When you obtain a mortgage loan, you may think that the loan entity will keep and manage your loan until you finish paying it or until you sell your home. Frequently it is not like that. In the current market, loans and the rights to manage them are bought and sold quite frequently. In many cases, the company to which you send your payments is not the company that owns the loan.
A house is one of the most valuable purchases you make in your life, so it is important that you know who manages your payments and that they are credited correctly to your mortgage account. The Federal Trade Commission (FTC), the national consumer protection agency, wants you to know what a mortgage servicer does and what your rights as a borrower are.
The responsibilities of the mortgage servicing services companies and their rights
A mortgage servicer is responsible for the routine administration of your mortgage loan account, which includes charging your loan installments and crediting these payments to your account; and if you have an account escrow (escrow, in English), also address to manage it . If you have any questions about your mortgage loan account, you have to contact the administrator.
A escrow account, better known as an escrow account, is a fund maintained by your mortgage servicer to which you provide money to cover the payment of property taxes and property insurance. Usually, the payments corresponding to your escrow account are included in the monthly payment of your mortgage. Your mortgage servicer pays taxes and insurance premiums as they accrue during the course of the year. If you do not have an escrow account, you must pay the taxes and insurance premiums on your own.
If your mortgage servicer manages your escrow account, federal law requires you to pay the taxes, insurance premiums, and any other established charges promptly with the funds from that account. Within 45 days from the date of establishment of the escrow account, the administrator must provide a summary that clearly details an estimate of taxes, insurance premiums and other charges to be paid within the following 12 months together with the dates and total amounts foreseen for said payments.
Your mortgage servicer must also provide you with a free annual statement in which you detail the activity of your escrow account, for example, you must itemize your account balance and reflect payments for your property taxes, property insurance and other charges.
Transfer of the mortgage loan management service
If your loan is transferred to a new administrator, you usually receive two notices: one from the current administrator and the other from the new administrator of your mortgage. In most cases, your current servicer must notify you at least 15 days before the effective transfer date, unless you have received a transfer notice at the time the loan transaction closes. The effective date is the day the first mortgage payment should arrive at the address of the new mortgage servicer. The new administrator must notify it 15 days after the date of the loan transfer.
- Both notifications must include the following information:
- The name and address of the new mortgage servicer.
- The date on which the current administrator will stop accepting their mortgage payments.
- The date on which the new mortgage servicer will begin to accept your payments.
- The telephone number of the toll-free or collect-back lines of the current administrator and the new administrator to obtain information about the transfer.
- If you can continue with optional insurance coverage, such as a creditor’s policy with life or disability insurance coverage; the measures you must take to maintain insurance coverage and if the terms of coverage will be modified.
- A statement that the transfer will not affect any of the terms or conditions of your mortgage, except those that are directly related to the administration of the loan. For example, if your contract states that you can pay real estate taxes and insurance premiums on your own, the new mortgage servicer can not require you to establish a escrow account for that purpose.
- A statement explaining your rights and how you should proceed in case you have any questions or complaints about the loan administration service.
There is a 60-day grace period that applies from the date of transfer, during this period you can not charge a late payment fee if you mistakenly send your mortgage payment to the former mortgage servicer instead of sending it to the new administrator.
Transfer of possession of the loan
The right of possession of your loan and the rights to administer it may be in the hands of one or two companies. If the ownership of your loan is transferred, the new holder of the rights of possession of the loan must send you a notice that includes: i
- The name, address and telephone number of the new owner of the rights of possession of the loan.
- The date on which the new owner takes possession of the loan.
- The person who is authorized to receive legal notices and who can resolve issues related to loan payments.
- Where the transfer of the right of possession is recorded.
The new owner of the right of possession of the loan must notify it within 30 days after the date of taking possession. This notice is in addition to any other notice you may receive regarding the transfer of the administration rights of your loan.
Accreditation of payments
The administrator must credit the payments to your mortgage account the day you receive it. Some consumers have complained about the application of late payment charges, even when their payments were made on time. To protect yourself, keep all vouchers for your payments, including billing statements, paychecks, or bank statements. Maybe you can check online the movements of your account. If you have a dispute or dispute, continue to pay the monthly installments of your mortgage, but notify the administrator in writing (see Model Letter), and keep a copy of the letter and all the accompanying documentation for your file. Send your correspondence by certified mail to the address specified by the administrator and request an acknowledgment of receipt. If you wish to send your letter and the attached documentation by fax or email, be sure to follow the instructions of the administrator and before sending your letter confirm the fax number or the e-mail address. Keep a copy of the confirmations of the fax transmission and of the acknowledgment messages and replies received by email.
