MORTGAGE RIGHTS
Mortgage Loan Servicing Disputes Misapplication of Payments
Order of Payment Your mortgage has a provision that tells the order that payments must be applied to principal, interest, escrow and fees. Here is an example from a client's mortgage: 3. Application of Payments: Unless applicable law provides otherwise, all payments received by Lender under Paragraphs 1 and 2 shall be applied: first, to any prepayment charges due under the Note; second to amounts payable under paragraph 2; third, to interest due; fourth, to principal due; and last, to any late charges under the Note. I checked paragraph 2 of the mortgage, and found that it was the escrow provision. So, this mortgage requires escrow items to be paid before the payment is applied to principal and interest. The Fannie/Freddie uniform mortgage, on the other hand, requires payments to be applied in this order: interest, principal, escrow item, late charges, and any other amounts due. When Booked There are two time issues in the payments area: (1) payments are never booked; and (2) payments are held and not booked until a late fee has been incurred. This is why you need to go through every monthly statement as soon as you receive it. If you find a problem, you should act immediately by sending a Notice of Error, which we show you how to do in the Protect Yourself chapter. The problem with unapplied or tardily applied payment is that you more than likely will be in default if the mistake is not corrected. To get a feel for how quickly events can spin out of control, read the Time Is Not on Your Side page in the loan modification chapter. Since this problem can have such serious consequences, Congress added a rule to the Dodd-Frank Act requiring servicers to book payments as of the date they are received. Servicer Changes and Loan Modifications I want to draw your attention to these situations because they are breeding grounds for these types of mistakes. Accounting information may not be transferred accurately. Payments can be misapplied by the old or new servicer. Funds that accumulated in a suspense account during a trial period plan may not be taken out of suspense and applied to the account. The icing on the cake? The servicer who screwed up may report the homeowner as late to the credit reporting agencies.
NEXT: Late Fees, Fee Pyramiding and Unreasonable Fees
 MORTGAGE RIGHTS
The site does not provide legal advice. Neither Susan LaCava nor her law firm, LaCava Law, S.C., represent you until there is a signed retainer agreement.
Mortgage Loan Servicing Disputes Misapplication of Payments Order of Payment Your mortgage has a provision that tells the order that payments must be applied to principal, interest, escrow and fees. Here is an example from a client's mortgage: 3. Application of Payments: Unless applicable law provides otherwise, all payments received by Lender under Paragraphs 1 and 2 shall be applied: first, to any prepayment charges due under the Note; second to amounts payable under paragraph 2; third, to interest due; fourth, to principal due; and last, to any late charges under the Note. I checked paragraph 2 of the mortgage, and found that it was the escrow provision. So, this mortgage requires escrow items to be paid before the payment is applied to principal and interest. The Fannie/Freddie uniform mortgage, on the other hand, requires payments to be applied in this order: interest, principal, escrow item, late charges, and any other amounts due. When Booked There are two time issues in the payments area: (1) payments are never booked; and (2) payments are held and not booked until a late fee has been incurred. This is why you need to go through every monthly statement as soon as you receive it. If you find a problem, you should act immediately by sending a Notice of Error, which we show you how to do in the Protect Yourself chapter. The problem with unapplied or tardily applied payment is that you more than likely will be in default if the mistake is not corrected. To get a feel for how quickly events can spin out of control, read the Time Is Not on Your Side page in the loan modification chapter. Since this problem can have such serious consequences, Congress added a rule to the Dodd-Frank Act requiring servicers to book payments as of the date they are received. Servicer Changes and Loan Modifications I want to draw your attention to these situations because they are breeding grounds for these types of mistakes. Accounting information may not be transferred accurately. Payments can be misapplied by the old or new servicer. Funds that accumulated in a suspense account during a trial period plan may not be taken out of suspense and applied to the account. The icing on the cake? The servicer who screwed up may report the homeowner as late to the credit reporting agencies.
 MORTGAGE RIGHTS
 MORTGAGE RIGHTS
The site does not provide legal advice. Neither Susan LaCava nor her law firm, LaCava Law, S.C., represent you until there is a signed retainer agreement.
