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Mortgage Servicing Errors and How a Lawyer Can Help

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The federal government implemented the Real Estate Settlement Procedures Act (RESPA) to attempt to erase willful and intentional mortgage servicing issues that mortgage servicing companies caused during large foreclosure filings back between 2007 and 2013. Mortgage servicing companies are agents for the owners and holders of the notes and mortgages and are hired to manage the mortgages.

The following is a list of many of the pivotal duties the servicing companies do:

  1. Collect mortgage payments;
  2. Account for escrow monies received;
  3. Payout escrow payment loan costs (homeowners’ insurance, real estate taxes, property mortgage insurance( PMI));
  4. Send monthly statements;
  5. Send notices;
  6. Assist borrowers with loss mitigation avenues;
  7. Hire attorneys for certain legal actions taken in case of default.

The larger mortgage servicers manage a lot of loans and can be prone to mistakes in the accounting and management of these loans.

Error Notices
When a borrower believes a mortgage servicer has caused an error in the accounting or management of a loan, the borrower has the right to send a “notice of error” or request for information. A notice of error is a specific notice that requires the servicing company to take certain actions. First, it must send an acknowledgment to the borrower within a certain period of time that it has received the error notice and is investigating the alleged error. Then the servicing company has a certain amount of time to investigate the error and correct it and communicate with the borrower or conclude that no error was made and explain to the borrower.

Failure to comply with these Statutes properly may provide the borrower with a cause of action for actual damages, statutory damages, and attorney’s fees. These claims against mortgage servicers are typically handled on a contingency basis by an attorney meaning that the attorney pays the costs and recovers the fees and costs, if and when, the lawsuit is successful. This gives the borrower an avenue to file lawsuits against the deep pockets of the mortgage industry and seek assist in regulating the industry to ensure mistakes are less common.

It is important to consult legal counsel regarding these notices as they must be sent containing specific language and to a specific location with the mortgage serving company. If you believe your mortgage servicer has made a mistake and your attempt to have it correct have been ignored or not corrected contact this office to establish a consultation to discuss your legal avenues.

If you are seeking legal counsel for notice of error issues, please contact Powell, Jackman, Stevens & Ricciardi, P.A. today for a free consultation.

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