As a consumer even
after you have done your due diligence in obtaining a home loan, unexpected
issues may arise. It is often difficult to determine what course of action to
take and whom to, In this article you will find the basic information about
loan services, lenders, mortgage brokers, complaints, and contacts.
WHO IS MY LENDER?,
Your lender is the person/entity
that loaned you the funds you borrowed and has a mortgage on your property to
secure the loan repayment.
your promise to repay the lender
is ordinarily in the form of a promissory note, and the mortgage is ordinarily
in the form of a deed of trust that is recorded as a lien against your property
to act as security for payment. Your lender appears as the beneficiary on the
deed of trust.
Lenders can be private
individuals, mortgage brokers, mortgage bankers, credit unions, banks, etc.
There are different advantages to each type of lender, so – before you get the
loan - make certain you carefully select which lender will be most appropriate
and beneficial for your situation.
WHAT TO DO IF I HAVE A DISPUTE WITH MY LENDER.
Most lender disputes have to do
with loan servicing, which is discussed later. However, if you have a dispute
with the lender, attempt to contact the lender directly.
Many lenders have a toll-free,
customer service number. Call that number and explain the problem. Be sure to
have your loan number and pertinent documents in hand before calling. Document
the call by writing down to whom you spoke, the date and time of the call, and
what was promised.
If the customer service representative is unable to
immediately resolve the problem, be sure to ask for follow-up action and ask
when you might expect a call-back or a time frame in which the problem will be
resolved.
After speaking with a customer service representative, or if you are
unable to successfully contact
the lender by telephone, send a
letter to your lender. In your letter, state what the problem is and what you
wish the lender to do about it; make sure you are specific.
Keep a copy of your
letter. Confirm in writing any telephone conversations with the lender. If you
send documents, make certain they are copies and not the originals.
WHAT TO DO IF I HAVE A COMPLAINT AGAINST YOUR LENDER.
Each type of lender must abide by
lending laws, but oversight and enforcement of those laws are accomplished
through different entities.
If you believe your lender
violated usury laws (illegal interest rates), you should contact an attorney,
as usury laws are quite complex. You can also file a complaint with the
government agency that oversees the lender. Remember: do not send original
documents with the complaint.
If your lender is a private person
or entity (that is, not a broker, banker, or financial institution), you should
consult with an attorney, as there is likely no government agency that oversees
that private lender.
If your lender is not a private person
or entity, you should contact the government agency that oversees that lender.
That agency will be able to determine if it has the ability to intervene in the
dispute, help remedy the problem, or take appropriate action. If the government
agency does not have the ability to do any of the foregoing, you should consult
an attorney.
The following is a list of
different types of lenders and their overseeing government agencies (contact
information for each can be found at the end of the booklet):
Banks
• If the name of your bank
contains the word “National” or has the initials “N.A.” after it, it is a
national bank. Contact the federal Office of the Comptroller of Currency.
Savings and Loans
• If the name of your savings and
loan contains the word “Federal” or the initials “F.S.B.” or “F.A.” after it,
it is a federal savings and loan association or bank. Contact the Office of
A Consumer Guide to
Mortgage-Related Complaints 3
Thrift Supervision.
State Licensed Banks and Savings
and Loans
• If the bank or savings and loan
is licensed by the state it is not or may not be regulated by the federal
agencies. Contact the California Department of Financial Institutions.
Credit Unions
• If the name of your credit union
contains the word “Federal”, it is a federal credit union. Contact the National
Credit Union Administration.
• If not, it is a state-licensed
credit union. Contact the California Department of Financial Institutions.
Industrial Loan Companies
• If your lender is an industrial
loan company, also known as “thrift and loan”, it is state-licensed. Contact
the Department of Financial Institutions.
Mortgage Bankers, Lenders, and Brokers
• Your lender may be a mortgage
banker, or residential mortgage lender. If so, it is state-licensed as a banker
or lender. Contact the Department of Corporations.
• A lender may be a real estate
broker and licensed by the state. Contact the Department of Real Estate.
WHO IS MY LOAN SERVICER?
The person who collects your loan
payments is often referred to as the loan servicer or authorized servicer. A
borrower generally does not have the ability to select the loan servicer; the
servicer is selected by the lender. Sometimes the lender is the loan servicer,
other times, the Servicing is contracted to a third-party, and
occasionally, the mortgage broker services the loan.
Note that if the servicing
responsibility for a loan is to be (or has been) transferred, both the current
and new servicer must notify the borrower of the change and its effective date.
In addition to collecting your
loan payments, your loan servicer will also impose charges if your payment is
late, if the promissory note contains such a provision.
For some home loans,
the law allows a late charge of up to 10% per installment. It is very important
to make all your payments and to make them on time.
Your loan servicer is also
responsible for releasing the lien when your loan is paid in full, pursuing
foreclosure if you are delinquent in payments, and paying property taxes and
insurance through your escrow or impound account (if applicable).
Your lender will provide
information about your loan servicer. You may receive payment coupons or
monthly notices. Your servicer will be the entity to whom you are sending loan
payments.
WHO WAS MY MORTGAGE BROKER?
Mortgage brokers help you obtain a
home loan that will best suit your needs.
If you worked with a mortgage
broker, your mortgage broker will have been the person that was not the lender
but helped you get a loan. A mortgage broker would have taken your loan
application, reviewed your options with you, and provided a disclosure
statement of the costs and fees associated with the loan. The broker’s name
will appear on that disclosure statement and on other loan documents such as
the final settlement statement as having received a loan origination fee or
commission.
HOW DO I AVOID MORTGAGE-RELATED PROBLEMS?
Many mortgage-related problems can
be prevented by taking some precautions:
• Before you get your loan, do
your own due diligence.
• Be aware of current scams by
reading the Department of Real Estate’s Consumer Alerts at
www.dre.ca.gov/cons_alerts.html.
• Stay away from companies
offering loan services for an upfront fee as these are often scams.
• Beware of “bait and switch”
tactics.
• If you are getting a loan
through a broker, make sure he/she is licensed.
• Read all of your documents and
make sure you understand
WHAT SHOULD I DO IF I HAVE A COMPLAINT AGAINST MY MORTGAGE
BROKER?
A mortgage broker has a fiduciary
duty to you as the borrower. This fiduciary duty includes a requirement that
the mortgage broker place your economic interests ahead of his/her own economic
interest. That broker will have been state-licensed and subject to licensing
laws in addition to the general lending laws.
The Department of Real Estate has
jurisdiction over mortgage loan brokers licensed as real estate brokers or
salespersons, while the Department of Corporations has jurisdiction over
mortgage loan brokers licensed as California finance lenders or residential
mortgage lenders. To determine which agency will take your complaint,
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