Office of Loan Programs

Frequently Asked Questions - Loan Servicing

We have divided the questions and answers into five categories and provided links to each one:

• General Servicing Questions
• Interest Rate and Payment Change Questions
• Hazard Insurance and Property Tax Questions
• Additional Payments to Principal Questions
• Change in Employment Status Questions

GENERAL SERVICING QUESTIONS

1. Who will be servicing my MOP loan?

   The servicing of your loan will be handled by University employees in the Office of Loan Programs in Oakland at our office address above.

2. How will payments to my MOP loan be made?

   While on active payroll status, your mortgage payments are required to be deducted from your monthly paycheck.

3. When will I receive my annual mortgage interest statement?

   Every January, we will send you a mortgage interest statement showing the total amount of interest paid on your loan for the prior calendar year. This information is for tax reporting purposes and is also reported to the Internal Revenue Service on IRS form 1098.

   The IRS requires us to mail these statements by January 31st, however, we usually mail them by mid-January. If you need this information earlier, we can provide it to you verbally.

4. Will you mail me a history of payments made?

   Twice a year, in July and December, we will mail you a history statement detailing all payments received in the prior six months. If, for any reason, you would like other specific information about your loan payments, please contact us at our office address above.

5. Do you report to the credit agencies?

   Yes. Every month we send an updated data file to a credit reporting agency.

6. Does your office sell my name and address to anyone?

   No. We do not sell or allow access to our mailing list. We have taken all possible precautions to keep borrower information confidential. However, as you may be aware, all real estate transactions are a matter of public record.

7. Do you ever use private collection agencies or outside personnel to contact borrowers?

   No. Please be advised that we do not employ outside collectors and all contact concerning your mortgage loan will be with University employees during normal business hours, 8:00 a.m. to 5:00 p.m. All written correspondence from this office will be on University of California, Office of Loan Programs letterhead.

8. How can I obtain a copy of my loan documents or appraisal?

   Please contact us in writing at our office address above for copies of any of the documentation produced when your loan was made.

9. I have a MOP loan and a SHLP loan. Will your office service both loans?

   Probably. All MOP loans are serviced by the Office of Loan Programs in Oakland. Some of the Supplemental Housing Loan Program (SHLP) loans issued by the Berkeley campus are serviced by that campus. Most of the other SHLP loans are serviced by the Office of Loan Programs. However, there are some isolated exceptions to this policy.

10. When I pay off my loan, do you stop the payroll deduction?

    Yes. After receipt of the payoff funds, the Office of Loan Programs will contact your campus payroll office and advise them to stop the monthly payroll deduction. If, due to payroll processing deadlines, the cancellation does not occur in time to stop the deduction, we will refund the deduction as soon as possible.

11. What happens if the property secured by the MOP loan is no longer my primary residence?

    A condition of the MOP program is that all loans are first deeds of trust securing the primary residence of the eligible borrower. If you choose to change your primary residence, we will expect you to payoff your MOP loan as soon as possible. However, you must continue to make regularly scheduled monthly payments by submitting a personal check to the address specified above, as well as keep property taxes current and adequate hazard insurance in force.

12. What happens when I request to pay off my University home loan?

    When we receive a request for Payoff Demand from either an escrow or title company, or a borrower informing us that a loan will be paying off, OLP issues a payoff demand statement. This statement details the current principal balance, interest (collected from the due date of the most recent payment through the date we receive the funds at OLP) and a recording and reconveyance fee of $55.00. We recommend remitting payoff funds by wire transfer and that we be notified 24 hours prior to wiring the funds. We will provide you with the actual payoff amount needed once we know the date the funds will be wired. We will also accept cashiers' checks for payoffs.

    Your automatic payroll deduction will be canceled after receipt of the payoff amount. If a refund is due, it will be mailed to you as soon as possible after your payroll deduction occurs. Once we receive the full payoff amount, OLP will prepare the deed of reconveyance for recording by the county recorder. Upon receipt of the recorded deed of reconveyance, the original documents will be forwarded to you via certified mail at your current address. This usually takes a minimum of six (6) weeks. If you are paying off your loan because you have sold your house, you will need to provide OLP with your new address.

