The mortgage servicer is allowed to retain late fees, BPO fees, inspection fees, and other fees charged or assessed to a borrower's account. In addition to the fee income, the servicer is allowed to retain the net liquidation proceeds of any foreclosure sale (net after foreclosure expenses and principal balance to investors).
Misconduct that likely constitutes Predatory Mortgage Servicing
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- Billing borrowers on a bill & receipt system;
- Changing, redacting, altering, replacing, whiting out, misstating, mislabeling or mis-characterizing transactions in a borrower’s loan or escrow account history that are different than other histories in time or the master loan history and general ledger;
- Sending mix and match loan and transactions histories from different sources;
- Charging property inspections, used as collection measures, to a borrower’s account when the servicers has charged the borrower a late fee;
- Charging the borrower’s account with any fee without first providing notice and demand to the customer for such fee so at to affect interest amortization and allocation;
- Charging fees that are not authorized under the loan documents;
- Creating false, fraudulent or dummy bookkeeping transactions in a borrower’s loan or escrow account;
- Delaying the posting of payments made by the borrower prior to late fee assessment date so as to assess and charge a late fee to the borrower;
- Demand of excessive prepayment penalties;
- Demand of expenses and fees not obligated for;
- Failing to identify charges made to a borrower’s account on their statements;
- Failing to post or report a customer’s good credit to credit agencies;
- Failing to provide accurate loan balance amounts and loan payoff amounts;
- Failing to stop credit reporting for 60 days after receiving a written dispute;
- Force placing an insurance policy on a borrower’s property when a borrower has their own insurance;
- Holding funds in suspense and not crediting them to account so as to increase calculations of escrow balances and payments around escrow analysis and adjustment dates;
- Holding payments in suspense/unapplied accounts and not notifying the borrower of such actions or reflecting the credit of the payment in any payment or escrow balances on loan statements, demand letters or notices sent to the borrower;
- Instructing the borrower not to send in any payments while their complaints or disputes are investigated and then charging them a late fee;
- Mislabeling or concealing charges made to a borrower’s account on their statements;
- Not reporting disputed accounts as disputed to credit reporting agencies
- Ordering BPOs or appraisals on a customer’s property and then charging their account;
- Over-calculating and then over-demanding escrow payments;
- Over-calculating and then over-demanding principal and interest payments;
- Placing debts, charges, payments and fees that were previously discharged by a federal bankruptcy court back into the borrower’s account as a misc. Escrow adjustment;
- Placing non-recoverable corporate advances unto a borrower’s escrow account;
- Placing non-recurring items and expenses not previously owed or demanded into the borrower’s escrow account;
- Providing fraudulent, altered or incomplete account histories to the borrower;
- Providing the borrower with notices of inflated payoffs or demands;
- Disregarding qualified written requests under RESPA and borrower complaints
- Refusing to accept payments from the borrower when borrower is disputing charges to his or her account;
- Refusing to accept the borrower’s own hazard insurance that meets lender’s requirements;
- Refusing to accept the borrower’s own hazard insurance without payment of a fee;
- Refusing to or not manually recalculating loan payments, amortization schedules, principal and interest allocations; late fee assessments and other accounting adjustments from the date in which errors, mistakes or problems were made to the date identified;
- Refusing to provide loan or account histories to the borrower;
- Refusing to send borrowers payment coupons to their designated “mailing” address, not the property address;
- Sending borrowers payment coupons after the due date of the loan;
- Threatening to improperly ruin a customer’s credit reputation;
- Use of abusive & threatening collection practices;
- Using “property inspections” as collection measures;
- Using the wrong date for interest calculations on loans;
- Using the wrong due date on payment notices;
- Using the wrong index for application of interest for arm loans; and
- Using the wrong late fee assessment date on payment notices.
