Lender Abuse

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Graduate of Max Gardner's Bankruptcy Boot Camp April 3 - April 8, 2008

As the number of mortgage loan products exploded over the past decade, so did home ownership. However, a large number of new homebuyers don't understand how the mortgage process works and what is happening behind the scenes. The securitization of mortgage loans after origination has allowed the risk of these loans to be spread around, but the resulting rise of mortgage servicing companies has been a disaster for the average consumer.

The Basics of Securitization: Immediately after a loan is closed, most consumer mortgage loans are now sold to a trust, which holds a large pool of loans together. The trust sells investment shares in the pool. called Mortgage Backed Securities. The result is that the owner of your home mortgage is not the bank, but a pool of investors who own a fraction of a huge number of mortgages.

Mortgage Servicers: To ease the difficulty of billing and collecting payments on these huge pools of loans, owned by thousands or millions of investors, new companies were created (or subdivisions of existing banks were created) to manage the administration of these pools of loans. These companies are called mortgage servicers. A servicer doesn't own your loan, instead it has a contract with the Trust who does own the loan to manage it for them. A servicer is paid a flat fee percentage of the payments it collects to perform a limited range of services. However, most agreements between the Trusts and servicers also allow a servicers to collect other "fees" and keep those as profit. These include: late fees, inspection and appraisal fees, escrow overages, foreclosure fees and costs, and many junk fees. The ability of a servicer to collect these fees and keep the entire amount as profit has created an incentive to abuse the system!

Common Signs of Servicer Abuse: Here are some common tricks mortgage servicers use to collect unauthorized and illegal fees from you, and/or signs to watch out for!

No monthly statement sent to borrowers
Monthly statement that does not show how payments are applied and on what dates
Payments not processed within one or two days of receipt
Excessive charges for simple things like electronic payments, loan histories, faxing of document copies, etc.
Not reporting correctly to credit bureaus
Phone calls repeatedly transferred and disconnected
Customer-service representatives that cannot access needed information
Payments that are received but aren’t credited per the mortgage documents
Unexplained charges, fees or “advances”
Ignoring borrower’s bankruptcy status
Payments returned without valid explanations
Unauthorized “automatic” deductions from borrower checking accounts
Escrow account miscalculations and excessive charges
Customer-service personnel and supervisors who do not use their real names
Collectors who use misinformation and threats to coerce borrowers into paying amounts they may not actually owe
Force-placed insurance policies on properties already covered by the borrower’s insurance
Ignoring borrower-submitted documentation of payments, insurance coverage, etc.
Misrepresentation of loan terms and conditions (i.e., attempting to collect pre-payment penalties when not included in the original mortgage)
Sending notifications to non-existent addresses
Offering borrowers experiencing payment difficulties unreasonable and usurious “forbearance agreements”
Unreasonable or inexplicable delays and/or excessive charges for producing a payoff statement

If you experience any of these problems, it is very important that you get help from a professional who is familiar with mortgage servicing abuse! The attorneys at the Gaschler Law Firm have the knowledge and experience to fight the mortgage companies for you. The managing member of our firm, Tara E. Gaschler, is a graduate of Max Gardner's Bankruptcy Boot Camp, where she learned about abusive mortgage servicing practices, how to attack lenders and servicers who mismanage loans and methods for modifying consumer mortgage loans when mortgage servicers abuse the account.

DON'T WAIT UNTIL IT'S TOO LATE - CALL TODAY!

Increasingly, Mortgage Lenders and Servicers are playing fast and loose with your mortgage. The results can be devastating and range from higher rates to foreclosures! Knowing your rights and how to protect them is key!