13. How do I request a payoff demand statement?

    If you are planting to pay off your home loan and are using an escrow or title company, the escrow or title company will submit a request for demand to the Office of Loan Programs at our office address or by fax. You will need to keep in touch with the escrow or title officer that is handling your loan payoff. OLP will prepare the demand statement within 48 hours of receipt and will submit it to the escrow or title company. If you wish to pay off your home loan directly, contact the Office of Loan Programs Payoff Department at the number above or via e-mail at olp@ucop.edu. A loan servicing staff member will provide you with the necessary information.

    
    
14. Does the University ever sell its home loans in the secondary market?

    Yes. In March 2002, the Regents approved a program that allows the periodic sale of Mortgage Origination Program loans to outside investors, on the condition that the University’s Office of Loan Programs retain all loan servicing functions. Since July 2002, the University has sold over $600 million in loans to various investors. To ensure privacy, the University has signed confidentiality and non-solicitation agreements with all of its investors. The purpose of the loan sale program is to increase the availability of funds for future loan allocations, so that the University can increase the number of loans available to assist with the recruitment and retention needs of new and existing employees.

    As loan servicer, the University will continue to process payments and monitor all aspects of the loans, including hazard insurance compliance, property tax payments, on-going program eligibility, and delinquency situations.

    Please feel free to contact our office if you have any questions about your loan.

INTEREST RATE AND PAYMENT CHANGE QUESTIONS

1. When will I receive notice of my annual interest rate change?

   The new interest rate for your MOP loan is calculated approximately fifteen days before the interest rate change - which is 45 days before any payment change will take effect. A letter detailing the change will be mailed to you after the calculation is completed.

2. How is my new interest rate determined?

   All MOP loans are tied to the most recently available four-quarter average rate of return earned by the University of California's Short-Term Investment Pool plus an administrative fee component of .25%. The annual maximum adjustment, upward or downward, is capped at 1% and is adjusted on the anniversary date of the loan. The anniversary date is the date upon which the twelfth payment is due and occurs on the same calendar month and day each year. For example, if the first payment on your loan was made on July 1, 1995, the anniversary date of your loan will be June 1st of each succeeding year. Loan rates for this program generally fluctuate less than most indices used by other institutional lenders (see the Historical Rate Index and chart).

3. How is my new payment determined?

   The outstanding loan balance is amortized over the remaining term based on the new interest rate. As interest is paid in arrears, the payment change will occur one month after the interest rate changes.

HAZARD INSURANCE AND PROPERTY TAX QUESTIONS

1. Who is responsible for the payment of hazard insurance premiums and property tax installments?

   The University does not impound for hazard insurance premiums or property tax installments. Accordingly, you are responsible for the timely payment of these items. Given that these expenses often total several thousand dollars per year, we suggest that you plan for these expenses by establishing a separate monthly savings plan to accumulate the necessary funds for these expenses.

2. What are the hazard insurance requirements for my loan?

   As you may be aware, hazard insurance is required on your property in an amount equal to the full replacement value of the improvements on the property as established by your property insurer. Forms of residential property insurance that are acceptable under University Mortgage Loan Programs include: (1) Guaranteed Full Replacement Cost Coverage; or (2) Extended Replacement Cost Coverage that pays up to a specified amount above the policy limit. In many cases, especially if the home is several years old, it is advisable to also obtain a partial or full building code upgrade endorsement.

3. Which hazard insurance companies are acceptable for my loan?

   You may obtain the required property insurance from any properly licensed insurance company qualified to do business in California and rated by the A.M. Best Company as general policyholder's rating of "B" or better in Best's Insurance Reports. We will also accept coverage from the California FAIR plan if it is the only coverage that can be obtained at a reasonable cost. If the company you would like to do business with is not rated by Best's Insurance Reports, please contact us.

4. Why do you sometimes ask for copies of my renewed hazard insurance policy?

   Typically, we will receive a hazard renewal insurance form directly from the company when the annual premium has been paid. Occasionally, however, the firm will not send us the policy and we need to contact you for a copy.

5. Should I send the University a copy of my current Homeowners Insurance policy every year?

   The Mortgage Origination and Supplemental Home Loan Programs require that a current homeowner's insurance policy is provided to the Office of Loan Programs (OLP) at the time of annual renewal as verification that satisfactory hazard insurance is maintained on the property. Generally, these renewals come from the insurance company. If you cancel your homeowner’s policy in order to move to a different provider, the University will receive a notice of cancellation. You should instruct the new provider to send a copy of the declarations page to OLP. If we don’t receive a notice from the new company, we will contact you to find out the status of your insurance.

   If your homeowner’s insurance is paid as part of your Homeowner’s Association (HOA) dues, you may not be aware if the HOA changes insurance carriers. In this case, OLP may contact you for information concerning the new carrier. It is the responsibility of each homeowner to ensure that OLP is provided with proper evidence of insurance. Just ask your Homeowners Association or your current insurance agent to fax or mail us a copy.

   The policy should also have the University of California listed as the Mortgagee. The Mortgagee clause should read:

   THE REGENTS OF THE UNIVERSITY OF CALIFORNIA
   Its Successors and/or Assigns
   Office of Loan Programs
   1111 Franklin Street, 6th Floor
   Oakland, CA 94607-5200
   

6. Do you require earthquake insurance?

   If earthquake insurance is required, we will notify you during the initial processing of your loan. If we do not advise you specifically, earthquake insurance is not required as a condition of your loan.

7. How are property taxes assessed in California?

   The fiscal year period for the state of California runs from July 1^st to June 30^th. Property taxes are assessed and collected at the County level. With rare exception, there are no separate tax bills issued by either cities or school districts.

   Property taxes are collected in two equal installments. The first installment, representing July 1^st through December 31^st is due on November 1^st and delinquent on December 10^th. The second installment, representing January 1^st through June 30^th, is due on March 1^st and delinquent on April 10^th. Payments must be received (not postmarked) by 5:00 on the delinquent date or will be assessed a 10% penalty. The penalties increase substantially if not paid by June 30^th of that tax year.

   The amount of the taxes is determined by the value of the property. At minimum, for the first full fiscal year after purchase most homeowners will pay property taxes equal to 1% of the sales price. The property value may be adjusted by the assessor each year to account for inflation, but any annual upwards adjustment cannot exceed 2%. In many communities, an additional assessment will be levied due to bonds that have been voter approved. These additional assessments typically fund school districts, transportation needs, water supplies, sanitary districts and regional parks. As a general rule, these assessments will add an additional .25% to .50% to the amount of the tax bill.

   After the close of escrow, most borrowers will receive a supplemental tax bill in addition to the regular tax bill. The regular tax bill reflects the value of the property at the time the seller owned it. The supplemental tax bill is based on the difference between the seller's value, as determined by the existing tax rolls, and the new value, established at the time of sale. The amount due is prorated over the remaining months of the fiscal year. All subsequent tax bills will be based on the reassessed value, subject to annual increases as described above.

   A Homeowners' Exemption will reduce the assessed value of your home by $7,000. To apply for a Homeowners Exemption, contact your County Tax Assessor.

ADDITIONAL PAYMENTS TO PRINCIPAL QUESTIONS

1. How can I make additional payments to reduce the principal balance of my loan?

   If you would like to make additional payments to reduce the principal balance of your loan (known as a curtailment), you may do so at any time for any amount. Please make your check payable to the Regents of the University of California, mail it to our payment processing center address above, and include a note with your check referencing your loan number and indicating that this amount is to be applied to reduce your principal balance. A payment history, showing the amount of the additional payment to principal, and the remaining loan balance, will be mailed to you following the processing of this curtailment.

2. When will my additional payment to principal reduce my payment amount?

   Your payment amount is adjusted once a year (see question B-1 above). In order to reduce your payment for the upcoming adjustment, the curtailment must be received by our office at least twenty days prior to the date of your interest rate change.

3. Does my additional payment to principal result in a change in the distribution of principal and interest?

   Yes. MOP loans are fully amortizing. That is, the loan amount will be fully paid off, without a balloon payment, at the end of a fixed period of time. Each payment is split between principal and interest based upon the interest rate, number of years remaining until maturity and, the unpaid principal balance.

   When the principal balance is decreased by an additional curtailment, a greater portion of each succeeding payment is allocated toward principal than if the curtailment had not been received. However, the amount of your monthly payment will not change until the next scheduled payment adjustment (at your anniversary date).

4. Is there any disadvantage to making additional payments to principal?

   Yes. As noted above, more funds will be applied to principal, and less to interest, with each subsequent payment. Accordingly, there will be less interest paid in that particular calendar year, and less interest for the borrower to declare as a deduction on their income tax forms. Please note, as well, that making curtailments will not reduce the term of your loan.

CHANGE IN EMPLOYMENT STATUS QUESTIONS

1. How will my payments be made if I go on Leave Without Pay?

   If you are on approved leave without pay status for any period of time, please contact this office to make alternative payment arrangements and advise us of your forwarding address (if applicable).
   
   Borrowers have two options:

   • ACH debit: we will debit your bank account for your monthly mortgage payment amount (principal and interest payment only) on the fifth (5 th) business day of each month, while you are off payroll status.
   • Personal check: borrowers can mail a personal check on the first of each month to our payment processing center.

   Some borrowers have used "PC banking" or "bank by phone" services. Please note that any payment received after the fifteenth of the month will be assessed a late fee of 4% of the amount past due.

   If you pay by personal check or utilize the ACH debit option, a billing statement acknowledging receipt of your payment will be mailed to you on approximately the 18 th of each month. The payment processing center address is University of California-Office of Loan Programs, File #73706-02, P.O. Box 60000, San Francisco CA 94160-3706. Checks should be made payable to The Regents of the University of California.
   

2. How will my payments be made if I go on Sabbatical Leave?

   Typically, faculty on Sabbatical Leave are paid their full-time salary while on Sabbatical. When this occurs, your mortgage payment will continue to be deducted from your monthly paycheck. If this is not the case in your situation, you will need to remit your payment by personal check. For details on this procedure, please see the "How will my payments be made if I go on Leave Without Pay" question in this section (click here).

3. What happens if I terminate my employment with the University of California?

   The University of California Mortgage Origination Program provides condition of employment loans to eligible faculty and members of the Senior Management Group.

   Once you have terminated your employment with the University, you are no longer eligible to participate in the Mortgage Origination Program. As detailed in the Note and Deed of Trust, you will have six months from the date of separation to payoff your loan via either sale or refinance. Until your loan is paid off, you must continue to make regularly scheduled monthly payments by submitting a personal check to the payment processing center address or utilizing the ACH debit option, as well as keep property taxes current and adequate hazard insurance in force.

4. Will I be eligible to continue participating in MOP when I retire from the University of California or will I be required to pay off the existing balance of my loan at that time?

   As a member of the Academic Senate, or Senior Management Group, when you retire from the University of California, you may continue to participate in the Program. However, you must continue to make regularly scheduled monthly payments by submitting a personal check to our payment processing center address or utilizing the ACH debit option, as well as keep property taxes current and adequate hazard insurance in force. In addition, you must continue to maintain the property as your primary residence and retain at least a 50% ownership interest in the property. Since retirees are no longer paid from the campus payroll, automatic payroll deduction is not possible.

   Borrowers who retire due to a disability are also eligible to continue to participate in the Program, but the above payment requirements still apply.

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