What to Do If You Have Loan Service Problems
If you have a billing problem or some other type of trouble with your lender or loan servicer, there are a variety of steps you can take to improve your chances of clearing the matter up quickly.
Your first step should be to contact the company’s customer-service department. Its telephone number is probably on your most recent statement, or you can get it by contacting the nearest branch office.
If your lender or servicer is located out of your area and the phone number isn’t listed on your statement, you’ll have to call the telephone operator to find out the company’s area code and then call directory assistance.
Although you may have a good reason to be upset, remember to keep your cool when you’re talking to the customer-service representative. Your first call is the most important one that you’ll make, in part because it sets the tone for how you’ll be treated in the long run.
“If a customer calls in with a problem or question and politely states his case, he’s going to get a lot farther a lot faster than some guy who calls up swearing and calling everybody a moron,” said Bob Garman of Directors Home Loan Mortgage Corp., a Riverside-based mortgage banker that services 30,000 loans.
Keep a Record
It’s a good idea to have a note pad and pencil handy when you make your first and any subsequent calls, Garman said, so you can have a record of the date, the time, the name of the person you talked to and a recap of the conversation.
“If you can’t get the problem solved on your first try, it helps to have all this information written down so you can mention it later as you move up the chain of command,” Garman said.
“Write down everything. The more documentation you have, the better.”
Actually, bankers say, at least three-quarters of all calls that come into a service center everyday are successfully handled by a customer-service representative.
But if your problem isn’t solved or your question isn’t answered on your first try, it’s time to start working your way up the company ladder.
Different lenders and servicing companies have different organizational structures. Start the appeals process by asking to speak to the service rep’s immediate supervisor: There’s a good chance he or she has a title such as “assistant loan-servicing manager,” or simply “customer-service supervisor.”
If you aren’t satisfied with the results of your conversation with the supervisor, take your complaint to the manager of the loan-servicing department.
Loan-servicing managers carry a lot of clout at most financial institutions. They usually have the power to reverse unwarranted charges, order corrections to credit records and discipline service representatives who are incompetent or rude.
“The manager is usually the most powerful person at the processing center,” said Lamar Brantley of the Savings and Community Bankers of America, a Washington-based trade group that represents more than 2,000 banks and S&Ls; across the country.
“If you can convince the manager to see things your way, you’re probably going to win your dispute regardless of what all the other people you have talked to said.”
Even if the servicing manager won’t give you a break, you might want to take one last shot at resolving matters directly with your lender by writing to its president.
If you can’t get the president’s name and address from the loan-servicing manager, you can probably find it in Standard & Poor’s Register of Corporations or other business-reference books commonly found in large libraries.
Presidents Involved
“Believe it or not, most bank presidents really do get involved when they personally get a complaint from a customer,” Garman said.
“Even if he doesn’t handle the problem himself, he’ll tell somebody to look into it. Your case takes on a little more importance when your files are sent over by the boss.”
The key to writing an effective letter to a busy company president, Garman said, is to keep it short and to the point.
Briefly summarize your problem, mention who you have already talked to, provide dates of your conversations and copies of any correspondence between you and company representatives.
If your phone calls or letters finally yield the results that you want, ask the company to send you a letter stating how matters have been resolved.
“What somebody tells you over the phone is only as good as their memory and sense of honor,” said Leonard Schapira, a Santa Monica lawyer who tangled with lenders when he worked in the California Attorney General’s office and at the Better Business Bureau. “Get it all in writing.”
It’s also a good idea for you to write a letter to the person who helped you. Thank them for their assistance, restate what they promised to do and send copies to anyone else who you may have talked to.
“Again, you’re building a file that you can refer to if you have any more problems in the future,” Schapira said.
But what can you do if the bank or servicer doesn’t give you what you want?
“The first thing you have to do is to find out exactly who owns your loan,” Schapira said. “It’ll pretty much dictate what you do next.”
Under a federal law that went into effect last year, your current lender must usually notify you in writing if it plans to sell your loan or transfer its loan-servicing duties to another company.
The letter must include the date that the sale or transfer will become effective, the name and address of the new owner or servicer, and a toll-free or collect-call telephone number that you can use to reach the new company.
