Because mortgage loans are typically converted into mortgage-backed securities and other investment products, the servicing rights are often sold to companies known as mortgage servicers that manage loan accounts. A mortgage servicer is responsible for the daily management of your mortgage loan account, including sending monthly mortgage statements to mortgagors, collecting and crediting your monthly loan payments, reviewing loss mitigation applications, commencing foreclosure actions, and managing your escrow account, if you have one.
When mistakes occur, or loan servicers engage in abusive and deceptive practices, borrowers may default on their loans through no fault of their own placing them at risk of foreclosure.
For over a decade the Law Offices of Bruce Richardson has worked to protect our clients from a wide range of abusive mortgage servicing practices, including:
• Failure to properly credit payments — Mortgage servicers may violate the terms of the mortgage by improperly applying funds, wrongfully assessing late fees, ignoring a grace period or failing to credit funds to a mortgagor’s account. Federal rules generally require mortgage servicers to credit payments to a mortgagor’s account on the day the payment is received. Mortgage servicers are required to credit payments to your loan account the day it is received.
• Improper management of escrow account – An escrow account is a fund held by your mortgage servicer that you pay into for property taxes and homeowners’ insurance. The payments are factored into the monthly mortgage payment, along with the principal and interest, and held in the escrow account.
The servicer then uses your escrow account to pay your taxes and insurance as they become due during the year. Federal law mandates that your mortgage servicer make timely escrow payments for taxes, insurance and any other escrowed items. Mortgage servicers that fail to properly manage, or make the disbursements from, escrow accounts can cause harm to homeowners ranging from issues with uninsured property damage to losing the home to a tax lien.
• Charging unreasonable fees — Mortgage servicers are permitted to charge fees under certain conditions, particularly if the borrower is in default or foreclosure. This includes late fees, inspection fees, foreclosure costs and other related feeds. Mortgage loan servicers often charge excessive, duplicative, unnecessary and unearned fees which can unfairly increase the outstanding balance of the loan.
• Improper forced-placed Insurance – Mortgagors are required to have and maintain insurance coverage on their property. The mortgage establishes this requirement to protect the lender’s interest in case of fire or casualty.
A lapse in insurance coverage will prompt your loan servicer to obtain hazard insurance at your expense. This type of insurance is called force-placed insurance. The loan servicer will charge you for the cost of the force-placed insurance. Forced-placed insurance costs more than typical insurance despite providing less coverage. A typical force-placed hazard insurance policy does not provide coverage for personal property or for liability coverage regarding damage or injuries to others. The loan servicer typically increases the borrower’s monthly payment to cover the cost of the insurance. A servicer’s wrongful application of force-placed insurance can result in the loss of hundreds or thousands of dollars.
• Dual Tracking – Exists when a mortgage servicer continues foreclosure proceedings while simultaneously reviewing the homeowner’s application for a loan modification or other loss mitigation options. The rules issued by the Federal Consumer Financial Protection Bureau (CFPB) prohibit “dual tracking.” 12 C.F.R. §1024.41 governs a servicer’s response to a loss mitigation application. 12 C.F.R.§1024.41(c) (3) (I) (D) (2) provides that where a borrower makes application and a judicial foreclosure has already been commenced, “the servicer cannot conduct a foreclosure sale before evaluating the borrower’s complete application.” Further, 12 C.F.R.§1024.41(g) prohibits a servicer from either holding a foreclosure sale or moving for a sale if a borrower makes a loan mitigation application within certain time constraints. In comments on the servicing rules, the CFPB has stated that “nothing in 1024.41(g) prohibits a servicer from continuing to move forward with a foreclosure process (assuming that the first notice or filing was made before a servicer received a complete loss mitigation application) so long as the servicer does not take an action that will directly result in the issuance of a foreclosure judgment or order of sale, or a foreclosure sale (see Mortgage Servicing Rules, 78 Fed. Reg. at 10833-35). A violation by the servicer/lender of the prohibition against “dual tracking” affords a borrower a separate action in federal court against the servicer/lender for the assessment of a monetary penalty.
If you are dealing with an unscrupulous mortgage servicer and fearful of losing your home, you need the powerful legal representation we can provide. We put the best interests of our clients first and fight tirelessly to protect their rights. If you are at risk of foreclosure because of an unscrupulous mortgage servicer’s abusive or unlawful conduct, you may be afraid and not know where to turn. Our legal team will explain all your legal rights, evaluate and relay all your options, zealously advocate on your behalf, and help achieve your objectives. Call the law offices of Bruce Richardson today or complete the convenient online contact form to request a consultation.