Not Happy with Mortgage Loan Servicer
by Elizabeth from Canoga Park, California USA
Ask Kate about your mortgage loan servicer: Kate, My GMAC mortgage was just sold to a subservicer, Dovenmuehle Mortgage, Inc. Is this a company I can do a refinance with? Or is this sort of a temporary situation, like when I was initially with a company when I purchased my condo who very quickly sold my mortgage to GMAC.
It gets a little confusing who owns what and how this affects doing a refinance.
I didn't like that GMAC had no physical locations in Los Angeles and this company is somewhere in the Midwest.
I was not happy with GMAC (from my experience and they are in bankruptcy) but I wonder what my options are now.
Thanks for all your advice Kate. I really do enjoy your site even when I don't want to ever look at another rate calculator in my life.
Kate Answers: Not Happy with Mortgage Loan Servicer
The whole loan servicing and loan sub-servicing scenario is quite absurd. If a lender originates a mortgage that can be sold to Fannie Mae, they can also retain loan servicing rights to bring in lucrative fees. Per Wikipedia, a loan servicer is defined as...
a public or private entity that collects, monitors and reports loan payments, handles property tax, insurance escrows and late payments, forecloses defaulted loans, and remits payments.
However, per Wikipedia, a loan sub-servicer...
collects the timely payment of interest and principal from borrowers. The level of service varies depending on the type of loan and the terms negotiated between the firm and the investor seeking their services.
In other words, when the loan servicer does not wish to service a mortgage, they hire and split servicing income from Fannie Mae with a sub-contractor, the loan sub-servicer. Wow, just what homeowners have been wishing for in mortgage lending, another layer of personnel.
But I don't know if Dovenmuehle Mortgage, Inc. can refinance. Sorry to say, I think you'll need to contact them to find out.
New Good Faith Estimate Form of 2010 Addresses Loan Servicing
But while we are on the subject of loan servicing, there's a statement on page 3 of the new Good Faith Estimate form of 2010 that really grinds my gears. Here it is...
If Your Loan is Sold in the Future: Some lenders may sell your loan after settlement. Any fees lenders receive in the future cannot change the loan you receive or the charges you paid at settlement.
Well, sad to say, the Department of Housing and Urban Development (HUD) is out of touch with the reality of loan servicing and sub-loan servicing. Although they state that assigned loan servicers cannot change the terms of a promissory note, HUD seems to ignore that they can certainly mess with a homeowner's payment record.
Of course, this shouldn't come as a surprise to HUD. They report that 2 out of every 5 complaints received involve servicing issues.
In fact, when I originated mortgages, some homeowners refinanced to escape their current (and awful) loan servicer. However, as I always warned, there are no guarantees that a round robin will not take homeowners back to the same loan servicer or sub-servicer.
HAMP and Loan Servicing
In recent years, there's a new twist with loan servicing - The HAMP loan modification program is voluntary for loan servicers of non-Fannie Mae and non-Freddie Mac mortgages. So in spite of what lenders or HUD says, for homeowners, being able to modify a mortgage in the future could depend on the luck of the draw.
Even so, I think all homeowners should question who will service their loan when getting new financing. But after the last few years, we know there are no guarantees.
Protect Yourself from Poor Loan Servicing Records
As always, the best homeowner defense against poor loan servicing records is to make monthly house payments on time. If using an automatic bill payment plan, double-check each and every month to verify your account was debited and the loan servicer credited the payment to your account.
Keep adequate records, cancelled checks or bank statements and never rely on the records of the loan servicer.
Good luck and best wishes,
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