5 Steps to Avoid Problems with Mortgage Servicers

Harrisburg, PA – With consumers across the country reporting problems with mortgage servicing, the Wolf Administration has issued guidance for Pennsylvania homeowners to stay well-informed of their rights and responsibilities regarding mortgage servicers.

“Because homeowners are not given the opportunity to choose their mortgage servicer, it is especially important that consumers know and understand what information they are entitled to from their mortgage servicer,” said Secretary of Banking and Securities Robin L. Wiessmann. “Following a few simple guidelines with a mortgage servicer can help a homeowner understand their rights and responsibilities, as well as avoid any potential issues that arise.”

A mortgage servicer is a company that processes mortgage loan payments, responds to homeowner inquiries, manages the mortgage escrow account (for taxes and insurance), and can initiate foreclosure proceedings if a homeowner defaults on the mortgage. The servicer may be the same or a different company than the mortgage lender, the financial institution chosen by the consumer to be their lender.

Keep the following tips in mind when dealing with a mortgage servicer:

  • Know what information your mortgage servicer is required to provide to you. The servicer must give you a statement that clearly itemizes the estimated taxes, insurance premiums, and other anticipated amounts within 45 days of establishing an escrow account for your mortgage. The servicer is also required to give you a free annual, detailed statement of the activity for your escrow account.
  • Look out for transfer notices. If your original lender transfers your loan to another servicer, you will typically get a notice from your current mortgage servicer andyour new servicer. The new servicer must notify you within 15 days after the effective date of the transfer. Likewise, if ownership of your loan is transferred, the new owner must provide notice within 30 days of taking possession of the loan.
  • Read and maintain all correspondence and statements from your servicer. If your mortgage servicer asks for a copy of your property insurance policy, respond promptly. Check your billing statements carefully to make sure any fees you have been charged are legitimate and you fully understand what any fees are for. If not, send a written inquiry asking for itemization and explanation.
  • If you default on your mortgage, keep the lines of communication open. If you fail to make payments on your mortgage loan and find yourself in default, stay in touch with your mortgage servicer. Servicers have different policies regarding when they will order default-related services. Communicate with them if you are still living in the home, keeping it well-maintained, and want to work with them to resolve the default on your account and avoid foreclosure.
  • Know how to handle inquiries and disputes. Under federal law, your mortgage servicer must respond promptly to “qualified written requests.” If you have an issue with your loan, contact your servicer in writing. The servicer must send you written acknowledgement within 20 business days and must either correct the account or determine its accuracy within 60 days.

The Department of Banking and Securities maintains an online library of resources to help consumers learn more about their rights and responsibilities in the financial marketplace, including these publications for homebuyers and homeowners:

Anyone with questions regarding mortgages, mortgage lending, or mortgage servicing can contact the Department of Banking and Securities at 1-800-PA-BANKS.

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