* During a 60-day grace period, you cannot be charged a late fee if you mistakenly send your mortgage payment to the old servicer
* The new servicer cannot report to a credit bureau that payments were late.
* Write to the servicer if you think there are any problems with your account.
* Within 60 business days of receiving your inquiry, the servicer must correct your account or determine it is accurate.
* Do not subtract any disputed amount from your mortgage payment. The servicer may consider this different amount to be a partial payment and declare the mortgage in default.
Bureau of Consumer Protection
Office of Consumer & Business Education
When you apply for a home mortgage, you may think that the lender, or loan originator, will service the loan until it is paid off or your house is sold. This is not always true. In today's market, mortgage servicing rights often are bought and sold.
If you are notified that your home mortgage servicing has been sold to another company, you may wonder how it will affect your loan terms and monthly payments. Some consumers have complained that they were not given enough notice of loan servicing transfers and were unfairly charged late fees and penalties.
In 1990, the National Affordable Housing Act was passed to address some of these concerns. This brochure explains what a mortgage servicer does and what your rights are under the Housing Act It also tells what you can do if you have a complaint about the transfer of your loan servicing.
When your escrow account is first established, your mortgage servicer must give you a statement telling you the estimated taxes, insurance premiums and other charges that are anticipated over the next 12 months and the expected totals of those payments.
The mortgage servicer also is required to give you an annual statement that details the activity of your escrow account. This statement shows your account balance and reflects payments for property taxes and homeowners insurance.
Provide a disclosure statement.
The disclosure statement says whether the lender intends to sell the mortgage servicing immediately; whether the mortgage servicing can be sold at any time during the life of the loan; and the percentage of loans the lender has sold previously. During 1992, lenders must disclose the percentage of loans for which the servicing was sold in 1990 and 1991. This will change beginning in 1993, when lenders will have to report figures for the previous three years. The percentages will be noted in the ranges 0-25%, 26-50%, 51-75%, and 76-100%. The lender also must provide information about servicing procedures, transfer practices, and complaint resolution.
If you have a face-to-face interview with a lender, you must receive the disclosure statement at the time of the loan application. If you apply for a loan by mail, the lender has three business days to send you the disclosure statement after receiving your application. If you do not return a signed disclosure statement, the lender cannot fund a mortgage for you.
* The lender terminates the contract because, for example, you have defaulted on the loan.
* The servicer files for bankruptcy.
* The Federal Deposit Insurance Corporation or the Resolution Trust Corporation begins proceedings to take over the servicer's operations.
* the name and address of the new servicer.
* the date the current servicer will stop accepting mortgage payments, and the date the new servicer will begin accepting them.
* free or collect call telephone numbers for both the current servicer and the new servicer that you can call for information about the transfer of service.
* Information that tells whether you can continue any option insurance, such as mortgage life or disability insurance, and what action, if any, you must take to maintain coverage. You also must be told whether the insurance terms will change.
* A statement that the transfer will not affect any terms or conditions of the contract you signed with the original mortgage company, other than terms directly related to the servicing of such loan. For example, if your old lender did not require an escrow account, but allowed you to pay property taxes and insurance premiums on your own, the new servicer cannot demand that you establish such an account.
Within 20 business days of receiving your inquiry, the servicer must send you a written response acknowledging your inquiry. Within 60 business days, the servicer must either correct your account or determine it is accurate. The servicer must send you a written notice of what action it took and why.
Do not subtract any disputed amount from your mortgage payment. Many mortgage servicers will refuse to accept what they consider to be partial payments. They may return the check and charge a late fee, or declare the mortgage is in default and start foreclosure proceedings.
You also can send your complaint to the FTC. Write to: Correspondence B ranch, Federal Trade Commission, Washington, D.C. 20580. Although the FTC generally does not intervene in individual cases, the information you provide may indicate a pattern of possible law violations requiting action by the Commission.
You also may want to contact an attorney to advise you of your legal rights. Under the National Affordable Housing Act, consumers can initiate class action suits and obtain actual damages, plus additional damages, for a pattern or practice of noncompliance. In successful actions, consumers also may obtain court costs and attorneys fees.
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