When you get a mortgage, the lender transfers the money so you can pay for your home, but after that, payments and other issues are usually dealt with by a mortgage servicing company. These mortgage servicers collect and process payments, track your balance, send your statement, and pursue foreclosure in the case of default. They are the key entity that you deal with after signing on your mortgage.
That’s why mortgage servicing compliance is so important. When a servicer violates compliance laws through abusive practices, homeowners feel the immediate affects, and the impact can be devastating. Since most mortgage servicing violations occur when a homeowner is already in financial trouble or falling behind on the mortgage, these violations can put a homeowner in default or even lead to foreclosure when it isn’t warranted. In these situations, it’s important to talk to consumer protection lawyers and find out what your options are before the situation gets out of hand.
Common Types of Mortgage Servicing Compliance Violations
So how do mortgage servicers commonly engage in abusive practices? The following are the most common types of mortgage servicing compliance violations:
- Payment misapplication or inaccurate accounting: Sometimes when you pay a certain payment on your mortgage, the servicer will misapply it or inaccurately record it, putting you in default.
- Illegal or unreasonable fees: Certain fees are permitted when a payment is made late or an account goes into default, but fees for other reasons and any excessive fees are not permitted.
- Dual tracking: This happens when the mortgage servicer proceeds with foreclosure proceedings, while simultaneously working with the borrower on a loan modification or other option. This hurts borrowers and is illegal.
- Force-placing insurance without cause: Most mortgages require the home to be covered by proper insurance. If you fail to keep your policy current, the servicer can force-place the insurance, that is pay it on your behalf and add the cost to your mortgage. Unfortunately, this fee is often exorbitant and sometimes is applied even when the policy is current, making homeowners incapable of paying.
- Failure to address debt collection complaints: When borrowers do complain about these practices, the concerns are often ignored, making the situation worse.
As you can see, mortgage servicing compliance violations put undue stress on the borrower. If you don’t take action, you can quickly find yourself facing a serious financial situation that is not your fault. Luckily, you can consult a consumer protection lawyer to get the situation remedied and even collect damages for your suffering. Call the Ohio consumer protection lawyers at Luftman, Heck, & Associates at (888) 726-3181 today to find out how we may be able to help you get back on your feet.