Mortgage Loan Servicing Disputes Misapplication of Payments Order of Payment Your mortgage has a provision that tells the order that payments must be applied to principal, interest, escrow and fees. Here is an example from a client's mortgage: 3. Application of Payments: Unless applicable law provides otherwise, all payments received by Lender under Paragraphs 1 and 2 shall be applied: first, to any prepayment charges due under the Note; second to amounts payable under paragraph 2; third, to interest due; fourth, to principal due; and last, to any late charges under the Note. I checked paragraph 2 of the mortgage, and found that it was the escrow provision. So, this mortgage requires escrow items to be paid before the payment is applied to principal and interest. The Fannie/Freddie uniform mortgage, on the other hand, requires payments to be applied in this order: interest, principal, escrow item, late charges, and any other amounts due. When Booked There are two time issues in the payments area: (1) payments are never booked; and (2) payments are held and not booked until a late fee has been incurred. This is why you need to go through every monthly statement as soon as you receive it. If you find a problem, you should act immediately by sending a Notice of Error, which we show you how to do in the Protect Yourself chapter. The problem with unapplied or tardily applied payment is that you more than likely will be in default if the mistake is not corrected. To get a feel for how quickly events can spin out of control, read the Time Is Not on Your Side page in the loan modification chapter. Since this problem can have such serious consequences, Congress added a rule to the Dodd-Frank Act requiring servicers to book payments as of the date they are received. Servicer Changes and Loan Modifications I want to draw your attention to these situations because they are breeding grounds for these types of mistakes. Accounting information may not be transferred accurately. Payments can be misapplied by the old or new servicer. Funds that accumulated in a suspense account during a trial period plan may not be taken out of suspense and applied to the account. The icing on the cake? The servicer who screwed up may report the homeowner as late to the credit reporting agencies.
 MORTGAGE RIGHTS
 MORTGAGE RIGHTS
The site does not provide legal advice. Neither Susan LaCava nor her law firm, LaCava Law, S.C., represent you until there is a signed retainer agreement.
Mortgage Loan Servicing Disputes Misapplication of Payments Order of Payment Your mortgage has a provision that tells the order that payments must be applied to principal, interest, escrow and fees. Here is an example from a client's mortgage: 3. Application of Payments: Unless applicable law provides otherwise, all payments received by Lender under Paragraphs 1 and 2 shall be applied: first, to any prepayment charges due under the Note; second to amounts payable under paragraph 2; third, to interest due; fourth, to principal due; and last, to any late charges under the Note. I checked paragraph 2 of the mortgage, and found that it was the escrow provision. So, this mortgage requires escrow items to be paid before the payment is applied to principal and interest. The Fannie/Freddie uniform mortgage, on the other hand, requires payments to be applied in this order: interest, principal, escrow item, late charges, and any other amounts due. When Booked There are two time issues in the payments area: (1) payments are never booked; and (2) payments are held and not booked until a late fee has been incurred. This is why you need to go through every monthly statement as soon as you receive it. If you find a problem, you should act immediately by sending a Notice of Error, which we show you how to do in the Protect Yourself chapter. The problem with unapplied or tardily applied payment is that you more than likely will be in default if the mistake is not corrected. To get a feel for how quickly events can spin out of control, read the Time Is Not on Your Side page in the loan modification chapter. Since this problem can have such serious consequences, Congress added a rule to the Dodd-Frank Act requiring servicers to book payments as of the date they are received. Servicer Changes and Loan Modifications I want to draw your attention to these situations because they are breeding grounds for these types of mistakes. Accounting information may not be transferred accurately. Payments can be misapplied by the old or new servicer. Funds that accumulated in a suspense account during a trial period plan may not be taken out of suspense and applied to the account. The icing on the cake? The servicer who screwed up may report the homeowner as late to the credit reporting agencies.
 MORTGAGE RIGHTS
The site does not provide legal advice. Neither Susan LaCava nor her law firm, LaCava Law, S.C., represent you until there is a signed retainer agreement.  MORTGAGE RIGHTS