Posted On: March 31, 2009

REAL ESTATE SETTLEMENT PROCEDURES ACT: RESPA SECTION 10 GUIDELINES

The Real Estate Settlement Procedures Act (RESPA) has strict guidelines on Escrow Accounts under Section 10. Sec. 10 places limits on the amount of money a lender requires a borrower to hold in an escrow account for payment of taxes, homeowners insurance, flood insurance, private mortgage insurance, or any other charge related to the property. RESPA's Section 10 does not require that all loans have an escrow account, instead it regulates the maximum amount of money that can be deposited into an escrow account.

Lenders under Section 10 must conduct a escrow account analysis at least once a year and if there is a shortage they must notify the borrower of the problem and if a borrower's escrow account has more than $50.00 the lender is required to refund the borrower the difference.


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Posted On: March 29, 2009

REAL ESTATE SETTLEMENT PROCEDURES ACT: RESPA GUIDELINES SECTION 6

Section 6 of the Real Estate Settlement Procedures Act (RESPA) provides borrowers with consumer protections relating to the servicing of their loans. When a borrower sends a “Qualified Written Request” or "QWR" to his loan servicer concerning the servicing of the loan, the loan servicer must provide a written acknowledgment within 20 business days of receipt of the request. Not later than 60 business days after receiving the request, the servicer must make any appropriate corrections to the borrower’s account, and must provide a written clarification regarding any dispute. During this 60-day period, the loan servicer is strictly prohibited from providing information to a consumer reporting agency (i.e. Transunion, Equifax, etc) concerning any overdue payment related to such period or qualified written request.

Under RESPA Guidelines , a borrower can institute a private lawsuit for a Section 6 of Real Estate Settlement Procedures Act "RESPA" violation and/or a group of aggrieved borrowers may bring a class action lawsuit if a pattern of non-compliance can be shown within three years of the violation against a loan servicing company who refuses to comply with Section 6.

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Posted On: March 18, 2009

REAL ESTATE SETTLEMENT PROCEDURES ACT: LOAN SERVICING ABUSE REQUIRES QUICK GOVERNMENT INTERVENTION

Reporter Kristi Marohn with the St. Cloud Times wrote an excellent article, "Experts: Improper fees play part in crisis--Servicers may benefit from loans in default" on how some loan servicing companies are engaging in abusive tactics which is helping fuel mortgage defaults across the United States.

The loan servicing companies typically do not own the loans they service and profit margins of just servicing loans is actually fairly small but they can make a tremendous amount of money in tacking on fees and penalties. Loan servicing companies can make even more money if a loan goes into foreclosure because they can charge even more fees.

The ongoing frustration for homeowners, attorneys, and others is that many loan servicing companies are simply none responsive to problems associated with the loans they service. We are seeing fees being charged to consumers for such things as Pre-paid Late Fees for all of 2009, 2010, 2011 or Pre-paid monthly inspection fees for years in advance when there is no inspection even done.

The charging of these fees is a direct cause for an increase in foreclosures across the United States. We are seeing these fees and many other unknown fees being charged now when borrowers enter into loan modification agreements which is why the default rates are so high for those borrowers who have entered into a loan modification only to find themselves stuck again in foreclosure because the fees that were charged forced them into foreclosure once again.

RESPA's Section 6 is routinely ignored by the loan servicing companies as most Qualified Written Requests are either totally ignored or the information they provide is non-information or a letter stating that the law does not require them to give information to the borrower on his/her own loan.

Loan servicing fraud is very prevalent and one must be very diligent when evaluating causes of action. When evaluating a claim please make sure you pull the courthouse records to make sure the signatures of the borrowers are actually the borrowers. We are seeing and hearing of many cases where the loan servicing employees are forging borrowers signatures to documents. These documents often increase the fees so much that it forces homeowners into foreclosure because they can't get anyone on the phone from the loan servicing companies to fix or even address the problems the loan servicer itself caused.

We urge everyone to call your congressman and senator and request they regulate this industry. This is a completely unregulated industry and the abusive behavior is fueling the credit and housing crisis in the United States. Consumers need real protection and relief from those loan servicing companies are preying on the American public.

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