mortgage servicing issues & the respa

A mortgage servicer is the entity hired by your creditor or note holder to manage your mortgage loan.  Though sometimes a company owned by your lender or creditor, this company is not typically entitled to receive income from your regular monthly loan payments.  Rather, a mortgage servicer is essentially a debt collector, and as such, mortgage servicers are subject to some federal laws that do not apply to lenders.

respa: legislative relief

The Real Estate Settlement and Procedures Act (“RESPA”), provides for private causes of action (or personal lawsuits) against the servicer of a residential mortgage loan.  Under this federal law, servicers are required to provide borrowers with detailed notice any time there is an assignment, sale or transfer of the servicing rights to their loan.  This means when you start getting monthly statements from a new mortgage company, they should have sent you a notice of the change.  

Additionally, RESPA imposes a duty on mortgage servicers to respond to your written requests for information or written disputes, also known as “Qualified Written Requests.”  Upon receipt of a Qualified Written Request, servicers must stop reporting negatively to the credit bureaus about your account for a period of sixty (60) days.  They also have to fix the errors on your account and/or answer your questions related to servicing the loan. Failure to respond properly can result in civil liability. 

RESPA also contains certain things that your mortgage servicer cannot do.  It prohibits mortgage servicers from obtaining forced-placed hazard insurance without a reason to believe that the homeowner’s own policy has lapsed.  RESPA also makes it unlawful for a servicer to charge a borrower a fee for responding to a Qualified Written Request or fail to respond within ten (10) days of a borrower’s request for the identity of the current creditor of the loan.

If you are facing problems with your mortgage servicer, contact an attorney familiar with federal mortgage servicing laws.  RESPA is one of the most powerful tools that a homeowner has against his/her mortgage company.  

Read more about the RESPA below...