If your loan was sold before last year, your lender technically doesn’t have to disclose which institution actually owns your mortgage today. But most lenders are willing to provide this information to keep their customers happy, said Larry Stevens, an attorney with Great Western Bank.
In the unlikely event that your loan was sold before 1991 but your lender refuses to disclose who owns it now, the best way to determine the current owner is to order a “property profile” of your home through a title-insurance company.
Local real estate agents can give you the names of title insurers doing business in your area, and they’re usually listed under the heading of “Title Companies” in the Yellow Pages of the phone book.
“When a lender sells a loan to another company, a document called an ‘assignment of trust deed’ is usually filed with the county recorder’s office,” said Pat Corcoran of Dataquick Information Systems, a La Jolla-based real estate services company.
“The assignment will show who’s the current owner of the loan, so bingo--you’ve got your answer.”
Some local title-insurance companies will provide you with one free profile of your home. However, specify that you want the profile to include a list of your loan “assignments”: It’s usually not included in a basic profile, and takes a little extra work to prepare.
If your loan has been sold, there’s a good chance that it was purchased by either the Federal National Mortgage Assn. or the Federal Home Loan Mortgage Corp.
“Fannie Mae” and “Freddie Mac” are quasi-government agencies that together purchase more than half of the 5 million or 6 million loans that are made every year.
The federal rule requiring lenders to automatically notify borrowers when their loan is about to be sold or their servicing rights transferred doesn’t apply if the loan is sold to Fannie or Freddie.
However, both agencies require lenders to disclose this information if a borrower makes a written request.
Both Fannie and Freddie have the power to change the company that services the mortgages it owns and can help you resolve disputes between you and your lender or loan servicer.
Complaints to Fannie Mae should be sent to Bonnie O’Dell, Public Information Department, 3900 Wisconsin Ave. N.W., Washington, D.C. 20016.
Letters to Freddie Mac should be addressed to Katherine Billings, Consumer Information Department, mail stop 409, 8200 Jones Branch Drive, McLean, VA. 22102.
Let Regulators Know
Complaints about poor service or other problems should also be reported to government regulators.
“We take every letter we receive very seriously,” said Susan Potkai, a spokeswoman for the Federal Reserve Bank. “We check out each complaint and act as an intermediary between the borrower and the lender.”
Still, Potkai said, you need to make sure that your letter goes to the proper authorities.
For example, the Federal Reserve only regulates the 1,100 state-chartered banks across the country: Two-thirds of the 2,400 complaints that its Washington headquarters received last year had to be forwarded to other agencies because they involved other types of institutions that are outside the Fed’s jurisdiction.
The Federal Reserve has 12 regional headquarters across the country where complaints can be filed. Californians should write to the Fed’s Division of Consumer and Community Affairs, 101 Market St., San Francisco, CA 94105.
Savings and loan associations are regulated by the Office of Thrift Supervision. Complaints should be sent to the nearest of the OTS’ five regional headquarters in San Francisco, Chicago, Dallas, Atlanta and Jersey City, N.J.
Westerners should send their complaints to OTS, Regulatory Compliance Division, P.O. Box 7165, San Francisco CA 94120.
Federally chartered banks--which you can usually spot because they typically have the word national or the term NA in their names--are regulated by the Comptroller of the Currency.
Complaints about these banks should be filed with the agency’s Consumer Activities Division, Washington, D.C., 20219.
Monitored by State
In California and most other states, companies that process loans but are neither a bank nor an S&L; are monitored by the state’s department of real estate.
With few exceptions, state law mandates that the person in charge of supervising collection activities on California mortgages at these companies must have a California real estate broker’s license even if the company is headquartered in another state.
“If no one at the company has a broker’s license, we can issue a cease-and-desist order that prevents them from servicing California residents,” said Les Bettencourt, the state’s deputy real estate commissioner.
“And if they do have a license, we have the power to revoke it or suspend it and put them out of business in California if we find that they’re doing something illegal.”
Although Bettencourt’s agency is headquartered in Sacramento, it has six enforcement offices scattered across the state.
Residents of the Greater Los Angeles area who believe their loan servicer falls under the DRE’s jurisdiction should send their complaints to the Department of Real Estate, Consumer Affairs Division, 107 S. Broadway, Los Angeles CA 90012.
