Did You Know: Loan Screw-ups

FYI—Loan Screw-ups

It is important that you know some of the ways the servicer of your loan frequently fails in their responsibility to handle their job as they should. Their failure could give you the reason you need to block a pending foreclosure. There are many things they do wrong or fail to do at all but the more common items include:

• Failing to make timely payments from your escrow account
• Failure to aggressively work at a loss mitigation attempt when requested to do so
• Sending you inconsistent letters demanding payment
• Failing to honor forbearance agreement (not you—them)
• Failing to give you proper notice of a servicing transfer and your rights related to that transfer
• Failing to properly apply payments during the transfer period, possibly creating a default
• Failing to provide a timely or complete response to a qualified written request
• Choosing to apply force-placed insurance when you, in fact, already had coverage in place
• Returning mortgage payments
• Improperly placing your payment in a suspense account
• Posting your payment late and/or misapplying your payment
• Threatening foreclosure when, in fact, you are not delinquent
• Charging excessive fees for the use of attorneys, inspections, etc
• Charging fees for services which have not YET been performed
• Creating a default by misapplication of the payments you have sent in

This is just a partial list of things which servicers do on a regular basis which can wreck havoc with your loan. At the least, it can be an inconvenience. At the worst, it can actually cause you to be in default and in foreclosure through no real fault of your own. It happens. Even when you have actually missed mortgage payments and are struggling to keep your home, the loan servicer is still required to handle the account with certain fairly standard and reasonable guidelines. Too often, they fail to do so and you end up getting the short end of the stick. Unless consumers demand they stop the unfair practices and produce documentation of how they have handled your file (via a qualified written request) they will continue to operate like they all got training in the wild, wild west where anything was okay.

What should you do if you suspect your servicer is not dealing with you fairly?

Step One: File a qualified written request following guidelines discussed elsewhere on this blog. (Do additional research on the web; see this entry on Buying TIME from our blog).
Step Two: Try to find an attorney who will represent you in challenging their right to foreclosure.

You must move quickly and with a firm action plan so that you don’t become another foreclosure because the consumer didn’t know that they could fight back.

The “Buying TIME” Foreclosure First Aid Kit, available at www.DovePublishingHouse.com would be of great benefit to you as well.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)