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Mortgage servicing is a company who handles the financial transactions on the mortgage. These financial transactions can range anywhere from processing payments, to assessing liens on the property. Mortgage servicers are usually the contact persons for the homeowner and they work directly with them to pay their mortgage or to discuss any financial issues that affect the mortgage. However, in recent times, mortgage servicers have come under fire for fraud and misappropriating of funds. Here are some of the possible pitfalls of mortgage servicing.
One of the pitfalls of mortgage servicing is the mortgage payments are not being applied to the account. Sounds like an easy administrative error, but it is not. When payments are not being applied to the loan, it costs the homeowner in fees. If the pattern continues, it can place the property in jeopardy of being foreclosed. Another situation of misappropriating funds is when payment is refused. Payment refusal can also place the homeowner in jeopardy of racking up unnecessary fees. The last situation of misappropriating funds is when the company places payments into a suspense account without proper justification.
Fees and Interest
The second pitfall of mortgage servicing is charging fees to clients for collection letters and inspections, or charging additional interest. The mortgage servicing company is not authorized to charge fees or additional interest. The company is only to handle the collection and processing of mortgage payments. Outside of this task, the mortgage servicing company has no legal right to impose additional fees to the loan holder. Mortgage servicers will impose these fees and interest because it how they make a profit.
The third pitfall of mortgage servicing companies is manipulating the account to appear in default when it is actual current. Making an account appear in default creates legal implications for the loan holder. By making the account appear in default, the servicing company can place the account into collections. The collection process will begin the foreclosure process on the property. The mortgage servicer has to notify you of any defaults on your account and the opportunity to dispute the default.
As a loan holder, you have rights that you can enforce in order to avoid these pitfalls. As loan holder, you must keep records of payments. The record of payment may include copies of checks or money orders, bank statements, or online account history. Keeping track of your payment history allows you to reconcile with the payment history the servicer is showing. By law, servicers have to credit mortgage accounts the day they receive the payment.
Secondly, review your billing statements thoroughly. Make note of any uncredited payments or fees. If you feel that the company is not handling your payments properly, or tacking on unwarranted fees, contact the mortgage servicing company in writing. Provide all documentation of payments to prove your case. Retain copies of your complaint. If this does not resolve the issue or you feel that the company is being fraudulent, contact the Federal Trade Commission.
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