Bankruptcy and RESPA

RESPA stands for Real Estate Settlement and Procedures Act.

Especially in Chapter 13 bankruptcy cases, you need to know the correct numbers on your mortgage(s).

Some provisions relate to how mortgage companies must handle escrow accounts, and various notices they must provide, and the timing for same.

My favorite part requires your mortgage company to send you a complete accounting, of all the money they got from you, and what they did with it, if you send a QWR (lawmakers love acronyms) qualified written request.

Now, why would you need an accounting from your mortgage company?

Do you have a dispute with them over how much you owe, whether you are behind?  Are they foreclosing on you, and say you are $8,000 behind when you only missed two payments?

Are you trying to get a modification, and disagree on the numbers?

You do need a basis to send the QWR, so if you are paying on time every month, and they are not claiming you are behind; don’t waste your time.

But if they are playing games with your insurance escrow, or paying taxes you already paid, send the letter.

If they are billing you for late charges for payments you made on time, if they are not crediting all the payments you sent, send the QWR.

If you just came out of a Chapter 13 bankruptcy which brought you up to date on your mortgage payments, and they are threatening to foreclose, send the QWR.

The law still gives them 20 days to acknowledge they received the letter, and 60 business days to send you the mortgage accounting.

They owe you a complete accounting, every penny you sent in, and where they applied that penny.

Dollars to donuts, the accounting they send you will not make sense.

That is, it will not add up correctly.

Most of the mortgage companies use an invention of theirs, the Suspense Account.

This is where they stick your money rather than returning it, when they decide it is not enough.

I have seen mortgage accountings that leave out all Suspense Account entries.

If the accounting does make sense, great, problem solved!

If not, this is a fee shifting statute, so, if you sue and win, and I have not lost one of these yet, the mortgage companies has to pay your attorney fees and costs.

Contact me if you need a form RESPA letter, or have any questions.


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