“The Force Returns” – Suing the Mortgage Loan Servicing Company

suing mortgage loan servicing company

The majority of banks and mortgage companies which provide mortgages in the United States have been subcontracting out the servicing of their loans to mortgage loan servicing companies. There is now a new weapon which aggrieved homeowners who have not been properly treated by their banks or mortgage servicing companies can use in defense and as an offensive tactic against mortgage loan servicing companies. In January 2014, the Consumer Finance Protection Bureau (“CFPB”) was established pursuant to the Real Estate Settlement Procedures Act (“RESPA”). It is also established under the Truth in Lending Law. This statute provides consumers with a private right to bring a lawsuit against a mortgage loan servicing company. The basis of the lawsuit by homeowners deals with the failure of the mortgage loan servicing company to properly investigate, underwrite and review the mortgage loan application submitted by the homeowner. In short, the homeowner can sue the mortgage loan servicing company for their failure to do their job properly. This statute provides homeowners with monetary damages of between $500 and $2,000 for each violation made by the mortgage loan servicing company. In addition, the homeowner can ask that the mortgage loan servicing company pay their attorney’s fees and other actual damages they have incurred as a result of the mortgage loan servicing company’s failure to act in good faith and properly underwrite their mortgage modification application.

Errors by Mortgage Loan Servicing Companies

There are numerous errors which mortgage loan servicing companies make. To start with, they fail to properly review the application made by the homeowner. They inaccurately calculate the amount of money due and owing to the financial institution. Sometimes, they don’t properly apprise the homeowner with other mortgage mitigation loss options. There are also a variety of other mistakes, inaccuracies, omissions, miscalculations, and problems which are caused by the mortgage loan servicing companies.

Putting the Servicer on Notice

The statute provides a roadmap with regard to the notification of the servicing company with regard to obtaining information concerning their underwriting processes as well as for making claims against the mortgage servicing companies.

Enhancing the Mortgage Modification Process

My experience is when the mortgage servicing company understands you are aware of your statutory rights under this new statute and you are seeking financial damages and snooping around and investigating their processes, they become a lot more reasonable with regard to offering modifications to mortgages that are realistic and affordable by homeowners.

Elliot S. Schlissel is a foreclosure defense lawyer representing homeowners throughout the Metropolitan New York area for more than 20 years.

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