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Review Your Monthly Mortgage Statements Carefully

mortgagefinancegazette.com | September 7, 2014

By Daniel L. McGookey

We are seeing with increasing regularity a disturbing pattern in the mortgage servicing area. The mortgage servicer, who is not the lender, is simply the party hired to collect the monthly mortgage payments. The fraud we are referring to is where the servicer tacks on unfounded charges, increases the interest rate, jumps up the monthly payment and falsely claims that more is owed on the loan than actually is. This sort of illegal conduct can only be discovered upon a careful review of the monthly mortgage statement the homeowner receives from the servicer. Mary and Ralph’s story is a dramatic example of this sort of rip-off.

Mary and Ralph are an elderly couple who have been in their home for many years. In the early 2000’s they refinanced their home. Soon thereafter they ran into financial difficulties causing them to file a Chapter 13 bankruptcy. At the time, they owed around $90,000 on their mortgage, and were less than $2,000 behind in their payments. Since they didn’t include their mortgage in the bankruptcy, they simply continued to make their $650 per month mortgage payment and their real estate taxes and insurance over the course of their ten-year bankruptcy proceeding.

As they came out of bankruptcy in late 2013, they had every reason to think they had finally crossed the finish line leaving their financial difficulties behind, as they had successfully paid off the second and third mortgages on their home, along with other debt. Unfortunately, their first mortgage servicer was not about to let Mary and Ralph enjoy their golden years in financial peace; not when they seemed easy prey for servicing fraud.

The victimization was sure and swift indeed. Knowing that the coast was clear of bankruptcy court oversight, within a month of dismissal of the case the servicer jacked their monthly payment of principal and interest up over 40%, from $650 to over $900. When Mary asked the servicer about the reason for the increase, she was told that it was due to an interest rate increase, even though their horrible rate of 9.7% was fixed. Despite the fact that this increase was totally unjustified and stretched their budget to the limit, not knowing what to do they simply made the increased payment rather than risk losing their home to foreclosure.

The straw that broke the camel’s back came only a few months later when the servicer apparently became impatient in its efforts to drive the couple from their home (Always remember: default and foreclosure is profitable business for loan servicers). After sending Mary and Ralph regular monthly statements for over a decade always showing a steady decline in the loan balance, early this year the servicer suddenly increased their loan balance $20,000, from $67,000 to $87,000! Since then, Mary and Ralph’s statements show they owe roughly $87,000.

By unlawfully resetting the loan balance at a significantly higher amount, the servicer stripped away the equity the couple had built up in their home. This equity was an important piece of their retirement puzzle. Presently, Mary and Ralph decided that they’ve had enough. We are going to write a strongly worded letter to the servicer calling it out on its fraud. By doing so, we are confident that the servicer will not only will adjust the loan balance downward to the mid-sixty thousand dollar level where it belongs, but will also dramatically reduce the exorbitant 9.7% interest rate to current market levels as recompense for its fraud.

Should this happen, their $900 monthly payment will fall to well below the $650 where it once stood. Even though the fraud perpetrated on Mary and Ralph was more flagrant than most we see, fraud manifesting itself in the form of unfounded charges, interest rate changes, payment increases (usually claimed to be due to real estate tax increases), and loan balance bump ups is extremely common. Therefore, every homeowner should always check his or her monthly mortgage statement very carefully to ensure against such victimization. The dollars potentially flying out the door can add up at lightening speed.

 

Back to September 2014 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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