Top Ten Mortgage Servicing Abuses

July 5, 2016 by Arkady Bukh

Mortgage Abuse: And You Really Thought the Lender Was On Your Side

While “Robo-signing” has made the headlines, many loan companies have identified methods to speed foreclosures and generate fees all payable by the homeowner. Many of the uppermost mortgage servicing abuses could be curtailed with a little research and caution by the potential home buyer.

Don’t allow yourself to get stuck on these scams.

Misapplied Payment

Even if you make the payment on time, the loan company may “accidentally” reject the check — or apply it to a completely erroneous account. The outcome is unjustified late charges and frequently other penalties. Misdirected mortgages are a headache for homeowners, but for the finance company, they mean more income.

Illegal Fees

It is not permitted to bill the borrower when the finance business pays for property monitoring, but it happens; so too with other illicit fees.

Hypocritical “Help”

Homebuyers who have been cooperating with their mortgage company to smooth out their loan are shocked to discover that the company is pursuing foreclosure.

Refinancing Blocked

Lenders don’t like to lose so it in their best interest to stall refinancing attempts. Some financiers have even declined to produce loan payoff data.

Legal Rights Squelched

Loan companies frequently include “waivers” with modifications which tell the home buyer, “If you sign this change, you are giving up your right to use any legal action against us — not matter how wicked we get.”

Botched Taxes

Many mortgages include an escrow account for taxes that the lender is supposed to manage. When the banker doesn’t pay taxes or insurance bills on time, the homebuyer is nailed with the penalties — not the lender. Some require costly risk coverage even when adequate insurance is already held.

Zero Communication

When lenders believe a homebuyer is a payment late, it is supposed to send a notice. Often they do; often they don’t.

Foreclosures

Every state has regulations overseeing the foreclosure procedure and when foreclosure can be begun. In the race to foreclose, some lenders ignore critical steps which are legally required.

Wacky Foreclosures

Although difficult to accept, crazy foreclosures happen frequently. The lender initiates foreclosure processes despite the homebuyer being current on their payments.

Robo-Signing

Attorney Arkady Bukh advises Lenders sometimes fail to review important documents. Sometimes they even falsify court documents used to evict the home buyer. When bankers haven’t kept records, the owner is on the hook for legal fees, taxes and penalties.

The lesson in all this? Double check and re-read documents. Make a copy of everything connected with your mortgage so that if the lender claims to have misplaced something, you’re ready with a notarized copy.