What should homeowners do if their lender or mortgage service provider closes or goes bankrupt? The Federal Trade Commission (FTC), which oversees consumer affairs, has produced a new Facts for Consumers publication to assist homeowners whose mortgage lenders may have closed or gone bankrupt in the wake of the mortgage lending crisis.
"How to Manage Your Mortgage If Your Lender Closes or Files for Bankruptcy," provides answers to important questions about loan servicing transfers, changes to escrow accounts, payment disputes, and more. The publication provides several situation-based tips for consumers who need to know what to expect in today's mortgage market, with explanations on what it means and what to do if your lender files for bankruptcy before or after your loan closes, if your mortgage service provider files for bankruptcy or goes out of business, what to expect if your loan gets transferred to another service provider, or if you have an escrow account.
The FTC stresses mortgage holders should always read your monthly statements. If your statement is late, call the mortgage company to track it down. Keep records of your payments or online account histories.
The FTC advises consumers who believe they have been charged a penalty or a late fee they don't owe, or have other problems with the servicing of their loan to continue to make their monthly mortgage payments as usual and contact their service provider in writing. In a separate letter mailed to the customer service address, explain why you think your account is incorrect. Make sure you include your account number and send the letter by certified mail. Request a return receipt, or send it via fax and keep the transmittal confirmation. Do not write your note on your payment coupon. Keep a copy of your letter and any enclosures for your records.
Under the Real Estate Settlement Procedures Act (RESPA), your mortgage service provider must acknowledge your inquiry in writing within 20 business days of receiving it, and take action within 60 business days. Throughout this period, you should continue your monthly mortgage payments. Do not subtract the disputed amount from your payment. Some mortgage servicers may refuse to accept what they consider a "partial" payment; they could return your check and charge you a late fee, or claim that your mortgage is in default and start foreclosure proceedings. For questions about RESPA, contact the Department of Housing and Urban Development at (202)-708-0502, or e-mail hsg-respa@hud.gov.
The FTC seeks to prevent fraudulent, deceptive and unfair business practices in the marketplace. To file a complaint or receive information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382- 4357); TTY: 1-866-653-4261.
The FTC offers consumers the following safety tips:
1. Do business only with companies that clearly provide their name, street address and phone number.
2. Share credit card or other personal information only when buying from a company you know and trust.
3. Resist the urge to "act now." Most of the time, any offer that's good today will be good tomorrow, too.
4. Every potentially high-profit investment is a high-risk investment, so rate the risks.
5. Get all promises in writing and read all paperwork, especially the small print, before making any payments or signing any contracts.
6. Throw out any offer that says you have to pay to receive a "free" gift. "Free" means free.
7. If you think you've been a victim of fraud, report your complaint to 1-877-FTCHELP or ftc.gov.
To download a copy of the pamphlet, go directly to http://www.ftc.gov/opa/2007/12/bankrupt.shtm.
The Silicon Valley Association of REALTORS® advises financially troubled homeowners to contact their mortgage company immediately if you anticipate falling behind on your mortgage payments. If you don't know if they can help you, call 888-995-HOPE (or visit 995HOPE.org). This toll-free, confidential hotline is sponsored and funded by the Homeownership Preservation Foundation, a non-profit dedicated to preventing foreclosures. The foundation offers free advice and counseling to homeowners.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.