When paying for your home, you trust your loans servicing company to carefully track payments and other information and to prevent mortgage errors. However, mortgage lender errors do happen, and they can have serious consequences if unaddressed—imagine being threatened with foreclosure because a loan company incorrectly marked your mortgage as paid.
Know what to do if a mortgage company makes a mistake. Further, know who to turn to for help. Attorney Carlos M. Amor has decades of experience helping homeowners with mortgage issues and takes practical approaches to finding solutions for clients. Contact our law firm and ask for a free consultation by calling 954-453-7200. Attorney Carlos M. Amor provides free consultations by phone, via video meeting, or in person.
Why Do Mortgage Company Errors Occur?
Processing So Many Loans Opens Up Room for Error
If something does not seem right in terms of your mortgage, it’s worth asking, what if a mortgage company made an error? Mortgage lender errors can happen frequently in the mortgage lending business. There’s a huge number of records flowing through, and mortgages are sold and resold frequently, opening up more possibilities for error.
Mortgage errors can happen for simple reasons as well, such as key-stroke errors when entering account information, funds being moved to the wrong account, or incorrect payment records being recorded. In some cases, errors may be traced to a loan provider trying to take shortcuts by not hiring enough staff or using ineffective, automated, or outsourced processes.
Even these small errors may continue to balloon into larger problems if not corrected quickly. If mortgage company errors are not caught internally, the results can include unwanted and unwarranted notices of default payments, collection attempts, and foreclosure threats.
Common Types of Mortgage Errors
Lenders can and do make mistakes when servicing loans. Even though mortgage lenders should know the rules, sometimes mortgage errors result from carelessness or even disregard for rules and procedures.
Knowing what to do if a mortgage company makes a mistake is key. But being able to find and identify errors before they become a larger problem is equally important. With so many different variables, there are plenty of loan servicing errors that can creep in. A Notice of Error can address mistakes such as:
- Improperly applied or credited payments
- Not providing an accurate payoff balance upon request
- Wrongful foreclosure without proper cause or in violation of mortgage servicing laws
- Denying a loan modification request without proper reasoning
- Neglecting to pay insurance or taxes
- Charging unreasonable fees
- Neglecting to record a satisfaction of mortgage.
When errors do appear, having well-kept notes and documentation will be very helpful. While errors can go both ways, meaning borrowers may have recorded amounts incorrectly, inserted a typo, etc., notes and documentation can be used to help check and clarify errors.
What If a Lender Erroneously Claims that Your Mortgage Is Paid Off?
One of the most serious mortgage lender errors occurs when a company leads a borrower to incorrectly believe that a mortgage was paid off, resulting in the borrower’s no longer making payments. When this occurs, a borrower can later be threatened with foreclosure and receive notices of non-payments despite their having the genuine belief, based on the mortgage company’s error, that payments have been completed.
Rectifying the situation involves steps similar to straightening out other mortgage company errors. This means first reviewing your mortgage agreement, statements, and related materials, sending a letter to your mortgage loan servicer, and contacting an attorney.
What If Your Lender Neglects to Record Your Satisfaction of Mortgage?
Once you make your final mortgage payment, your lender is required to record with the clerk in the county where your property is located that your mortgage has been satisfied. After taking this filing step, they must then inform you through a mortgage satisfaction letter that the release on their lien for your property has been recorded. Under Florida law, these steps must take place within 60 days of your final mortgage payment. If the lender fails to do this, it may cause you problems later if you try to sell your home or other property. For that failure to notify you, your lender may be held accountable in a civil claim.
If a lender refuses to provide you with information or disagrees with your assessment that a mortgage lender error occurred, contact attorney Carlos M. Amor for the legal help you need.
Even with such serious errors, don’t expect a lender to suddenly realize their mistake. The best course of action involves promptly taking action and sending a Notice of Error right away.
What to Do If a Mortgage Company Makes a Mistake
Report Errors as Soon as They’re Found
If a mortgage company makes a mistake, you are not powerless, and you do not have to suffer the consequences of their error. However, it is important to try and notice the mistake as quickly as possible and to take proactive steps to alert a company of the mistake and make sure that it’s addressed.
It’s best to address mortgage errors and to request more information in writing. The federal Consumer Financial Protection Bureau has outlined how to go about contacting and sending a letter to your mortgage provider. Its website even includes sample letters.
Sending Written Error Notices
Contact your mortgage provider as soon as you find out that a mortgage error might have occurred. While you can call your lender, sending a written letter will offer more legal protections than a call. Known as a Notice of Error, this letter points out that a servicer made a particular error when working with your mortgage account. A Notice of Error serves to:
- Notify a lender that an error was made
- Seek to resolve errors pertaining to your account
- Provide lenders with a chance to respond to any errors made.
After a lender receives a Notice of Error, it should promptly evaluate the error. In response to a mortgage company error, a lender must correct the error, provide notification of the correction, and list contact information so that a borrower can follow up. A loan provider has a several options for responding, including:
- Correcting the error and confirming the correction with you in writing
- Investigating the error and providing a written explanation for why no mortgage company error was found
- Asking you for additional information
- Informing you that the company will need an additional 15 business days to investigate and respond to your notice.
A loan servicer cannot wait indefinitely to respond to a mortgage lender error notice; a servicer must acknowledge your notice within five business days. However, the loan provider does have more time (typically up to 30 business days) to investigate and respond to the issue that your letter addresses. For errors concerning foreclosure, a service provider must generally respond before a foreclosure sale occurs.
Mortgage Lender Errors and Requests for Information
In some situations, you may need more information before evaluating a potential mortgage lender error. You may send a lender a letter requesting more information about your account.
As with a Notice of Error letter, a Request for Information must be acknowledged within five business days, and lenders have 30 business days to either provide the information requested or tell you why the requested information isn’t available. If that’s the case, a lender should also give contact information on where you can follow up.
The Real Estate Settlement Procedures Act (RESPA)
When you have sent a written letter to a loan service provider, the Real Estate Settlement Procedures Act (RESPA) requires that lenders acknowledge your letter and respond within specific time frames. This RESPA federal law is designed to help protect borrowers and homebuyers and to keep information and processes transparent between borrowers and lenders.
When Loan Servicers Do Not Have to Respond
In some situations, loan servicers do not have to respond to a Notice of Error or Request for Information. If a letter is about a previously reported request or error, is overly broad, or asks about a paid-off loan or one transferred to another servicer, a company will not need to respond. A loan servicer must still acknowledge your letter, however, and state that no response is needed.
When Should You Contact an Attorney?
If a mortgage service lender is not responding to your inquiries or if it claims that no errors exist despite evidence, it’s time to speak with a real estate attorney. If you are facing foreclosure or other serious situations as a result of a servicer error, an attorney can help get your situation straightened out.
Contact attorney Carlos M. Amor if you need help correcting a mortgage company error and preventing foreclosure and other consequences.
In many cases, sending a letter will not be enough to stop foreclosure. Or, if a foreclosure sale is imminent, working with an attorney will be your best option to prevent such a scenario.
Attorney Carlos M. Amor Knows How to Handle Mortgage Errors
Mortgage errors are more than just a nuisance—homeowners can lose their homes if a particularly serious mortgage lender error goes unnoticed. While it’s critical to be diligent and to keep proper records of mortgage payments and other important processes, take action if mortgage company errors occur.
You don’t have to go it alone. Attorney Carlos M. Amor has helped numerous homeowners to protect their homes and to clear up situations involving mortgage lenders. He offers free consultations by phone, by video meeting, or in person. Call our firm today to schedule a free consultation by dialing 954-453-7200.