| House Refinance Center |
| Loan Servicing Abuses Or "Mistakes" |
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Loan servicers do make mistakes. These "small" mistakes can affect your
mortgage and your good credit.
Since the housing crisis began, banks have promised to streamline the
mortgage and foreclosure operations. They also planned on hiring more staff
and to train them properly. But the mistakes still happen.
Some of the more common miscues are as follows.
Applying a payment to the wrong account.
If you are in the habit of sending checks, you could be exposing yourself to late
payment fees if the check arrives late. In addition, when someone has to enter
the information into a computer system there is the odd chance that the
payment could be applied to another borrower.
Double talk.
Double talk occurs when you are negotiating a loan modification with one
employee of the loan service, and at the same time another employee is
working on the legal paperwork to foreclose on you.
Robo-signing.
In many foreclosure cases, some loan servicers were involved in robo-signing.
This issue has been all over the news. If you are in foreclosure the loan servicer
has to follow the law to the letter. No short cuts are allowed.
Road-blocks to refinance.
Loan servicers hate to lose an account. They like to see the steady cashflow
coming in every month. When you try to refinance with a different lender, there
are some document you would need from the loan servicer. For example, your
new lender would want to see a "payout statement" or some might refer to it as
a "mortgage balance statement". This document tells the new lender how much
is owing on the mortgage.
The most important piece of information on the payout statement is the
"prepayment penalty". You are breaking a contract. The loan servicer will lose
business. Therefore, you have to pay. If the amount is too high, then it might not
be worth the trouble of refinancing. The loan servicer would delay for two or
three weeks, and sometimes longer.
Make your request in writing, an pay special attention to the date you sent in the
request.
Problems with escrow accounts.
Generally it is easier for the loan servicer to pay the property taxes and the
house insurance. The homeowner pays this extra amount with each mortgage
payment. However, sometimes the county does not receive the tax payment.
When this happens the home owner will get a letter from the county. The same
situation happens with the house insurance.
You have to be diligent and make sure both of these items are paid on time. If
there are any late charges, insist that the loan servicer pays them.
Foreclosure on the wrong house.
This is definitely a nightmare. Just ask the Cordosa family of Springville,
Florida. In August 2010 the Bank of America changed the locks, removed
clothing and furniture, and proceeded to foreclose on the house. Interestingly,
the house was a cash transaction. There was never a mortgage.
A second case was a foreclosure by Countrywide in Nevada back in 2002. A
couple was out of town, and when they returned they discovered that the locks
had been changed. They sued and received $2 million in damages.
Many experts say that mistakes of this type happen because the banks are
overwhelmed with the volume of distressed properties.
mortgage and your good credit.
Since the housing crisis began, banks have promised to streamline the
mortgage and foreclosure operations. They also planned on hiring more staff
and to train them properly. But the mistakes still happen.
Some of the more common miscues are as follows.
Applying a payment to the wrong account.
If you are in the habit of sending checks, you could be exposing yourself to late
payment fees if the check arrives late. In addition, when someone has to enter
the information into a computer system there is the odd chance that the
payment could be applied to another borrower.
Double talk.
Double talk occurs when you are negotiating a loan modification with one
employee of the loan service, and at the same time another employee is
working on the legal paperwork to foreclose on you.
Robo-signing.
In many foreclosure cases, some loan servicers were involved in robo-signing.
This issue has been all over the news. If you are in foreclosure the loan servicer
has to follow the law to the letter. No short cuts are allowed.
Road-blocks to refinance.
Loan servicers hate to lose an account. They like to see the steady cashflow
coming in every month. When you try to refinance with a different lender, there
are some document you would need from the loan servicer. For example, your
new lender would want to see a "payout statement" or some might refer to it as
a "mortgage balance statement". This document tells the new lender how much
is owing on the mortgage.
The most important piece of information on the payout statement is the
"prepayment penalty". You are breaking a contract. The loan servicer will lose
business. Therefore, you have to pay. If the amount is too high, then it might not
be worth the trouble of refinancing. The loan servicer would delay for two or
three weeks, and sometimes longer.
Make your request in writing, an pay special attention to the date you sent in the
request.
Problems with escrow accounts.
Generally it is easier for the loan servicer to pay the property taxes and the
house insurance. The homeowner pays this extra amount with each mortgage
payment. However, sometimes the county does not receive the tax payment.
When this happens the home owner will get a letter from the county. The same
situation happens with the house insurance.
You have to be diligent and make sure both of these items are paid on time. If
there are any late charges, insist that the loan servicer pays them.
Foreclosure on the wrong house.
This is definitely a nightmare. Just ask the Cordosa family of Springville,
Florida. In August 2010 the Bank of America changed the locks, removed
clothing and furniture, and proceeded to foreclose on the house. Interestingly,
the house was a cash transaction. There was never a mortgage.
A second case was a foreclosure by Countrywide in Nevada back in 2002. A
couple was out of town, and when they returned they discovered that the locks
had been changed. They sued and received $2 million in damages.
Many experts say that mistakes of this type happen because the banks are
overwhelmed with the volume of distressed properties.
Loan Servicing Mistakes Every
Homeowner Should Look For
Homeowner Should Look For
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