What are Notes, Mortgages and Deeds of Trust?
A Note is an IOU. It is your promise to pay the lender the amount loaned to you. The Note also contains important terms such as your interest rate, whether your interest rate is fixed or adjustable, and the number of years you have to repay the loan. Both Mortgages and Deeds of Trust allow the lender or other parties to which the lender has transferred your note, to sell your home if you were to default on your loan.
What is a Mortgage Company?
Mortgage Companies are hired to process your mortgage payments. Mortgage Companies call themselves “Loan Servicers.” You may also find them called Mortgage Servicers. Mortgage Companies handle day-to-day administrative matters such as keeping track of the date on which an interest rate is changed in an adjustable rate mortgage and are also supposed to work with homeowners who experience financial difficulty in making their payments.
What is Foreclosure?
Foreclosure is the process the owner of your loan must go through to obtain the right to sell your home after you default. There are two types of methods: judicial and non-judicial. Your state’s law governs whether foreclosures are judicial or non-judicial. A judicial foreclosure is begun by the owner of your loan filing a lawsuit against you in your local court. A non-judicial foreclosure is begun by sending you a notice that your house is going to be sold.
What is the Consumer Financial Protection Bureau?
The Consumer Financial Protection Bureau, whose name is often shortened to CFPB, is a federal agency charged with regulating the consumer finance industry. All sorts of loans, including your mortgage, car loan and student loan, are regulated by the CFPB. The CFPB also regulates such things as credit cards. You can file a complaint with the CFPB about a problem with financial products and services, including problems with your mortgage company. I urge you to file complaints. The CFPB keeps a database of complaints and uses the complaints as a way to identify problems that consumers are experiencing.
What is Force-Placed Insurance?
Force-Placed Insurance is house insurance the Mortgage Company buys to protect itself against loss if your home is damaged or destroyed. You are required to pay the premiums for Force-Placed Insurance. Mortgage Companies are not allowed to purchase insurance on your home if you already have insurance.
Can the mortgage company require me to make a payments before they will consider my Notice of Error?
No. The CFPB rules forbid mortgage companies from demanding that a payment be made before they consider your NOE.
I sent in a Notice of Error, and the mortgage company only sent me the number for company service. Can they do this?
No. The mortgage company is required to respond to the issue that you pointed out. They must fix the problem or explain to you in writing why they think that the particular issue you put in your NOE is not a mistake on their part.
I sent in a Request for Information, and the mortgage company said that the information I wanted is confidential. Can they do this?
Yes. Mortgage companies have information that they must keep confidential, such as employee records. The ROI procedure is new, so we do not know if the mortgage companies will abuse the right to refuse to produce confidential documents. The court system has a similar procedure, the request for production of documents, and lawyers have abused the right to withhold confidential or privileged documents. We will have to wait and see what the mortgage companies do.
Can I take my NOE and/or ROI to the local branch of the bank that is my mortgage company and turn it in there?
No. You must send NOEs and ROIs to the address that your mortgage company uses. You can find that address on your monthly statements or coupon books. You may also find the address on the mortgage company’s website.
I sent in a NOE, and the mortgage company is asking me to send them some documents. Can they do this?
Yes. We will have to wait and see whether the mortgage companies abuse this privilege. Lawyers certainly have abused this privilege in the court system.
When I call the service department about a problem, I am bounced from department to department and no one seems to know the answer to my question. Is this right?
No. This is one of the problems that the CFPB specifically tried to solve with its new regulations. You can send a NOE and you can file a complaint with the CFPB. I urge you to file the complaint. The CFPB is working hard to get rid of this problem, and your complaint will help them enforce the new regulations.
The employee in the service department can see on his screen that there is a problem, but they will not fix it. They said that I had to contact the research department. Can he do this?
Yes and no. The company is required to fix mistakes, so yes, the employee should have done something. The department he told you to contact, however, is the safer way to make certain that the problem is fixed. The “research department” is the department that responds to Notices of Error. You will be better protected by the CFPB regulations be dealing with them in writing than trying to solve the problem with a phone call.
How is it possible that the monthly payment for my modified loan is higher than my old monthly payment?
The longer the mortgage company takes to modify your loan, the more you owe. You are still charged interest every month, and various fees, such as late fees, broker price opinions and attorney fees can be charged to you. The net result is that the monthly payment for the modified loan is beyond your means. A lot of people have lost their homes because the mortgage company dragged its feet processing their application for a loan modification. If I were you, I would start looking for an attorney that handles mortgage company disputes. I would also file a complaint with the CFPB.
Their online payment system will not accept my payment. What should I do?
Send them a check by mail return receipt requested. The mortgage company has the right to reject your payment if it is not for the “full amount.” The problem is, the mortgage company can overcharge you and refuse to accept your payment unless it includes the overcharge. They tell homeowners that they will work it out later. Sometimes the overcharge is small enough to just be an annoyance. Other times, however, the mistakes made by mortgage companies can increase your monthly payment to an amount you cannot afford. If the overcharge is small, you should consider paying it and sending the mortgage company an NOE because fees and interest will mount up if you are locked out of paying your mortgage. If the charge is large, I think you should find a lawyer and you should file a complaint with the CFPB.
Every time my house insurance is renewed, the mortgage company asks me to send them proof of insurance. I send them the proof, but they claim I did not and buy expensive insurance on my house. What can I do?
I use an internet fax service whenever I send anything to mortgage companies because the service keeps an exact copy of what I sent as well as information about when the fax was sent and when it was received by the mortgage company. If this happened to me, I would send an NOE with this proof attached. By the way, the CFPB regulations require the mortgage company to refund charges for the force placed insurance during the period when you had insurance in place.
I sent my payment on the first of the month, but the mortgage company just held onto the check until the payment was past due and charged me a late fee. Can they do this?
No. The new CFPB regulations require them to post the payment to your account promptly. Send an NOE and file a complaint with the CFPB.
The charge for private mortgage insurance was supposed to be taken off after 5 years. I have paid for 5 years, but the mortgage company refuses to take the charge off. What should I do?
This sort of “mistake” makes me wonder how many people are in your situation. I do a lot of class action work, and have learned that the way to become rich is to steal a penny every day from as many people as you can. The thief can make a lot of money, and the charges are so small that no one would bring a lawsuit just to recover the charge to them. It simply is too small. PMI payments are not small, and if the mortgage company is doing this to a lot of people, it can make a lot of money. Class actions exist to address this sort of problem. You should send an NOE and file a complaint with the CFPB. If you really want to make an impact, find a class action attorney.
I paid my property taxes, but the mortgage company claims that I did not. They are threatening to pay them for me. What should I do?
You should check with your local government to make certain that the mortgage company cannot pay your taxes if you have already paid them. I had a case once in which the mortgage company paid the taxes on a non-escrow loan before they were due and the homeowners did not discover this until they tried to pay the taxes. The homeowners were hit with escrow payments for the year that the mortgage company paid, and were also hit with escrow payments for the next year. That is a double escrow payment. Most families cannot afford a double escrow payment, and will wind up in foreclosure pretty quickly. I urge you to find a lawyer as soon as you can. You should also send an NOE and file a complaint with the CFPB.
I have had my mortgage for a long time, and had reached that happy place where more of my payment went to principal than interest. A new mortgage company took over my loan, and it looks like I am back to square one. Now, a big chunk of money goes to interest and only a little bit goes to principal. Can they do this?
No. Mortgage companies cannot change the terms of your loan. They must divide your monthly payment between principal and interest as required by your loan.