HELP! MY NEW LENDER TOOK MY MONTHLY PAYMENT BUT SAID I AM IN DEFAULT
Although your original lender may be a large bank such as Wells Fargo, Bank of America, or PNC Bank, it is common for these institutions to sell your mortgage to another company. They may continue to service your loan, or the servicing may also go to a new company. When your loan is sold, or the servicer changes, your loan information is also transferred from one computer system to another. Sometimes, not all of the information is transferred, or there is a mistake in the transfer. This is especially common if you have had a modification. While you have a written agreement and you have been making payments, this information may not be properly transferred to the new loan servicer and can result in the lender taking your money and saying that you have not paid.
By law, your new servicer must notify you in writing within 30 days of taking over your loan. It is important to understand that if your mortgage is sold to a new loan servicer, you have rights. It is illegal for the new company to refuse payments and change the terms of the loan, payment amounts, or interest rates.
There are situations where, after a loan is sold and the servicing is transferred, the homeowner continues to make modification payments, but the new servicer’s computer doesn’t know about the modification and is expecting the payment amount that was being made prior to the modification. This can lead to the lender declaring default, threatening foreclosure, reporting a default to the credit reporting agencies, and severely damaging credit. This is illegal.
Legal Protections Against Being Wrongfully Accused of Defaulting
Federal laws provide several layers of protection to homeowners facing a claim of defaulting by their mortgage servicers:
- RESPA: Requires servicers to respond to your disputes about loan servicing errors promptly.
Truth in Lending Act (TILA): Ensures you receive notice of any loan servicing transfer, including the new servicer’s details. - CFPB Regulations: Protects you from unfair mortgage servicing practices, mandating prompt payment crediting and error resolution.
- Legal Assistance: If the issue persists, consulting with a knowledgeable attorney can provide legal advice and potential recourse against wrongful default claims.
It’s crucial to act swiftly when faced with a wrongful default claim. An attorney can provide you with information and guidance regarding your rights and protections under state and federal laws.
Contact a New Jersey Foreclosure Attorney Now
When facing foreclosure, it is important for homeowners to understand their rights and their options. An experienced foreclosure defense attorney can offer guidance regarding New Jersey’s laws and offer defense strategies or representation to apply for a mortgage loan modification. Contact the Law Office of Ira J. Metrick, Esq. today.
