Imagine getting a call from a mortgage company that you’ve never heard of, claiming that your loan payment (which you paid) is overdue. They tell you that you will be charged late fees and they will be reporting the delinquency to the credit reporting agencies.

After calming down, you learn that your home loan has been sold and this is your new mortgage company calling to see where your payment is. These and other mortgage problems can damage your credit and it may not even be your fault. The mortgage industry is busier than ever right now. And, when things get busy in any activity, mistakes are more likely to occur. Boxes don’t get checked; account numbers get mixed up; addresses are recorded incorrectly; and notices aren’t received. When these things happen, you may be totally unaware that your loan has been sold, that your payment wasn’t received, or that late fees have been assessed. That can lead to negative reports on your credit.


Fortunately, the law provides a remedy for those situations where the mortgage companies have made a mistake. It is called the Real Estate Settlement Procedures Act (RESPA; 12 USCA B 2605). RESPA provides protection for consumers by requiring their mortgage companies to respond to inquiries, resolve errors, and pay penalties for violations. When your loan is sold or transferred, RESPA requires notices to be provided to the consumer not less than 15 days before and not more than 15 days after the sale or transfer. The law also prohibits the new mortgage company from issuing any negative credit reports about you for 60 days following the transfer date of your loan. Additionally, if you discover a problem with your mortgage loan at any time, you have the right to send a written inquiry to your mortgage company asking for clarification or resolution. A mortgage company must acknowledge receipt of the inquiry within 20 business days. They must also make any appropriate corrections to your account and provide you with written clarification on the matter within 60 business days of your inquiry a payment at all, and you are convinced they are wrong, you should send them a written inquiry demanding clarification or resolution of the matter. If you discover that your mortgage company has not complied with any of the notices or credit reporting rules, you may have a claim for damages and should consult an attorney.


The real “teeth” in RESPA is in the liability of the mortgage company for violations of the law. RESPA provides that a failure of the mortgage company to comply with its provisions will make the company liable to you for each violation in the amount of a) your actual damages and b) any additional damages up to $1,000. Your actual damages can include your time spent trying to resolve the matter, your expenses incurred, any lost opportunities due to a damaged credit score (for example, not qualifying for a lower rate), and for “mental anguish”. Even without actual damages, the court can award up to $1,000 to you for each violation. Finally, a real consumer benefit to RESPA is the fact that it allows attorneys’ fees to be recovered if you are successful in your claim against the mortgage company. This helps those who have a dispute but who may not have the funds to hire a lawyer. By allowing the award of attorneys’ fees, it will be much easier for you to find a lawyer willing to take on your case without hourly fees being paid by you.


So what if you get one of those strange calls from a mortgage company you’ve never heard of, accusing you of failing to make your home loan payment? If you have not received a notice of transfer of your mortgage loan, you should immediately send a written inquiry to both the old mortgage company and the new one telling them you have not received any notices and asking for proof that they sent you the notices required by RESPA. You should also ask whether any negative credit reports have been issued by them concerning your loan. In addition, if your mortgage company tells you that you were late with a payment or that they haven’t received.

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