Mortgage servicers are companies that handle all transactions on your mortgage account, including collecting your loan payments and initiating the foreclosure of your home. Sometimes they make mistakes that could cost you your home.
Let’s look at different kinds of abusive mortgage servicing practices. If you think you’ve experienced any of these, contact us below for a free consultation.
Improperly applied payments
Mortgage servicers might wrongfully treat you as behind on your payments because those transactions weren’t accurately recorded. In some cases, they can stonewall your efforts to correct payment errors in your account.
If you feel that stonewalling occurred, you might have been charged unnecessary fees and interest and can even face wrongful foreclosure. (Visit our wrongful foreclosure page for more on that topic.)
Improper escrow: Force-placed insurance
If a mortgage servicer doesn’t think you have insurance on your property, the company can put one in place, known as a force-placed insurance policy.
Mortgage servicers generally aren’t allowed to obtain force-placed insurance. The exception is when they have reason to believe you’ve failed to maintain your own property insurance.
Before obtaining force-placed insurance, servicers must give you written notice and an opportunity to provide insurance proof. If you believe your landlord has violated these requirements, you might have a legal claim.
Improper Escrow: Tax charges
Many people are either partially or fully exempt from paying real estate taxes. For example, in Virginia, the elderly, disabled consumers, disabled veterans and the surviving spouses of veterans and first responders who were killed in the line of duty can apply for a full or partial real estate tax exemption.
But even if you’re exempt from paying real estate taxes, mortgage servicers will often charge you for taxes and include it in their monthly statements. This dramatically increases your mortgage payments. If you cannot afford the inflated and inaccurate payment amount, it can ruin your credit and leave you facing a foreclosure.
Prevented mortgage modifications
A loan modification might be the best solution for both you and your mortgage servicer. But because mortgage servicers profit from foreclosures, they don’t have an incentive to facilitate loan modifications.
You might find a roadblock from your servicer, who falsely claims you failed to provide supporting documentation for a loan modification. You also might get denied a permanent loan modification after successfully completing a trial plan.
Improper fees and charges
Most loan servicers keep most, if not all, of the fees and charges that they assess to your loan. They are therefore incentivized to charge as many fees to your loan as they can. Many of these fees and charges are improper.
Some potentially improper fees and charges to look for are:
Property inspection fees.
Pay-to-pay fees for paying your mortgage over the phone.
Retroactively assessing late fees or interest for months where a prior servicer elected not to charge them.
If you notice any of these on your mortgage, you should explore legal options.
How can we protect you from mortgage servicing abuse?
Our attorneys at Kelly Guzzo, PLC, have extensive experience litigating federal claims related to mortgage servicing abuse, including force-placed insurance disputes. If you believe a mortgage servicer has mistreated you, we’ll meet with you at no cost to see if you have a case.
