or less of the current property value subject to a new appraisal verification.
- If your loan is more than five years old, and the LTV is 80% or less of the current property value subject to a new appraisal verification.
- If your loan is 80% of the original property value or purchase price,
- For multi unit and non-owner occupied property your loan to value requirement may vary from 65% to 75% based on either the current property value or the original property value.
- Your request for cancellation must be in writing to:
Indymac Bank
ATTN: MI Department
PO Box 4045
Kalamazoo, MI 49003-4045
- Please contact Indymac to learn what instrument (such as a new appraisal) is required to determine the current property value - any costs associated with obtaining this information must be paid by the borrower. Some investors will only permit the cancellation of MI based on original property value, and will not consider the current property value to release MI.
If you feel you have satisfied the preliminary conditions to have your MI cancelled, please submit your written request today. Once we receive your request, we will review your account based on specific guidelines governed by your loan and the conditions set forth by the investor for your loan. We will respond in writing with a decision or options required to qualify the loan. Not all investors will permit the cancellation of MI. The investors that do consider deletion of MI follow specific guidelines. The guidelines may change at any time.
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How can I make my payment?
Indymac Bank offers several convenient ways for you to make your monthly mortgage payment.
eBill and ePay
eBill and ePay are services offered through our Customer CareNet (CCN) site. This service allows customers the ability to both view your monthly mortgage statements online as well as make your mortgage payments online.
Payment by Mail
Indymac Banks offers the standard payment by mail, plus the option to overnight your payment.
Branch Payments
Indymac Bank has several branch offices in Southern California. Our branch offices can accept your mortgage payment. For fast and efficient service at the branch, please have your loan number and/or payment stub with you. To view a list of our branches, please visit our home site at www.indymacbank.com. Click on Contact Us, then choose Bank Branches.
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What is the payment mailing address?
Regular Mail Payments to:
Indymac Bank, Home Loan Servicing
P.O. Box 78826
Phoenix, AZ 85062-8826
Send Overnight Payments only to:
Indymac Bank, Home Loan Servicing
6900 Beatrice Drive
Kalamazoo, MI 49009-8070
Attn: Cashiering
Please note that payments received after 4 PM daily, on weekends, or on a holiday will be processed on the next business day.
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Where do I send my Real Estate Tax bills?
Indymac Bank, Home Loan Servicing
P.O. Box 4045
Kalamazoo, MI 49003-4045
Attn: Tax Department
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How will I know if my taxes have been paid?
If we escrow for your taxes, the tax disbursement will be shown on your monthly mortgage statement. Look at it online or review the statement you receive in the mail.
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I have an escrow account and received a supplemental tax bill. What do I do?
If you receive a supplemental tax bill from your taxing authority and choose to pay the bill yourself, forward a copy of the receipt of payment to our office. We will adjust your escrow account to collect for the higher tax bill so that you will not have a supplemental tax bill in the next tax cycle.
If you want the supplemental tax bill paid from your escrow account, please make a copy for your records and forward the original bill to our office at:
Indymac Bank
ATTN: Tax Department
PO Box 4045
Kalamazoo, MI 49003-4045
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I do not have an escrow account and have received a supplemental tax bill. What do I do?
You are responsible for paying this supplemental tax bill.
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What does it mean when I live in a "homeowner state?"
Living in a "homeowner state" means that you receive your property tax bills from your taxing authority, but the lender is not sent a copy of the bill. We ask that you make a copy of the bill for your records. Forward the original to us to pay from your escrow account.
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When will you send my year-end statement (1098)?
Indymac Bank is required to mail the annual year-end statement by January 31st.
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I made 15 month's worth of payments last year. Can I claim all of the interest paid for those payments?
By law, you may only claim a maximum of 13 months worth of payments made in a calendar year. You may wish to seek assistance from a tax professional to ensure you are claiming the correct amount.
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There are multiple property owners on the loan, but you have only reported the interest under one Social Security number. Why did you not report under both Social Security numbers?
The IRS does not require us to report the total amount of interest paid under more than one Social Security number. We report it under the primary mortgagor's Social Security number. Indymac Bank does not determine how the interest is claimed on your tax return.
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The 1098 year-end statement I received was reported in my ex-spouse's name and Social Security number. Can you correct it to reflect my name and Social Security number?
Indymac Bank is required to report interest based on how the names are listed on the Promissory Note signed for the loan. Any legal documents you have should reflect who has the right to claim any interest paid.
If the co-mortgagor has transferred title of the property to you, please forward a copy to our office at:
Indymac Bank
ATTN: Correspondence/Research
PO Box 4045
Kalamazoo, MI 49003-4045
We will update your account names and the 1098 statement for the next year will reflect this change.
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How do I contact Indymac Bank for answers to questions about my mortgage loan?
By e-mail
Use the 'Contact Us' selection in the left navigation bar on Customer CareNet or e-mail us at servicing@indymacbank.com. When sending e-mail please include loan number, names on the loan and the property address.
By phone
You can contact us toll-free at 1-800-781-7399. Using your touch-tone phone, our Automated Information System is available 24 hours a day, 7 days a week to provide information about your loan. Automated instructions will prompt you to enter your account number and Social Security number and will offer various menu options. You can obtain the following information from our Automated Information System:
- Our mailing address
- Information about general account inquiries
- Information about insurance, mortgage insurance and real estate taxes
- Adjustable rate mortgage information
- Information about year-end taxes and interest
If you would like personal assistance during the call, press 9 to speak with an agent. Our Customer Service Representatives are available to serve you Monday through Friday, between the hours of 8:00 a.m. - 9:00 p.m. (ET).
By Letter
Please include your loan number on all information sent to our office.
Indymac Bank, Home Loan Servicing
P.O. Box 4045
Kalamazoo, MI 49003-4045
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What is your customer service phone number?
For general inquiries, you can reach us toll-free at 1-800-781-7399(within US) or 1-269-353-2460(International). Our Automated Information system is available 24 hours a day, 7 days to week to get information concerning your loan.
For Insurance inquiries, you can reach us toll-free at 1-800-343-5756.
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How do I use your Automated Information System?
You can use our Automated Information System by dialing 1-800-781-7399 from your touch-tone phone and have your account number and last four digits of your Social Security number handy. Automated instructions will prompt you to enter your account number and Social Security number and will offer various menu options. You can obtain the following information from our Automated Information System:
- Our mailing address
- Information about general account inquiries
- Information about insurance, mortgage insurance and real estate taxes
- Adjustable rate mortgage information
- Information about year-end taxes and interest
You may also perform the following self-service functions:
- Make a payment
- Request a payoff statement
- Make payment arrangements
Although we have an automated attendant, our Customer Service Representatives are available to provide personal assistance Monday through Friday, between the hours of 8:00 a.m. - 9:00 p.m. (ET).
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