Servicing errors — misapplied payments, escrow mistakes, unauthorized fees — happen more often than you think. Learn how to identify, document, and dispute servicing errors to stop foreclosure.
Mortgage servicers handle millions of accounts — and they make mistakes. When those mistakes affect your account, they can be used to challenge foreclosure. Here are the most common servicing errors and how they can form the basis of a foreclosure defense.
Payments applied to the wrong account, posted late, or not credited at all. If the servicer claims you're behind but your records show payments were made, this is a critical dispute that can halt foreclosure. Bank statements and payment records are your evidence.
Incorrect calculation of property taxes or insurance leading to escrow shortages. The servicer suddenly increases your monthly payment to cover the "shortage" — potentially causing a default that triggers foreclosure. Demand a detailed escrow analysis via QWR.
Late fees, inspection fees, BPO fees, foreclosure fees, or attorney fees that are not authorized by your mortgage contract or state law. Many servicers add inflated or duplicate fees. A forensic audit can identify improper charges.
The servicer provides an inflated reinstatement or payoff amount. If you attempt to reinstate based on an incorrect figure — or the figure includes unauthorized fees — the foreclosure may be improper.
Servicer force-places expensive insurance despite you having coverage, or charges for insurance you already have. Under RESPA, servicers must follow strict procedures before force-placing insurance.
Send a Notice of Error under RESPA (12 CFR § 1024.35) specifically identifying each error. The servicer must investigate and respond within 30 business days (7 days for certain errors). Keep meticulous records — bank statements showing payments, escrow statements, correspondence. The servicer's response (or failure to respond) creates the evidentiary record for a legal challenge.
Our forensic review can identify servicing errors that may provide grounds to challenge your foreclosure.
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