If you're planning to buy check out these all-too-common horror stories BEFORE you sign on the dotted line.
http://realestate.msn.com/buying/Art...mentid=2133885
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Huge errors and software glitches
Any number of predatory practices, from not crediting payments to prematurely initiating foreclosure proceedings, can send struggling home buyers over the edge.
Bureaucratic mistakes and software glitches are no small problem in the servicing industry. Huge errors stem from the massive turnover of ownership alone. Servicing rights for any individual mortgage are valued separately from the actual loan and are often sold repeatedly by banks and third-party servicers without customers having a clue or a choice.
Still, there is no rule that says the old servicer must transfer the entire record to the new servicer. Often borrowers aren't informed of a change, and they use their original payment coupon book and send checks to the old address. The checks usually get sent back to the borrower, while the new servicer chalks it up as a late payment, deducts a penalty from the mortgage and marks it as underpaid. After a few months of this, the loan is recorded as delinquent. But the customer may not know anything is wrong because servicers aren't required to send a statement, and if they do, it is often incomplete. A foreclosure notice can be the first indication of any trouble.
One Housing and Urban Development investigator says in a recent case a borrower faced foreclosure because 19 mortgage payments were missing. "The servicer found all 19 payments in what we call a 'miracle' because we got involved," the investigator says.(snip)



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