What You Need to Know About Your Mortgage Servicer

A mortgage servicer is responsible for collecting and crediting your monthly loan payments. For most mortgages, servicers also maintain an “escrow account” on your behalf. In addition, servicers handle all requests for loss mitigation such as loan modifications.

In addition to your monthly principal and interest payments most lenders require that you pay your property taxes and home insurance premium to the mortgage servicer as part of your monthly payment. The lenders or the mortgage servicers hold funds collected for this purpose in a special account, called an ‘escrow account” from which they disburse funds on your behalf: property taxes to the New York City Department of Finance (DOF) and premiums to your insurance company.

Federal law requires the servicer to provide you with an accounting of your escrow account on an annual basis. The statement will show whether you have a surplus or a shortage in your escrow account. A shortage could occur as a result of an increase in the property taxes the city charges or an increase in your insurance premium.

The servicer must provide you with a monthly mortgage statement which shows amount due for the billing period with a breakdown of how much goes to principal, interest and escrow and fees if any. The statement must also show the outstanding balance on your loan, and, if applicable, any past due amounts as well as how much is needed to bring your account current.

You are always entitled to and should shop around for your own homeowner insurance plan. If your existing plan expires and you have not purchased a new plan, your servicer is likely to purchase a new plan on your behalf, called “forced-placed insurance.” In some cases, the insurance plan that the servicer chooses may be significantly more expensive than a plan you could find on your own, and may offer less coverage. Look out for notices from the bank that indicate your insurance policy is about to expire and make sure to send the bank proof that you have purchased a new insurance plan on your own. Even if you were paying your insurance premium to the servicer as part of your escrow and are no longer able to make those payments, you have the right to buy your own insurance.

When you fall behind on your mortgage payments or pay less than the monthly amount due the servicer may either return partial payments to you or hold the funds in a “suspense account” until you pay all the money necessary to bring your account current.

If you have a dispute with the lender or servicer of your mortgage do not just try to resolve problems with the lender’s customer service.

Instead put your complaint or request in writing by making a “qualified written request” (QWR). If you want to resolve an error in your account you will send a “Notice of Error” to the servicer. Or if you need information about your account you will send a “Request for Information.” For either QWR, make sure to include your account or loan number.

Under federal law, the servicer or lender must acknowledge receipt of your QWR within 5 business days of receipt and resolve the dispute within 30 business days.

Be sure to send your request to the address the servicer specifies for notices of error or request for information (generally on the back of your monthly mortgage statement.)

Submit an online complaint to the Consumer Financial Protection Bureau (CFPB).

Or

Submit an online complaint to the NYS Department of Financial Services.

• Call the HOPP Hotline at 855-HOME-456 (855-466-3456), or
• Call 311 or 646-786-0888 and reach the Center for New York City Neighborhoods.
• Call the Legal Aid Society-Bronx Neighborhood Office at 646-340-1908.
• Visit our Bronx Foreclosure Clinic:
Bronx Supreme Court
851 Grand Concourse, Room 607 E/A
Bronx, NY
Every Wednesday: 1 p.m. -4 p.m. No appointment needed.

The information in this document has been prepared by The Legal Aid Society for informational purposes only and is not legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. You should not act upon any information without retaining professional legal counsel.