“Servicers … have been so understaffed that they are incredibly sloppy in their record-keeping,” Eggert said. “So they’ve been charging people late fees who aren’t late, not crediting payments properly, and then turning around and foreclosing based on late fees that should never have been charged in the first place.”


Problems rampant in mortgage servicing, advocates and regulators say

Errors, misbehavior point to need for reform

Anca Safta never missed a payment on her loan to expand her Lutherville home. But that didn’t stop Safta’s mortgage servicer from citing her this year for failing to pay, reporting her to credit agencies and threatening to foreclose.

“It was just a nightmare,” said Safta, a physician at the University of Maryland Medical Center who got the loan to build an extension for her parents to live in.

What happened? Her servicer had not credited the payments to her account.

It might seem to be a simple problem. It’s not. A growing number of lawsuits, investigations and studies indicate that servicer blunders and outright misconduct are common — and difficult for homeowners to resolve. Borrower advocates and regulators say the system is effectively broken.

“This isn’t just a few technical errors,” said Anne Balcer Norton, the state’s deputy commissioner of financial regulation. “The entire servicing model needs to be revised.”

Precise statistics on the incidence of rule-breaking or the percentage of loans with servicer errors have proved elusive.

“We do not yet really know the full extent of the problem,” Federal Deposit Insurance Corp. Chairwoman Sheila C. Bair told the Senate Banking Committee in May.

For more examples of “Servicing Errors” continue reading here…