At a time when misplaced mortgage paperwork, robosigning and short sales are the norm, homeowners don't always have to feel like they're lost in the shuffle.
Instead, homeowners have a tool, a letter called a qualified written request, that can help them demand answers to queries about their mortgages. From questions about transferred loans to penalties and fees, this letter can be sent to a loan servicer about almost any issue a homeowner has with an account.
"This is a vehicle for the borrower, the consumer, to initiate a complaint action," says Brian Sullivan, a spokesman for the U.S. Department of Housing and Urban Development. "If they have a complaint with their loan servicer, they should absolutely seek a remedy -- and the way to do it, at least initially, is this qualified written request process."
The qualified written request is covered under the Real Estate Settlement Procedures Act, or RESPA, a law enforced by HUD that prohibits unearned kickbacks and requires loan servicers and lenders to give consumers various disclosures.
Under RESPA, a loan servicer must acknowledge receiving a qualified written request within 20 working days. Within 60 days of receiving it, the loan servicer must try to resolve the issue.
This letter "puts them on a timetable; it requires response," Sullivan says. "This isn't a prescriptive process that requires servicers to take a certain action. It requires them to reach a resolution."
That resolution can be as simple as making corrections to an account -- for example, sending the homeowner information about the transfer of a loan, crediting late charges or penalties -- and alerting the homeowner to the correction, says Rebecca Lain, a certified counselor at Horizons Consumer Credit Counseling Service in Cedar Rapids, Iowa.
Worried your credit might take a hit while your mortgage account is in dispute? The homeowner's credit is protected while the loan servicer resolves the issue, even if the loan servicer confirms that it charged the correct fees or legitimately held a payment.
"During that 60-day period, if there's any dispute regarding a payment, the servicer may not provide any information regarding the overdue payment owed by the borrower that relates to that qualified written request," Lain says. "They cannot report that to any consumer reporting agencies until it's resolved."
Responsible for everyday management of your mortgage account, your loan servicer must collect and credit your monthly loan payments in a timely manner and handle your escrow account. The company is required to provide you a free annual escrow statement, which details the account balance and reflects payments for property taxes, homeowners insurance and more.
In some cases, Lain says, homeowners find mistakes by simply checking that statement and questioning items such as force-placed insurance, mysterious charges, held payments and miscalculated figures.
Not sure how to tell whether your loan servicer is pulling a fast one?
"It's an excellent idea for any borrower to pay attention" to that escrow statement, Sullivan says. "If you don't get one, demand it. Make certain your servicer is paying your property taxes and home insurance premiums on time. They are required to." And if you feel that you're not getting answers, push for them with a qualified written request.
The Department of Housing and Urban Development website provides tips on writing these letters:
*State that, under Section 6 of the Real Estate Settlement Procedures Act, you understand the loan servicer is required to acknowledge the request within 20 business days and must attempt to resolve the issue within 60 business days.
*Send this letter separately to the loan servicer or lender's customer service address. Don't send it with your mortgage payment. Continue to make your mortgage and escrow payments until the request is resolved.
*Clearly define the problem, ask questions and explain what action you think your loan servicer should take.
*Include copies of related written materials with your letter, such as older letters to the loan servicer, copies of canceled checks and copies of letters the servicer sent you.
*When you speak to any employee at the loan servicing company, keep a log of whom you spoke with along with the date and time. In the letter, briefly describe these conversations.
*Describe previous steps you have taken or your attempts to resolve the issue.
*Send the letter through certified mail and keep a copy of the receipt of acceptance.
*Provide contact information for yourself.
If the loan servicer or bank doesn't follow proper procedure, the homeowner can take legal action or file a complaint with HUD. Although the housing implosion affected everyone from the large bank to the consumer, it shouldn't be difficult to hold your loan servicer accountable.
The solution could begin with a simple pen and paper.