What rights do mortgage borrowers have?

[Klukie]

I currently have a mortgage and I know that I should know my contractual rights, but I really don't. I know that I have to pay on time every month for a specific amount of time and the bank cannot raise my fixed rate. I know my obligations but I really don't know my rights. My mortgage was sold a few years back to shittybank and I was given ten days notice. I was really pissed at the time and when i asked if they were obligated to get my permission first they stated that they were not. I took them at their word and spent the next few months on the phone with them trying to straighten out the mess they made of my escrow. Now with all of this mess with foreclosures and the falsifying of documents, I am left wondering what my rights truly are and have the banks violated any of them when they decided to bundle and swap me? A mortgage contract involves two parties and if I didn't own up to my end, I would be out on the streets. What happens to the contract if the bank doesn't hold up to their end?

[dkf]

1. I would guess there is a clause in your mortgage allowing the sale

[Klukie]

3. Do you know if there are specific contractual rights given to the consumer

via the law? Aside from the legality of the sale of my loan, would a contract be considered void if it was illegally processed/falsified?

[dkf]

5. That is what we are figuring out now.

So far it seems to be the luck of the draw if you get a good lawyer and a favorable judge at the foreclosure proceeding. But it has to go that far which is unpleasant in itself.

[Klukie]

7. I am talking about this in the context of mortgage in good standing...

not a foreclosure.

[Hassin Bin Sober]

2. First off, you signed a pretty one sided contract. You had no choice - they all are one sided.

You do have certain rights upon transfer based on federal and state laws. One of which protects you from late payment penalties and/or reporting if you send a payment to the wrong servicer within 60 (IIRC?) days of transfer. Other laws govern the administration of your escrow account and how much "cushion" the servicer can maintain or your behalf.

Other than that, the lender has already performed by loaning you the money. Your performance is how you pay it back.

You should have other protections when it comes to how your case is handled in court in the event of foreclosure but we see what's happening with that.

[Klukie]

4. What happens when my obligation is fulfilled?

Does the lender have to provide me with the original note? Do they have to provide me with anything to show I have fulfilled my obligation?

[guardian]

8. What happens when my obligation is fulfilled?

Are you asking what happens when the loan is paid off?

[Klukie]

9. Yes...and I mean what does the bank present me with if anything

I have never paid off a mortgage yet so i really don't know what happens. When I pay the loan on my car off I receive my title.

[guardian]

13. Yes. You will receive plenty of documentation.

I've paid off several property loans over the years. Each time I received notice from the bank of satisfying the note, original deed (or deed of trust), and ultimately a release that was recorded with the county in which the property is located for public notice. Depending on the state you live the notice might be called a Release of Deed of Trust or Satisfaction of Mortgage or similar.

I recommend that you (1) make a set of copies, and (2) put the original documentation in a safe deposit box.

[RB TexLa]

11. Whoever has the lien on your property files a document with your city or parish and releases the

lien

[flvegan]

6. How has the bank not held up its end?

Or maybe you're not saying that they didn't.

As far as selling your note, you really don't have any rights. That is a new contract to purchase an asset between two parties, yourself being excluded.

[Klukie]

12. I am not saying that they didn't but this whole thing stinks to me

It stunk back when they gave me the ten day notice of sale. I just think that there may be a whole other aspect to this mortgage mess that may not have been realized yet...specifically with good mortgages, not just foreclosures. What legalities are involved if the banks swapped me and do not have my note or if they falsified documents? Will there be any complications down the line if I sell? Or any issues when I pay off my obligation? Will I be holding legal documents in the end, and if not, does that open me up for a confused or greedy bank to claim that I still owe them?

[Godhumor]

10. Your bank sold the servicing of the mortgage it is not only legal but very common

There is nothing you can do about that particular situation.

[guardian]

14. selling mortgages

i asked if they were obligated to get my permission first

You most likely already signed a document at closing giving them permission. This right to sell/transfer is passed along to whomever assumes/buys the note. I've had the same loan/mortgage sold five or six times.

Whoever buys your loan must adhere to the original terms with respect to interest rate, loan term, prepayment conditions, etc.

For what it is worth, I've never had a problem a new bank buying the loan.

[slackmaster]

15. A large portion of errors and complaints about servicing involve escrow accounts

I advise everyone to take control of their own property tax and insurance if possible. If you pay them, you will always have proof that they were paid.

[Yo_Mama]

16. You do have rights!!

Since you already had one problem with this servicer I think you might need this info.

For the most part you have been given good information, however depending on how long it has been since the mortgage was originated, you could possibly have grounds for complaint IF on application the mortgage servicing disclosure showed that the lender wasn't going to sell your mortgage. Things do change, so the timing is an issue, but you can cause the original lender severe pain if they said they weren't going to sell and you file an official complaint and it turns out that the lender was providing inaccurate federally-required origination disclosures. But if it's been years it won't matter.

HUD maintains a helpful page with information about a consumer's rights involved in a servicing transfer. This is it. Note that the current notice period is 15 days:
http://www.hud.gov/offices/hsg/rmra/res/rightsmtgesrvcr.cfm
This is a very useful page if you have problems with the servicing of your loan. It includes a sample complaint form:
http://www.hud.gov/offices/hsg/rmra/res/reslettr.cfm
and how to make a qualified inquiry that will kick in the Section 6 requirements. Since you have already had problems, you probably want to read through that and save yourself a copy of the sample. Once you do that, they have 20 days to respond in writing and 60 days to fix it, and getting a Section 6 letter should really kick them in the pants. If they don't comply, you can file a complaint and you can file a civil suit, so it is worth following this procedure.

On the main page you will also see links with info about PMI, etc.
http://www.hud.gov/offices/hsg/rmra/res/respa_hm.cfm
PMI (mortgage insurance) must be dropped once the loan to value ratio drops to 78%. This is something of a common violation.


There is also information about escrow rights and how to stop escrow abuses, so you might want to save those links or at least read through them once.

When the mortgage has been paid off, the servicer must file a document (usually called a Satisfaction) in the land records.

You may also have specific rights under state law.

The federal cheat sheet:
Federal complaints under RESPA:
Director, Office of RESPA and Interstate Land Sales
U.S. Department of Housing and Urban Development
Room 9154
451 7th Street, SW
Washington, DC 20410
Email
Phone: [phone]

Section 6 - Complaint resolutions (for a violation of Section 6, you have three years for a lawsuit, and class actions are permitted.) Complaint can be about any servicer misdeed.
Section 8 - Fee misdeeds, including unearned fees, referral fees, and kickbacks. Three times cost. But threatening to file a federal complaint will normally resolve this problem. For example, the servicer can't charge you a fee for responding to your complaint or providing information to disprove your complaint.
Section 9 - Origination only, prohibits the borrower from being forced to use a particular title insurer. Right of suit isn't really limited, though, and it's three times cost.
Section 10 - Escrow. Currently actively enforced. HUD really does want to be informed if your servicer didn't send you the required annual statement or if the statement was inaccurate, and about any other misdeeds regarding escrow.
Basic escrow computation:
Total annual escrow = the total to be paid out that year, plus any shortage from the prior year, minus any overage from the prior year, plus a cushion which must be limited to 1/6th the annnual amount (two escrow payments). Divide by 12 for monthly payments.

They have to send you the accounting each year, and if they owe you at least $50, they have to refund it. A smaller amount must be applied to the next year's required escrow.

In most cases the escrow never goes down, so the overage doesn't apply. But in some states or localities property taxes may have dropped due to falling home values, and if so, this is a likely violation.