What to Do if Your Mortgage Company Keeps Losing Your Loan Modification Documents and Making You Start Over

One of the most common complaints about mortgage servicers and banks is that they lose homeowners’ loan-modification documents (like bank statements and modification applications), then make the homeowners start over. To make matters worse, homeowners who were initially behind by just a month or two fall even further behind on their mortgages because of the banks’ delays in processing loan modifications.

Mortgage problems typically are not something people share with their friends and family, so people feel frustrated, angry, and powerless to stop from being steamrolled by the banks. Banks then blame homeowners for the delinquency, even though the banks themselves are refusing to accept payments. In the meantime, the foreclosure process starts.

Although it may feel like a lost cause, homeowners dealing with loan modifications have an array of options.

 

First, federal law requires that banks evaluate loan modifications within about 30 days of having a complete application. When sending your application, be sure to make copies of all documents you sent, save fax confirmations, and note mail tracking numbers. This way, if there is a dispute, you can use this information to prove you complied with the banks’ requests.

Just keeping good records, though, does not mean that your mortgage servicer will make a decision on the modification within the required time. If there is a delay, you can submit a complaint to the Consumer Financial Protection Bureau. If the bank is a Massachusetts bank, you can submit a complaint to the Massachusetts Division of Banks.

Another option is to send what is called a “notice of error” to the bank. A notice of error is simply a letter, which should be sent by certified mail telling the bank that it made a mistake with your mortgage. Here, it would be about the bank’s delay in processing the modification. A notice of error must be responded to within 30 business days (about six weeks). Each bank establishes a specific address for notices of error, which is not the address for payments. This address is listed on your mortgage statement.

If the bank still does not respond, you can send a demand letter pursuant to the Massachusetts Consumer Protection Act, also known as Chapter 93A. The demand letter must describe any unfair business practices that the bank committed. The bank then has 30 calendar days to respond.

Finally, if none of these options get the mortgage company’s attention, you can file a lawsuit. Massachusetts law allows you to file in state or federal court, depending on what type of claims you are filing. Our office handles cases in state and federal court, a both the trial court level and appellate level.

If your loan modification is being held up for months, our office can help with any of the above steps to get the bank to provide you with relief. Although many banks have started to improve, mortgage servicing remains one of the top consumer complaints. Contact our office for a no-cost case evaluation.

Josef Culik

Josef Culik

Attorney Joe Culik has built his reputation on helping people and has dedicated his practice in Boston, Massachusetts to consumer protection, employee rights, and small business and franchise law.