Mortgage Companies Losing Track of Accounts?
New settlement sheds light on questionable practices, unauthorized fees.
Jan. 26, 2009 — -- Some people are having a hard enough time making their mortgage payments, and now comes news that some mortgage companies don't really know how much their customers owe or didn't credit them accurately for what they've already paid. Oh brother.
It seems pretty basic but the Federal Trade Commission has just settled with Bear Stearns and its subsidiary, EMC Mortgage Corp., for $28 million. (The case was brought before J.P. Morgan Chase acquired Bear Stearns and, in settling the matter, Bear Stearns and EMC did not admit wrongdoing.)
The case opens a window into some questionable mortgage servicing practices. The FTC says, "The companies allegedly misrepresented the amounts borrowers owed, charged unauthorized fees, such as late fees, property inspection fees, and loan modification fees, and engaged in unlawful and abusive collection practices."
The FTC says this is the 23rd case it has brought against mortgage brokers, lenders, and servicers in the past decade.
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It's particularly frustrating when you take out a mortgage with one company that you have chosen, and then your loan gets sold to some other company you have no relationship with and that company causes you problems with your payments. Bear Stearns and EMC were very active in buying up mortgages on the secondary market.
The $28 million will be distributed to consumers who were wronged. Already, at least 86,000 redress checks have been sent out. If you were an EMC mortgage customer, you can inquire about the settlement by calling a toll free number set up just to handle this case: 877-225-7510.
As part of the settlement, Bear Stearns and EMC agreed not to engage in the problematic practices anymore. But could other mortgage servicers be doing something similar? Here's what to look for: When your bank sells your mortgage to another institution, you should get two notices, one from your old bank, at least 15 days before the transfer and another from your new bank within 15 days after the transfer.
