Mortgage Issues

Mortgage servicing problems often start with one bad entry and spiral into fees, escrow shortages, credit damage, or foreclosure pressure. We represent homeowners when servicers misapply payments, mishandle escrow, force-place insurance, or break the RESPA rules around error resolution and loss mitigation.

Overview

How Mortgage Servicers Break the Rules

RESPA and Regulation X set rules for how servicers handle payments, escrow, written error notices, and modification reviews. A servicer does not get to invent its own process once your account becomes difficult or heavily documented.

The most common problems we see are straightforward: payments posted wrong, escrow shortages manufactured by bad accounting, insurance placed when the borrower already had coverage, and modification files mishandled or denied without a real review.

These cases matter because the paper trail is usually dense and the harm is cumulative. We help homeowners build that record and pursue servicers when the errors become actionable.

How We Help Homeowners

Qualified Written Requests

Under RESPA, you have the right to send a Qualified Written Request (QWR) to your mortgage servicer demanding information about your account or asserting that an error has occurred. The servicer must acknowledge your QWR within 5 business days and substantively respond within 30 business days. During this period, the servicer generally cannot report negative information about the disputed issue to credit bureaus. When servicers ignore QWRs or respond with boilerplate non-answers, we hold them liable.

Force-Placed Insurance

If your mortgage servicer believes you have allowed your hazard insurance to lapse, they may purchase insurance on your behalf and charge you for it. This is called "force-placed" or "lender-placed" insurance. It is typically far more expensive than a standard policy and provides coverage only for the lender, not for you. RESPA requires servicers to send two written notices before force-placing insurance and to cancel the force-placed policy within 15 days of receiving proof of your own coverage. Violations of these requirements are actionable.

Escrow Disputes

Your mortgage servicer collects a portion of your monthly payment into an escrow account to pay property taxes and insurance on your behalf. RESPA regulates how servicers conduct annual escrow analyses, limits the amount of cushion they can require, and mandates refunds of overpayments. When servicers miscalculate your escrow, fail to pay your taxes on time, double-charge for insurance, or demand unreasonable payment increases, they may be violating RESPA.

Loss Mitigation & Modifications

When you fall behind on your mortgage, RESPA requires your servicer to evaluate you for all available loss mitigation options, including loan modifications, forbearance, repayment plans, short sales, and deeds in lieu of foreclosure. The servicer must acknowledge a complete application within 5 days and make a decision within 30 days. They cannot initiate foreclosure while a complete application is pending (known as "dual tracking"). When servicers wrongfully deny modifications, lose paperwork, or foreclose while an application is under review, they are violating federal law.

Payment Misapplication

One of the most common mortgage servicing abuses is the misapplication of payments. RESPA requires servicers to apply payments to your account on the day of receipt. Payments must be credited to principal, interest, and escrow in accordance with your loan agreement. When a servicer holds your payment in suspense, applies it to the wrong account, credits it late, or allocates it incorrectly, it can trigger a cascade of problems: late fees, negative credit reporting, escrow shortages, and even foreclosure.

Payment misapplication is particularly common during loan transfers (when your loan is sold from one servicer to another), when you are in a trial modification plan, or when your loan has been placed in or discharged from bankruptcy. We have seen cases where a single misapplied payment snowballed into months of alleged arrears and ultimately a foreclosure action, all because the servicer failed to properly credit a timely payment.

If your mortgage statement does not reflect payments you have made, shows unexplained fees or charges, or indicates you are behind when you believe you are current, you may have a RESPA claim.

Signs You May Need Our Help

  • Your mortgage servicer is not crediting your payments correctly
  • You were charged for force-placed insurance even though you had your own policy
  • Your monthly payment suddenly increased dramatically due to an escrow shortage
  • Your loan modification application was denied without adequate explanation
  • Your servicer lost your documents and asked you to resubmit them repeatedly
  • Your servicer began foreclosure proceedings while a modification application was pending
  • Your servicer did not respond to a written complaint or inquiry within 30 days
  • Your servicer failed to pay your property taxes or insurance from your escrow account

Frequently Asked Questions

What is a Qualified Written Request (QWR)?
A QWR is a written letter sent to your mortgage servicer that either requests information about your account or asserts that an error has occurred. Under RESPA, the servicer must acknowledge your QWR within 5 business days and provide a substantive response within 30 business days (extendable to 45 in some cases). While the QWR is pending, the servicer generally cannot report negative information related to the disputed issue to the credit bureaus. We draft QWRs for our clients as part of our pre-litigation strategy.
What is dual tracking and why is it illegal?
Dual tracking occurs when a mortgage servicer proceeds with foreclosure while simultaneously reviewing a homeowner's loss mitigation application. RESPA's Regulation X prohibits this practice. Specifically, a servicer may not make the first notice or filing required for foreclosure while a complete loss mitigation application is pending. If your servicer filed for foreclosure while your modification application was under review, they may have violated federal law and you may have grounds to challenge the foreclosure.
Can I sue my mortgage servicer for misapplying my payments?
Yes. RESPA requires servicers to properly credit payments and to correct errors within 30 business days of receiving a written notice of error. If your servicer has consistently misapplied your payments, assessed improper late fees, or reported you as delinquent when you paid on time, you can send a QWR demanding correction. If the servicer fails to fix the problem, you can sue for actual damages (including credit damage, late fees, emotional distress), statutory damages, and attorney fees.
What damages are available under RESPA?
RESPA provides for actual damages sustained as a result of the servicer's violation, which can include overcharged fees, credit damage, higher interest rates on other loans, emotional distress, and even the loss of your home if the violation led to an improper foreclosure. In cases involving a "pattern or practice" of violations, courts may award additional statutory damages of up to $2,000 per violation. The servicer must also pay your reasonable attorney fees and costs if you prevail.
My loan was transferred to a new servicer and now everything is wrong. What can I do?
Loan transfers are one of the most common triggers for servicing problems. RESPA requires both the old and new servicer to send you written notice of the transfer at least 15 days before and within 30 days after. The new servicer must honor any loss mitigation agreements from the prior servicer. There is a 60-day grace period during which the new servicer cannot charge late fees or report you as delinquent for payments sent to the old servicer. If your new servicer bungled the transfer, they may be liable under RESPA.

Your Mortgage Servicer Must Follow the Law

If your mortgage servicer is misapplying payments, charging for insurance you do not need, or denying a modification you deserve, we can help. Call us for a free consultation.

(800) 995-5152 Schedule a Consultation