REFUSAL OF PAYMENT
THE NUMBER ONE FAVORITE TRICK OF MORTGAGE SERVICERS
Many clients complain to us at Advocate Legal that their servicer has stopped accepting their payments. Sometimes the servicer will add insurance or taxes to your loan payment and suddenly return your payments, saying you are paying the wrong amount. In some cases when the servicer stops accepting payments they will give no reason at all.
When a servicer stops accepting your payments often times they will offer you a loan modification. This is a trick to lure you into complacency when you should be taking aggressive action to force them to accept your payments. In this way, borrowers are lured into a longer default by the promise of a lower payment they never asked for and they are delayed from seeking a legal remedy for their breach of their loan contract.
When a servicer stops accepting your payments it is a way to make more money from you. This is because your default adds to the principal balance of your loan and also allows them to charge you penalties and fees including sometimes improperly imposing an escrow for taxes and insurance. If you cure your default, or you accept a forced loan modification, the servicer’s penalties and fees will be added to your principal balance. If you default and foreclose they will collect those fees before any money gets paid to the investor.
When the servicer stops accepting payments from a widow or widower of a recently deceased borrower they may use the excuse that you are “not on the loan.” This may be true, but when a servicer stops accepting loan payments from a surviving spouse because he or she was not on a party to the mortgage they are effectively calling in the Promissory NOTE which is illegal by federal statute. To delay the surviving spouse from seeking a legal remedy, the servicer will offer a loan modification, and eventually, stop accepting those payments using the same argument that you are “not on the loan.”
When the servicer stops accepting your payments it’s usually a trick to push you into foreclosure. You may not realize the extra money in your account and inadvertently spend it elsewhere. The servicer will usually play this trick on borrowers that have already shown a tendency to late payments, knowing that you are probably struggling. They may have strategically calculated that by the time you realize what is happening you will have fallen too far behind to be able to catch up.
Contact Experienced Attorneys for Skilled Guidance
If you act quickly when a servicer stops accepting your payments you have a good chance to get your loan reinstated and legal fees awarded by the court. With decades of experience, our experienced attorneys and staff at Advocate Legal can guide you through this process.