Servicing Basics

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The key signs of predatory mortgage servicing

! No monthly statement sent to borrowers

! Long hold-times on borrower calls

! Monthly statement that does not show how payments are applied and on what dates

! Payments not processed within one or two days of receipt

! Attempting to collect amounts discharged in a bankruptcy

! Excessive charges for simple things like electronic payments, loan histories, faxing of document copies, etc.

! Not reporting correctly to credit bureaus

! Phone calls repeatedly transferred and disconnected

! Customer-service representatives that cannot access needed information

! Payments that are received but aren’t credited per the mortgage documents

! Unexplained charges, fees or “advances”

! Ignoring borrower’s bankruptcy status

! Payments returned without valid explanations

! Unauthorized “automatic” deductions from borrower checking accounts

! Escrow account miscalculations and excessive charges

! Customer-service personnel and supervisors who do not use their real names

! Collectors who use misinformation and threats to coerce borrowers into paying amounts they may not actually owe

! Force-placed insurance policies on properties already covered by the borrower’s insurance

! Ignoring borrower-submitted documentation of payments, insurance coverage, etc.

! Misrepresentation of loan terms and conditions (i.e., attempting to collect pre-payment penalties when not included in the original mortgage)

! Sending notifications to non-existent addresses

! Offering borrowers experiencing payment difficulties unreasonable and usurious “forbearance agreements”

! Unreasonable or inexplicable delays and/or excessive charges for producing a payoff statement

! Much-higher than average number of consumer lawsuits compared to other servicers, particularly class-action cases

 

The bare minimum defense

1. Have copies of important documents

Make a set of copies of all your original loan documents—especially anything that has your signature on it. If you don’t have them, the only sources available to you are the company that handled your closing (normally a title company), the original lender and your current servicer. Be prepared to pay some kind of service charge to obtain them, but you must have your own set or you are purely at the mercy of whatever they are telling you.

Take that set and store it somewhere other than your home or office. If you have a safe-deposit box, that is an ideal place for the originals. If you don’t have one, consider having a trustworthy friend or relative keep the copy and you keep the originals (see next step).

2. A basic filing system

The simplest way to organize your records is to just put everything in date order, and we mean everything. There is a small chance you’ll get through your loan adventure without ever having to find something, but not knowing where it is when you need it is not only time consuming, but worrisome and frustrating.

Just having everything in one place, safely stored and at least already sorted in date order is a good place to start.. If you’ve had your mortgage for a while, do a first-pass sort of everything related to your mortgage you can get your hands on and put them in their own year folder.

There is a complete filing system outlined in more detail (including printable file folder labels) in The Mortgage Survival Kit.

“Never mistake motion for action.”

Ernest Hemingway