By: Lance T. Denha, Esq.
Mortgage servicers sometimes make serious errors when handling a homeowner’s mortgage loan account. Fortunately, federal law provides a way for you to make the lender correct the error or provide you with certain information if you believe that your mortgage servicer has made a mistake.
Mortgage servicers administer mortgage loan accounts. The servicer typically handles:
- sending mortgage statements to borrowers
- collecting and processing mortgage payments
- keeping track of account balances
- controlling escrow accounts
- reviewing applications for mortgage modifications and other possibilities for avoiding foreclosure, and
- overseeing foreclosures.
Your mortgage servicer could be the bank that owns your loan or it could be a separate company.
A federal law, the Real Estate Settlement Procedures Act (RESPA), provides a way for you to dispute errors with your mortgage servicer and/or obtain specific information about your account. The way to do this is to send your servicer a letter.
Under recent amendments to RESPA, your letter will be considered a “notice of error” or a “request for information.” There are different time limits for the servicer to respond to your letter based on which type of request you send.
If you send a letter to notify the servicer about a particular error that it made when managing your loan, the servicer must correct the error, provide notification of the correction, and give contact information for you to follow up — or let you know that no error occurred along with the reasons for this conclusion.
With so many different duties and variables, there is a lot of room for error when it comes to mortgage loan servicing. Under the law, the following servicer errors (among others) can be addressed in a notice of error:
- refusing to accept conforming payments
- improperly applying or crediting payments
- imposing unreasonable fees or charges
- neglecting to pay taxes or insurance
- failing to provide accurate information regarding workout options and foreclosures
- dual tracking the customer (where the lender pursues a foreclosure while simultaneously evaluating you for a mortgage modification or other workout option), and
- improperly starting a foreclosure or conducting a foreclosure sale.
Your servicer must acknowledge a written notice that asserts a particular error within five business days. How much time the servicer gets to respond to your notice of error depends on the type of error that you claim the servicer committed.
- If you claim that the servicer didn’t provide an accurate payoff statement after you asked for one, it must respond no later than seven business days after receiving your letter.
- If you claim that the servicer wrongly started a foreclosure or improperly scheduled or conducted a foreclosure sale, it must respond before the foreclosure sale date or within 30 business days after it receives your letter (whichever is earlier).
- If you claim a different type of error, the servicer must respond within 30 business days after it gets your notice.
The servicer may generally extend the 30-day period by 15 days if, within the 30-day period, it informs you about the extension and tells you why there is a delay. (However, a 15-day extension is not allowed if your notice of error is about a payoff statement or certain errors pertaining to foreclosure.)
Time frame to acknowledge your request for information. If you send a written request for information, the servicer must acknowledge your inquiry within five days.
Time frame in which servicer must respond to your request for information. The servicer must generally give you the information you requested within 30 business days — or explain why the information is not available, as well as provide you with the name and contact information of someone you can follow up with.
When the 30-day response period can be extended. The servicer gets 15 extra days to respond if it notifies you about the extension within the 30-day period and lets you know the cause of the delay.
When the servicer must respond sooner. The servicer must provide the information you requested within ten business days if you’re trying to find out the identity, address, or other contact information for the owner of your mortgage loan.
The servicer does not have to address your notice of error or request for information if:
- your letter is about an error that is essentially the same as one you previously asserted (and the servicer has already responded to it)
- your letter requests information that is essentially the same as a previous request (and the servicer already responded to your request)
- your request is overly broad, or
- you are asking about a loan that was transferred to another servicer (or that was paid off) more than a year ago.
However, the servicer cannot just ignore your notice, even if it fits one of the four criteria above. It must notify you within five business days after determining that it doesn’t have to deal with your notice or request, and give you the basis for the determination.
Always make certain to follow up and document all communication and correspondence in the event the error can rise to the level of penalties or initiation of foreclosure so that an attorney can utilize this vital information in defending any foreclosure action as a result of this error.