What does a home borrower do when his real estate loan is mishandled by the lender? How do you dispute irregularaties?

Your home is the largest investment you will ever make and it is equally important for you to safeguard your rights.  But there are circumstances where a lender has mishandled a borrower’s home loan, resulting in a dispute. An example of mishandling a loan consists of improper accounting of payments, sending of notices claiming amounts are owed on the loan when they are not and failure to advise the borrower when the loan’s servicing rights or the loan itself have been sold.

To make it pay off and get attention, first gather any papers and/or supporting information with respect to the loan. Call and speak to a representative in an effort to clarify and/or resolve the issue. To protect yourself, immediately following the conversation, prepare and send out a letter confirming what was said in the telephone call. Keep a copy of the letter for your files. This is valuable information should there be a later appeal.

If the problem concerning the mishandled loan is not timely resolved by the lender, or negotiations have reached an impasse, it may be time to schedule an in-person appointment with the lender’s representative (or supervisor/manager), bringing in any detailed supporting documents. Take notes of the conversation. Following the meeting, send a letter to the representative (or manager) confirming the conversation, restating what was discussed. You may also want to send more than one letter–to the representative’s manager or head of operations. Keep a copy of this letter for future need.

If there is still no success in resolving the dispute, at this stage, you may have to see an attorney well versed in mortgage disputes and file a lawsuit.  The threat of a lawsuit may be enough to move the lender into more promising negotiation. If you decide to consult with a lawyer, bring all your papers, documents, and correspondence with you. A lawsuit may be warranted when there is a serious accounting error where the consumer is not given credit for payments made on the loan by the lender.

Contact Your State Department of Corporations

Every state has a department or division or agency that oversees corporations engaged in financial services. In California, the Department of Corporations oversees financial institutions and does audits to ascertain any improprieties. Make a written complaint to the appropriate Department, setting forth the details and copies of all notes and correspondence.  How soon and what form of response or action the Department will take varies across the states. It may well be that the Department has received several complaints about the practices of the particular lender and might take a look at what can be done or send a letter informing the lender of your complaint.

Case Studies: Resolving Mishandled Real Estate Loans

Case Study 1: The Smiths vs. Greenleaf Lenders

The Smiths, a couple who recently purchased a home, discovered irregularities in the handling of their real estate loan by Greenleaf Lenders. They noticed discrepancies in the accounting of their payments and received notices claiming amounts were owed on the loan when they had already been paid. Despite multiple attempts to resolve the issue with Greenleaf Lenders’ representatives over the phone, no satisfactory resolution was reached.

Feeling frustrated, the Smiths decided to consult with a lawyer specializing in mortgage disputes. With the assistance of their attorney, they filed a lawsuit against Greenleaf Lenders to rectify the serious accounting errors and protect their rights as borrowers.

Case Study 2: Johnson Realty and the Mismanaged Loan

Johnson Realty, a real estate agency, had a client whose home loan was mishandled by a major lender. The client faced challenges with improper accounting of payments and inadequate communication regarding the loan’s servicing rights. After unsuccessful attempts to resolve the issue directly with the lender, Johnson Realty intervened on behalf of their client.

They scheduled an in-person appointment with the lender’s representative to discuss the matter and presented detailed supporting documents. Despite the meeting, the dispute remained unresolved. Recognizing the need for legal intervention, Johnson Realty recommended their client seek the assistance of an attorney experienced in mortgage disputes.

Together with the attorney, they explored the possibility of filing a lawsuit to ensure the lender’s accountability and protect the client’s interests.

Case Study 3: Wilson Family and the State Department of Financial Services

The Wilson family, facing mishandling of their home loan by Coastal Bank, decided to take action by involving the State Department of Financial Services. They compiled a written complaint, documenting the details of the irregularities they encountered, and submitted it to the department.

Along with the complaint, they included notes, correspondence, and any other relevant evidence. Understanding that the response and actions of the department varied across states, the Wilson family remained hopeful that their complaint would prompt an investigation or at least bring attention to Coastal Bank’s practices.

They were aware that the department might have received similar complaints, which could increase the likelihood of appropriate action being taken against the lender.

Conclusion

Most grievances and disputes between a lender and the consumer concerning real estate loans and possible mishandling are resolved informally without the need of a lawsuit.