Fair Treatment is the
Law
Filing Complaints
against Abusive Loan Servicers
When a borrower purchases a home, the company lending the money does not always hold and service the loan until it is paid off. Mortgage companies have the right to sell loans as well as the rights to service them.
If your lender sells the rights to service your loan, your mortgage servicer is then responsible for collecting monthly payments, posting them to your account, and handling tax and insurance payments.
The Philadelphia Sheriff’s Office recently has received several complaints alleging that loan servicers are charging Philadelphia residents illegal late fees, failing to post payments in a timely manner, and assessing unauthorized fees.
The Best Practices standards recently set out in a Federal Trade Commission settlement with Fairbanks Capital Holding Corp. states that borrowers have a right to be treated fairly. Mortgage servicers may not:
Consumers who are experiencing difficulty with loan servicers have several courses of action.
The Real Estate Settlement Procedures Act (RESPA) gives them the right to complain directly to the loan servicers, and the right to receive a timely response. All correspondence sent to servicers must indicate, however, that the borrower is making “a qualified written request” under RESPA.
Sample Complaint Letter to Lender
The following is a sample qualified written
request from you, the borrower, to a lender. Use this format to address
complaints under the Real Estate Settlement Procedures Act (RESPA).
Attention Customer Service:
Subject: Your loan number
Your Name
Your Address
Your City, State, Zip Code
This is a “qualified written request” under Section 6 of the Real Estate Settlement Procedures Act (RESPA).
I am writing because: (Describe the issue ask a question. State what action you have taken and what action you believe the lender/ or servicer should take. Attach copies of any related written materials to support your complaint. Describe any conversations with customer service regarding the issue and to whom you spoke. Describe any previous steps you have taken or attempts to resolve the issue. )
List a day time telephone number in case a customer service representative wishes to contact you.
End your letter by stating: I understand that under Section 6 of RESPA you are required to acknowledge my request within 20 business days and must try to resolve the issue within 60 business days.
Sincerely,
Sign your name
If you believe your loan servicer has engaged in deceptive, illegal or unfair practices, and you have been unable to satisfactory resolve the complaint, the State Attorney’s General Office or the Federal Trade Commission may able to help.
FILING COMPLAINTS
On Nov. 12, 2003, the Federal Trade Commission and the U.S. Department of Housing and Urban Development announced settlements with Fairbanks Capital Holding Corp., its wholly-owned subsidiary Fairbanks Capital Corp., and their founder and former CEO, Thomas D. Basmajian.
In separate settlements, the corporate defendants agreed to pay $40 million to consumers, and Basmajian agreed to pay $400,000 to settle a FTC suit alleging that Fairbanks engaged in a variety of unfair, deceptive, and illegal practices in the servicing of subprime mortgage loans.
Pennsylvania Banking Secretary William Schenck said any state residents who have unresolved complaints with Fairbanks should call 1-800-PA-BANKS or 1-717-783-7151.
To file a complaint under the RESPA regulations, write: Office of RESPA and Interstate Land Sales, Department of Housing and Urban Development, 451 Seventh Street, S.W., Room 9146, Washington, DC 20410.
Under certain sections of the RESPA, consumers can initiate lawsuits and obtain actual damages, plus additional damages, for a pattern or practice of noncompliance. In successful actions, consumers also may obtain court costs and attorney's fees.
You may also wish to work with a housing counselor. Call HUD's hotline at 1-800-217-6970 to find a HUD-approved housing group in your area.
PENNSYLVANIA ATTORNEY GENERAL’S OFFICE
BUREAU OF CONSUMER
PROTECTION
14th Floor Strawberry Square
Harrisburg, PA 17120
Phone: 717-787-9707
Fax: 717-787-1190
Or follow this link to their website:
Bureau of
Consumer Protection
Federal Trade Commission
The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or receive free information on consumer issues, call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261.
The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Mortgage Servicers: Their Responsibilities to You
You have certain rights in dealing with a mortgage company or a mortgage servicer. To find out more, visit Mortgage Servicing: Making Sure Your Payments Count