How a Homeowner's Mortgage Doubled; How to Protect Yours

A San Jose homeowner discovered phantom double mortgage

NBC Universal, Inc.

With home prices up and interest rates low, finance experts say cashing in on your home's equity might be a savvy investment.

John Salberg, who works as a teacher, tried to do just that with his four-bedroom, two-bathroom home near Campbell. He has owned his San Jose home for about 10 years. According to Zillow, his home's value increased a couple hundred thousand dollars over the past year.

In January, Salberg applied for a home equity line of credit. But in March, the bank dropped a bomb on him: it found Salberg already had two mortgages on his home.

"I don’t have two," Salberg told NBC Bay Area Responds. "I know for a fact I have only one. In fact, I just refinanced in December.”

It turns out, Salberg had one mortgage for $765,000 that he knew about and he was paying plus another mortgage for $765,600 that he had no clue about.

This news came as a shock to him.

"I didn't understand why there would be two mortgages on my record," he said.

The bank wouldn't give him his credit line until he accounted for the extra $765,600 mortgage. In the long term, a problem like that could prevent Salberg from selling his home, so starting in March, he tried to get it resolved.

“Conservatively, [I would guess I made]15 to 20 phone calls," he recalled. "And those phone calls lasted 45 minutes to an hour each.”

Salberg got his mortgage from the company Change Home Mortgage. He needed the company to delete the phantom mortgage, but he says the customer service staff there didn't take action.

In June, Salberg turned to NBC Bay Area Responds for help.

We saw three clues to this mortgage mystery.

First: the bank hadn't called in debt collectors or flagged Salberg's credit report for not paying the second loan.

Second: the mortgages were dated one day apart -- right when Salberg refinanced his home last year.

Third: the two mortgages were nearly the same amount.

NBC Bay Area Responds contacted Change Home Mortgage. Its lawyer responded to us immediately. Within a month of our inquiry, Change Home Mortgage had the mistaken mortgage canceled.

“You worked a miracle for me," Salberg told NBC Bay Area Responds.

Change Home Mortgage sent NBC Bay Area a statement which said:

"The error in this case was caused by a national title insurance company. When Change Lending’s management became aware of the situation, we immediately worked on behalf of the borrower to help get the issue resolved by the title company to the customer’s satisfaction.”

Jacob Channel, a senior economic analyst with Lending Tree, called Salberg's experience "one-in-a-million."

“Sorry to say, John, I haven’t heard of that happening to other people -- or at least frequently," Channel said.

Nonetheless, here's a recommendation for any time you buy, sell, or refinance a home: check the court records a few weeks after you close. Then verify your deed and mortgage are recorded properly.

If that's not the case, Channel advises: "I would act as fast as possible."

"I would probably drop everything that I was doing and contact my lender," he continued.

Salberg agrees 765,000%.

"Follow the trail, just to cover yourself," he recommended.

Salberg said he was finally able to get his home equity line of credit.

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