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When you apply for a home mortgage, you may
think that the lender, or loan originator, will
service the loan until it is paid off or your
house is sold. However, in today's market
mortgage servicing rights often are bought and
sold. The Real Estate Settlement Procedures Act
(RESPA) is a consumer protection statute.
Sections 6 and 10 of RESPA provide you with
certain rights regarding the servicing of your
mortgage and escrow account. Please read this
important information concerning your rights and
the responsibility of your loan servicer.
Duty of Loan Servicer to Respond to
Complaints. If you have questions or
problems with the servicing of your loan, the
servicer is required to respond to you. Write to
your servicer and call it a "qualified written
request under Section 6 of RESPA." It should be
a separate letter and not mailed with your
payment. The mortgage servicer must respond to
you within 60 business days of receipt.
Loan Transferred to New Servicer. Your
loan servicer is required to notify you in
writing at least 15 days before the servicing of
your loan is transferred to a new servicer. The
notice must include the following information:
- The effective date of the transfer, the
date your current servicer will stop accepting
payments and the date the new servicer will
begin accepting them.
- The name, address, and toll-free or
collect call telephone number for the new
servicer.
- Information that tells whether you can
continue any optional insurance, such as
mortgage life or disability insurance, and
what action, if any, you must take to maintain
coverage.
- A statement that the transfer of servicing
does not affect any term or condition of your
mortgage documents other than the terms
directly related to the servicing of the loan.
Treatment of Payments During Transfer Period.
During the 60-day period beginning on the
effective date of the transfer, the payment may
not be treated as late if you mistakenly send it
to the old mortgage servicer instead of the new
one.
Escrow Account. RESPA does not require
that you maintain an escrow account for the
purpose of paying property taxes, hazard
insurance, etc. Nor does RESPA have any
jurisdiction over the decision of the lender or
servicer to require or terminate an escrow
account. RESPA does, however, provide you with
the following protections with regard to the
escrow account:
- If your lender or mortgage servicer
requires you to maintain an escrow account for
the purpose of paying property taxes, hazard
insurance, etc., RESPA requires that the
servicer pay such items by the dates due to
avoid a penalty or late charge.
- RESPA sets limits on the maximum amount of
money the servicer may require you to maintain
and pay in the escrow account.
PMI (Private Mortgage Insurance). RESPA
has no jurisdiction over the lender's decision
to require PMI. Nor does it have any
jurisdiction over the lender's decision to
cancel PMI. (The PMI Act provides information
regarding cancellation of PMI.) |
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