By Moe Bedard
“Mr. Jones, you owe $12,327 to stop foreclosure on your home and bring your mortgage current.” The lender’s collections employee says to Mr. Homeowner Jones that is desperately trying to save his home of 27 years.
Mr. Jones does not question these fees. Hell, he’s the one that is late and in foreclosure. He’s the one that owes money to his lender. So these fees are never questioned by Mr. Jones as he cashes in most of his 401k and life savings to pay his lender what he assumes he owes. The full $12,237.
Welcome to business as usual in the mortgage servicing industry. Call it what you like, I call it predatory servicing because that’s exactly what it is.
What if Mr. Homeowner Jones really only owes $9,235 and not $12,237? Should he pay his lender for something they cannot prove that he owes? Should he just take their word and pay the piper, take his foreclosure medicine and not question these fees?
I don’t know about you, but I do not like to pay for something I do not owe. Especially when I am behind the proverbial 8 ball and cash isn’t something that is easy to come by.
So, how do lenders and servicers get away with charging these bogus fees?
It usually begins with fees being added for services that they cannot fully explain or substantiate and many times these fees are for payments you had made on time, yet they credit your account late and the fees start piling on daily. When you attempt to question or dispute these questionable fees, they may abuse you verbally and use scare tactics to shut you up or they may just forward it to the scary guys, collection attorneys or a law firm that will step up the abuse and threatening collection tactics with phone calls and certified letters.
This is exactly what is happening in probably 99% of the loans that are modified, on repayment or forbearance plans. Borrowers are paying for fees in huge numbers without ever verifying that they do in fact owe the money that their lender or servcier claims they owe.
What can a homeowner do when they are confronted with questionable fees?
The first thing a homeowner should do is ask the lender to fully document all fees that are owed. More often than not, a verbal request will go ignored as the fees tack on, daily and if not by the minute. They may even say, “No problem Mr. Jones, we’ll send that to you ASAP.” Just to get you off the phone and guess what? Your fees keep adding on as you wait by the mailbox for something that will never come.
You need to just cut to the chase and fight fire with fire or you are going to get eaten alive by your lender. Plain and simple.
What a homeowner can do is request in writing what is called a “Qualified Written Request” (QWR). There is a little know law that protects homeowners against questionable fees, entries, documentation and a “life of loan history” (all fees and payments ever made on your mortgage) from your lender. Under Section 6 of the Real Estate & Settlement Procedures Act (RESPA), a borrower can request that the lender document all claims for fees.
The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first passed in 1974. The purposes of RESPA are
to help consumers become better shoppers for settlement services and
to eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services.
Details about RESPA
Corresponding with the above purposes:
1. RESPA requires that borrowers receive disclosures at various times. Some disclosures spell out the costs associated with the settlement, outline lender servicing and escrow account practices and describe business relationships between settlement service providers.
2. RESPA also prohibits certain practices that increase the cost of settlement services. Section 8 of RESPA prohibits a person from giving or accepting any thing of value for referrals of settlement service business related to a federally related mortgage loan. It also prohibits a person from giving or accepting any part of a charge for services that are not performed. Section 9 of RESPA prohibits home sellers from requiring home buyers to purchase title insurance from a particular company.
RESPA in general
RESPA covers loans secured with a mortgage placed on a one-to-four family residential property. These include most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit. HUD’s Office of RESPA and Interstate Land Sales is responsible for enforcing RESPA.
If you have been charged questionable fees or even if you have not, isn’t it wise to make your lender prove to you every penny that you owe them? Please follow the below instructions to fight for your rights!
An informed homeowners is a person that can fight back against questionable fees and use the law to save their home
Loan servicing complaints
Section 6 provides borrowers with important consumer protections relating to the servicing of their loans. Under Section 6 of RESPA, borrowers who have a problem with the servicing of their loan (including escrow account questions), should contact their loan servicer in writing, outlining the nature of their complaint. The servicer must acknowledge the complaint in writing within 20 business days of receipt of the complaint. Within 60 business days the servicer must resolve the complaint by correcting the account or giving a statement of the reasons for its position. Until the complaint is resolved, borrowers should continue to make the servicer’s required payment.
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. Borrowers may obtain actual damages, as well as additional damages if there is a pattern of noncompliance.
Other enforcement actions
Under Section 10, HUD has authority to impose a civil penalty on loan servicers who do not submit initial or annual escrow account statements to borrowers. Borrowers should contact HUD’s Office of RESPA and Interstate Land Sales to report servicers who fail to provide the required escrow account statements.
Filing a RESPA complaint
Persons who believe a settlement service provider has violated RESPA in an area in which the Department has enforcement authority (primarily sections 6, 8 and 9), may wish to file a complaint. The complaint should outline the violation and identify the violators by name, address and phone number. Complainants should also provide their own name and phone number for follow up questions from HUD. Requests for confidentiality will be honored. Complaints should be sent to:
Director, Office of RESPA and Interstate Land Saleshttp://loanworkout.org/2008/01/04/is-your-lender-charging-you-for-questionable-fees-fight-back-against-predatory-fees/
US Department of Housing and Urban Development
451 7th Street, SW
Washington, DC 20410