Banks and their servicing companies make mistakes. Homeowners, at one time, blindly believed whatever a bank did and whatever documents they submitted were always correct. Since the mortgage crisis started in 2008, there have been dozens of publications of inappropriate actions, mistakes, issues involving robo-signing and bad practices by financial institutions. As a result of these disclosures, attorney generals in all 50 states as well as the United States Attorney General have brought lawsuits which have resulted in banks all over the country paying hundreds of billions of dollars in fines and penalties.
Katherine M. Porter, a law professor, conducted a study based on the filings of 1,300 Chapter 13 bankruptcy cases. Her study revealed, in a majority of these bankruptcies, documents submitted by the holders of the mortgage contained errors (Misbehavior and Mistake in Bankruptcy Mortgage Claims, Texas Law Review, 2008.)
What Type Of Mistakes To Look For
Mortgage servicing companies cannot always be counted on to give you credit for all of your mortgage payments. They may charge excessive fees in violation of state laws. They may fail to advise you that you can redeem your property by becoming current on your mortgage payments. In the event you seek to reinstate your mortgage, and you receive a statement from the mortgage servicing company with regard to what they claim is necessary to be paid to reinstate your mortgage, that reinstatement must have an accurate itemization of what they claim is due them. An example of a mortgage servicer mistake would be charging you for a reappraisal or home inspection on your home when the mortgage documents don’t make it an obligation of yours to pay these fees. The following are examples of common mortgage servicer mistakes:
- the bank engaged in coercive improper collection practices concerning their mortgage
- your mortgage payments get applied to someone else’s account
- the bank receives your mortgage payment but doesn’t give you credit for it
- the bank buys insurance on your property and charges you for it in spite of the fact you already had insurance on your property
- the bank fails to pay your property taxes in a timely manner and a penalty is assessed or the bank fails to pay your property taxes altogether even though they have received the money in escrow for your property taxes
- the bank charges you late fees and property expense fees even though your mortgage payments were made on a timely basis
