Read the fine print
Posted on November 8th, 2009 under Wealth of AdviceBy Francisco J. Colayco
I received a letter from Myrna asking for advice. I changed the information for confidentiality purposes.
Myrna bought condominium unit costing P500k from a developer ABC. She made a down-payment of P100k and applied from Pag-ibig for a loan for the balance of P400k.
Myrna was working abroad and she thought that she would only pay for the amortization of the loan when she received notice from Pag-ibig that the loan was approved and that ABC would let her know as soon as the Pag-ibig loan is approved.
She did not think about it anymore. Three years later, ABC sent her a notice that she owed ABC interest and penalties of P100k. ABC said that Pag-ibig only approved a lower amount for the loan and therefore, she owed ABC for the amount that was not approved by Pag-ibig. She was shocked because she did not even know that there was any amount due to ABC and that she was already being charges interest and penalties for non-payment.
There are two glaring issues in this case.
First, Myrna bought a property, gave her hard-earned savings as down -payment, signed the documents but did not read the fine print. Otherwise, she would know that if Pag-ibig did not approve the loan, she has to pay ABC. There is no way that ABC will allow non-payment for the property they sold.
Perhaps, ABC told her verbally about the terms as she was signing the contract and she forgot. But even if ABC did not really tell her, the terms of the contract that will be followed is what is written and signed. This is why it is very important to read and understand the entire document. It is very difficult to read and understand but in a situation like this, she has no other proof.
Second, Myrna never bothered to follow-up her investment. Otherwise, she would have known that the Pag-ibig loan was not approved as expected and that amortization payment was due to ABC. At the time she wrote me, she was not yet receiving notice from Pag-ibig about her loan. That will be another problem because Pag-ibig will be charging interest and penalties if she does not pay her amortization on time.
Myrna did not mention if she changed her address or contact numbers. It is also possible that since she was working abroad, her family in the Philippines did not forward her mail to her. It is very important to keep in touch with your creditors or those you owe money to especially if you have an asset under their control.
I asked Myrna to write ABC and explain her side and ask for an explanation on why she did not receive the notices from them. She should try to get a waiver of the interest and the penalties for late payment. However, it is but right for her to pay for the legitimate interest due on the amortization. After all, if she had received regular notices, she would have paid.
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