Bad Mortgage Servicers

Recourse against bad servicing

How to file a complaint

When a mortgage loan is closed, the origination file is closed and a servicing file is opened. It remains open for the life of the loan. Whether the process goes smoothly or badly depends on both the borrower and the servicing agent.

The servicing agent is the entity that receives the mortgage payment, keeps the payment records, provides borrowers with account statements, imposes late charges when the payment is late, and pursues delinquent borrowers.

In many transactions, servicing agents also pay property taxes and insurance with money placed in escrow by the borrower.

Borrowers can choose from whom they borrow, but they can't choose the servicing agent. The agent may or may not be the lender who originated the loan. Servicing is frequently sold. Borrowers must be notified of transfers, but cannot prevent them.

If you have been mistreated, you should file a written complaint with the lender addressed to Customer Service. Do not include it with your mortgage payment, which you should continue to make separately.

State:
Your loan number
Names on loan documents
Property and/or mailing address

This is a "qualified written request" under Section 6 of the Real Estate Settlement Procedures Act (RESPA).

I am writing because:

[Describe the problem and the action you believe the lender should take.]
[Describe any previous attempts to resolve the issue, including conversations with customer service.]
[If it is relevant to the dispute, request a copy of your payment history.]
[List a day time telephone number.]

I understand that under Section 6 of RESPA you are required to acknowledge my request within 20 business days and must try to resolve the issue within 60 business days.

If this doesn't do the trick, you can file a complaint with HUD. You can also sue. According to HUD, "A borrower may bring a private law suit, or a group of borrowers may bring a class action suit, within three years, against a servicer who fails to comply with Section 6's provisions."

You can also file a complaint with the government agency that regulates the servicing agent. Here are web sites you can use to contact these agencies:

For national banks
For Federally chartered savings and loan associations
For state-chartered banks and savings and loans
For mortgage banking firms

If you don't know the proper agency, you can send the complaint to the Consumer Protection Division of the state Attorney General. It will forward it to the relevant state or Federal agency.

Any borrower who does not receive a complete transaction statement at least annually should periodically submit a "qualified written request" for one using the form described above.

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