Recourse from your mortgage lender or servicer is possible although it may take time, patience, and keeping really good records. You have rights under Real Estate Settlement Procedures Act (RESPA), which is enforced by the Department of Housing and Urban Development.
What is RESPA?
RESPA is a consumer protection law that pertains to the closing of your house, and the servicing of your mortgage and escrow account if you have one, outlining your rights as well as the responsibilities of your mortgage loan servicer.
Lender or Servicer
When you purchase a house with a mortgage, the company that provided the mortgage loan may sell the right to service the loan to another company after your closing. This is very common, and according to RESPA you have the right to have your lender let you know 15 days in advance of a transfer and give you full contact information for the new servicer.
If this happens, the terms of your loan are not allowed to change just because your loan servicer changes.
How to Receive Recourse
There are several steps that you can take to receive recourse from your mortgage lender or servicer. The first step is to write them a letter describing your complaint, and listing any conversations or correspondence you have had with the lender to resolve this issue. To protect your rights and follow RESPA procedures, it is very important that your letter:
- is NOT mailed with your mortgage payment; send it in a separate envelope
- you must include these words at the top of your letter: "This is a qualified written request under Section 6 of the Real Estate Settlement Procedures Act (RESPA)"
- include your loan number, the name(s) on the loan and the property address
- should conclude with reminding the lender that under RESPA they have to acknowledge your written complaint within 20 days and resolve your complaint or provide a written explanation within 60 days
Next Steps
If you have a complaint against your mortgage lender and it is not resolved to your satisfaction, your next level of recourse is to file a complaint directly with HUD and also to talk to an attorney about other possible remedies, including a lawsuit. Before you do file a complaint you may want to read how RESPA handles these common areas of complaint:
- Under RESPA your lender does not have to, but is permitted to require you to set up an escrow account - however, they are limited to keeping a cushion that does not exceed one sixth of your total annual escrow charges.
- You are not allowed to earn interest on the funds in your escrow account
- Your mortgage lender does not have to pay your real estate taxes by a certain time or annually even if it will save you money; all they have to do is pay it in a timely manner
- Your mortgage lender has to pay your hazard insurance premiums in a timely manner.
Get Legal Help
If you are being mistreated by your lender, and you are unable to get satisfaction or you think your lender is guilty of RESPA violations, contact an attorney who can help you file a complaint with HUD or contact the lender on your behalf. You may also be able to sue your lender for damages depending on the circumstances.