It is important that you have the mandatory property insurance for your home. If you do not have this coverage, the administrator of your mortgage loan can buy it on your behalf. This type of policy is known as forced insurance (in force). Usually, this insurance is more expensive than current insurance although it provides less coverage. The fundamental purpose of a forced insurance policy is to protect the owner of the mortgage.
Carefully read all correspondence you receive from your mortgage servicer. Your administrator may ask you to provide a copy of your property insurance policy. Quickly respond to requests related to property insurance and keep copies of all documents sent to your mortgage servicer.
If you believe there is a paperwork error and that your coverage is adequate, send the administrator a copy of your insurance policy. Once the error is corrected, cancel the forced insurance coverage and reimburse the cost of the policy, make sure that it also credits you with any late payment fees or interest that you would have applied for the insurance coverage.
Carefully review your billing statements to be sure that the charges applied by your mortgage servicer are legitimate, including charges that may have been authorized by you or by the mortgage contract to pay for a service. If you do not understand what the charges are for, send a written inquiry and request a detailed explanation of the charges. Also, if you call your loan administrator to request a service, such as faxing copies of loan documents, be sure to ask if they will charge you for the service and what the value of the service is.
Special considerations for loans in default
If you fall behind with one or more installments of your mortgage loan, you default or default. Your mortgage servicer can then impose “services related to non-payment” to protect the value of the property. These services can include inspections of the property to make sure that you are living in the house and to control that you are maintaining it. If you consider that you are not maintaining the property correctly, the administrator may require “property preservation services”, to mow the lawn, do yard work and repair, or to cover broken windows or doors with boards. The cost of this type of services, which may add up to hundreds or thousands of dollars, is charged to your mortgage account. If the administrator initiates the foreclosure procedure on your property, you will apply additional costs to your account such as attorneys’ fees, search for title deeds, and other expenses for postal items and the publication of notices of foreclosure. This can add hundreds or thousands of dollars more to your loan and as a result, it will be even harder to catch up on your mortgage and avoid foreclosure.
If you are in this situation, stay in touch with your mortgage servicer. Administrators have different policies regarding the time established to require services related to non-payment. Some may not require an inspection of the property or require preservation work if you inform them of the months you live in the house, who are in charge of its maintenance and if they are also working with you to find a solution to resolve the delinquency of your account. However, it is important that you review your billing statements carefully and question the charges that are incorrectly attributed to you. If your account statement shows charges registered under general concepts such as “other charges” or “corporate advances”, contact your loan administrator in writing to have an explanation of those charges and the reason for their application.
Are you struggling to make your payments?
If you are struggling to make your payments – or if you have already incurred default or non-payment – contact your mortgage servicer immediately. When you are trying to solve problems with your account, it is very important that you keep the communication channels open. If you are having difficulty communicating with your mortgage servicer or finding a solution to your problem call 1-888-995-HOPE to receive free personalized assistance from housing counseling agencies certified by the Department of Housing. Housing and Urban Development of the United States ( US Department of Housing and Urban Development , HUD). This hotline serves calls from around the country 24 hours a day, 7 days a week and is operated by the Homeownership Preservation Foundation , a non-profit organization that is a member of the HOPE NOW Alliance that is comprised of participants from the mortgage market and counseling agencies certified by HUD. To receive free online guidance, visit www.hopenow.com (in English).
Declaration of the balance for cancellation
A statement of the balance for the cancellation ( payoff statement , in English) is a document that specifies the amount required to pay the entire loan, Generally, mortgage administrators must deliver this statement if you request it and follow the instructions . Your mortgage administrator must give you this statement within a reasonable time – usually within 5 business days – from the date of your request.
Inquiries and disputes
By federal law, the servicer of your mortgage loan must respond promptly to the inquiries you submit in writing, also called “qualified claims in writing” (see Model Letter). If you believe you were charged a late fee or penalty for incorrect payment or if you have other problems related to the administration of your loan, contact your mortgage servicer in writing. Be sure to include your loan account number and clearly explain the reason why you believe an error was made in your account. Send your correspondence to the address specified by the administrator for this type of claim.
Your mortgage servicer must send you a written response acknowledging receipt of your letter within 20 business days. Within 60 subsequent business days, the administrator must correct their account or determine that no error has been committed. The administrator must send you a written notice describing the action or action you took and the reason for it, along with the name and phone number of a person with whom you can communicate to discuss the action taken.
Do not subtract any disputed amount to the payment of your mortgage fee. Your mortgage administrator may reject those amounts you consider partial payments. They may return the payment or put your account in “suspended” or “pending” status until you pay the rest of the monthly payment. In any case, the administrator may charge you a late payment fee or claim that your mortgage is in default or default and initiate foreclosure proceedings.
This is a model letter to present a “qualified written claim”. Use this letter format to address your claims under the provisions of the Real Estate Settlement Procedures Act (RESPA). Before writing your letter, ask if the claim will be accepted in Spanish.