Home Business What is a mortgage servicer and how can you avoid a suspicious one?

What is a mortgage servicer and how can you avoid a suspicious one?

by SuperiorInvest

Q: Here at Ask Real Estate, we recently received a question from a reader about poor treatment by mortgage servicers. Many first-time home buyers don't realize that the lender who approves their mortgage could turn around and sell the servicing rights to a company they've never heard of. Now the homeowner might have to deal with a mortgage servicer who has poor customer service, charges late fees when they shouldn't, or makes unnecessary demands on borrowers. How can you protect yourself from having to do business with a bad mortgage servicer?

TO: A mortgage lender is a company that lends you money, but is not necessarily the one that services your loan. This is a mortgage servicer and unfortunately you cannot choose them. They are responsible for sending statements, accepting payments, and managing escrow accounts. They also charge various fees, many of which they keep, and may initiate a foreclosure. Loan services can always be sold.

“There is no incentive for good customer service,” said Sarah B. Mancini, co-director of advocacy at the National Consumer Law Center.

But mortgage servicers must follow the law, and you don't have to tolerate unfair business practices.

Kristi C. Kelly, an attorney who works on mortgage cases with Kelly Guzzo, PLC, in the Washington, D.C., area, said many borrowers never have problems with their mortgage servicer. But when they do, problems often involve servicers not applying payments promptly, or causing homeowners who are eligible for property tax exemptions to unnecessarily make estimated tax payments into their escrow accounts. warranty.

Document any problems you have with the servicer and write a letter to the address printed on your statement for “qualified written requests” or “error notices.” If a payment you made was not applied correctly, you can call and ask when the company received the payment. If the administrator acknowledges that the payment was made on time, you can request a recording of the phone call, which will give you an advantage.

“If it's not corrected then you will potentially have a claim,” Ms Kelly said. She could sue to correct the mistake and for damages and attorneys' fees.

The Consumer Financial Protection Bureau, a federal agency, can also help. Accepts complaints online or by calling (855) 411-2372 and works to achieve a resolution for the borrower. It also monitors complaints to detect widespread abuse by repeat offenders. In New York State, the Attorney General's Office also receives complaints about mortgage servicers to detect patterns of abuse and offers free legal help through the Homeowner Protection Program.

If you decide to refinance when interest rates are more favorable, you may want to look for a lender that is less likely to sell servicing rights, such as a credit union.

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