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Attorney General Jason R. Ravnsborg

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South Dakota Attorney General and State Banking Division Issue Consumer Alert on Mortgage Payment Increases

South Dakota Attorney General and State Banking Division Issue Consumer Alert on Mortgage Payment Increases 

(PIERRE, SD) – With a record number of residential mortgage loans scheduled to reset across the nation this year, Attorney General Larry Long and the South Dakota Department of Revenue & Regulation, Division of Banking are urging South Dakota homeowners with adjustable rate mortgages to plan now for the scheduled “recasts” or “resets” of interest rates in the year ahead. Long says the first step homeowners should take is to become informed about their mortgage.

“It is important to know what kind of mortgage you have,” said Long. “Consumers who have a mortgage with a fixed rate for a few years followed by an adjustable rate may face payment shock when their rate soars. Consumers should understand their mortgage documents and if at all confused, they should consult their loan provider.”

Banking Division Director Roger Novotny says homeowners with nontraditional mortgages could be significantly impacted by these recasts because recasts or resets of nontraditional mortgage loans and many subprime loans frequently come with a significant increase in payments. Novotny offers these tips to borrowers to get prepared:

  • Know the characteristics of your mortgage 
  • Budget accordingly for potential increases 
  • Contact your servicer for help if necessary 
  • Ask about the terms of any prepayment penalty 
  • Ask about possible solutions if payments are past due

Novotny encourages mortgage servicers and providers to help consumers by providing information on their loans and working with them to avoid foreclosure.

“Servicers should provide consumers with information on when the recast will occur and how much it will impact their monthly payment,” Novotny said. “If the loan does go into default, servicers should consider working with the consumer to come to an arrangement that prevents foreclosures.”

The NeighborWorks organization has established a hotline (888-995-HOPE) for homeowners who may be struggling with mortgage recasts. Consumers are also encouraged to call the South Dakota Division of Banking at (605) 773-3421 with questions.

For more information: contact Roger Novotny, Director, Division of Banking, 605-773-3421.