You may think that your “mortgage company” owns your mortgage. For many if not most Americans, it just ain’t so. The company that you write checks to is probably just a mortgage “servicer,” a company that is paid a small fee (usually around 1/4 to 1/2 of 1% of the amount of your mortgage) to collect the payments, pay escrow items such as insurance and taxes, and pay the money over to the real owner or owners of the mortgage, the “investor.”

Anyway, it is not unusual for these servicers to not properly credit your monthly mortgage payments, to charge unauthorized fees, and otherwise abuse the borrowers. In bankruptcy cases, they often add fees to the “Proofs of Claim” that are filed in bankruptcy court, that are not permissible under the law.

In an article entitled Bankruptcy Judges, Justice Dept. Rip Mortgage Companies by Karen Weise, from the ProPublica web site, at , there is an excellent article that collects several of the recent cases, and gives you a good background of the problem. For many years, the courts and even lawyers worked on the assumption that these mortgage servicers were reputable, only charged appropriate fees, kept good records, and followed the law. This is simply not always the case. It’s just too bad that consumers have to watch out for themselves these days, and can’t rely on financial institutions to comply with their responsibilities of honesty and integrity.

J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization