NOT YOUR GRANDMOTHER’S MORTGAGE
In this, the second installment of our ongoing educational series “Can I Sue My Bank?”, we thought that we would reiterate why education for homeowners facing mortgage issues is so important. Chances are very likely that your mortgage is critically different that than your grandmother's was in that it is securitized, meaning it is bundled together with thousands of others in a loan pool or trust and sold as a stock certificate. Why this is so important is because it forces the struggling homeowner to work with a collection agency, called a loan servicer, rather than the owner of the mortgage.
SERVICERS DON’T WANT TO HELP
Servicers, unlike owners, do not want to help you. They get paid a percentage of the loan balance rather than the amount they collect. Thus, when a borrower falls behind in payment and the balance increases, so does the servicer’s compensation. The early intervention requirements of federal law address the specific concern that servicers are not the friend of homeowners.
DOCUMENT, DOCUMENT, DOCUMENT
The Early Intervention Rule mandates that the servicer must try to establish live contact with a borrower within 35 days of the first delinquency in payment. Within 45 days of the delinquency, there must be a written notice to the borrower of the loss mitigation options available and how to obtain further information about how to apply for them. Because failure to abide by this rule can lead to a lawsuit by the homeowner for damages, it is critical that the homeowner keep careful records of phone calls and written correspondence. Catching the servicer in legal violations can greatly strengthen the hand of the struggling homeowner in the effort to save the home.
Daniel McGookey, author of Consumer Mortgage News, is a lawyer of 36 years. His firm, McGookey Law Offices, LLC, has offices in Columbus, Lorain and Sandusky, and represents homeowners with real estate and mortgage issues throughout Ohio.