What Did the Mortgage Company Do With My Money?

     I have had clients with their homes foreclosed even though they were current with their payments, and filed Chapter 13 bankruptcies to stop that foreclosure sale.

Why would there be a foreclosure on a mortgage for which all the payments were made?

Messed up books.

The RESPA (Real Estate Settlement and Procedures Act) provides a remedy.

A sample two page letter is on my website, page one and two.     One of my favorite statutes, RESPA contains a section which requires mortgage companies to give you a complete accounting of what they did with your money from day one.

You send the letter, they have 20 days to acknowledge receipt of it, and 60 business days to provide the records.

So, it takes to long to help in stopping a foreclosure.

But, you can file Chapter 13 bankruptcy, stop the sale, then send your letter.

If the documentation is there, find the discrepancies.  If not, that is itself a violation of the RESPA law.  Then you can sue the mortgage company in the bankruptcy court.

Which is a fee shifting statute, so that the bad guy has to pay your attorney fees if you win.

Having filed several of these, it is amazing how goofy the record keeping is.

After suing, and getting more information from the mortgage company, we discovered that they had erroneously entered 12 records from someone else’s mortgage.

Now, in my computer world, if I put something wrong in, I delete it, and there is nothing there.

Not in mortgage servicer land.  They left in the 12 wrong entries, and added 12 more to delete those, so we had 24 entries that did not belong.

These things are hard enough to read without entries from someone else’s mortgage records clogging them up.

This mortgage company actually recorded my clients as being hundreds of dollars behind, while sending them a refund for the surplus in their escrow account!

As I told the company, my clients send you one check.  You are the guys who arbitrarily apply some to escrow, some to principal, some to interest.  So, you created the surplus in one part, and the deficit in another.

This was actually the first time I even got the mortgage company to explain their records.

The first several suits I filed settled on the basis of us getting what we demanded, without ever getting an explanation of what the mysterious printouts meant.

If you are having trouble getting the straight story from your mortgage company, send a RESPA letter.  You have nothing to lose, and gain either the information you want, or the right to sue to get it and likely have them pay your attorney fees.