It’s a frustrating situation when homeowners start to miss making their monthly mortgage payments. Struggling homeowners are often advised to get in touch with their respective mortgage servicers to help them come up with a workable solution to keep up with their payments and hopefully avoid foreclosure. Homeowners should be familiar with the core duties of the companies that collect their monthly payments so that they can ask the right questions about their mortgage and have an idea of what to expect when they do.
Help is on the way for homeowners affected by COVID-19
On March 27, U.S. President Donald Trump signed into law The Coronavirus Aid, Relief and Economic Security (CARES) Act, which is in a nutshell a $2 trillion aid for Americans who have been affected by the COVID-19. While the passage of the law could allow struggling homeowners to temporarily postpone their mortgage payments for a couple of months through forbearance, homeowners need to verify with their servicers if they are covered by the aid.
As a borrower, keep in mind that there are third-party companies, other than lending institutions, that could service your mortgage often called “non-bank servicing companies.” Below are the things you should expect from these companies that collect your monthly mortgage payments:
Servicers could change several times
During the term of the loan, you should be aware that your servicer could change several times. This is a common practice in the lending business because lenders or banks need to sell their loans so that they could replenish their funds and lend again to other people who want to buy a home or refinance a mortgage. Typically, you’ll receive a notification from your current servicer if they will transfer your loan to another company. You will receive another notification from your new servicer who will receive your monthly payments. When in doubt, the MERS Servicer ID is a quick way to verify the legitimacy of your new servicer.
Servicers should promptly communicate with borrowers
Aside from sending your monthly billing statements and notifying you once you become delinquent with your payments, your servicer must respond promptly to any questions or disputes that you may have with your mortgage payments. You need to put your inquiries or disputes in writing to make it valid and actionable. When you send a complaint letter, your servicer has 20 business days from receipt to acknowledge that they received your letter, then, they have 60 business days to take the necessary action to address your complaint.
Servicers can manage the property if necessary
In some cases, the lender or servicer could take charge of managing your home. This could happen when you suddenly abandon your home. Once you abandon your home, it gives the lender the right to protect its interest in the property, meaning, they could reasonably take over your property. The lender can make necessary repairs and change the door locks once they have confirmed that you’ve abandon your home.
Servicers can make mistakes too
The cliché “no one’s perfect” also applies to mortgage servicers. When communicating with your servicer especially in a national crisis like the COVID-19 pandemic, you need to be vigilant as they could make mistakes that could cost you more money, or even lose your home. Closely check your monthly statements to find out if you’re being charged with excessive fees. If you’re applying to modify your loan, it’s critical that you send a “complete application” to protect you from dual tracking. Dual tracking means that your servicer could be initiating a foreclosure even though you’re currently working to modify your loan. Make sure to always confirm with your servicer everything you need to send back with your loan modification application form to prevent this from happening. If you think that your servicer has committed a violation, you may file a complaint with the U.S. Consumer Financial Protection Bureau (CFPB).
It’s important for homeowners to be familiar with the duties and responsibilities of their respective servicers because it is the company that could offer them multiple options in the event that it may become difficult for them to meet monthly payments. Immediately working with your servicer is crucial if you want to save your home.