A "loan servicer" handles mortgage accounts. Sometimes, the original lender or another entity, like a bank, that the lender sells the loan to (an "investor") services the loan. Other times, the lender or investor transfers the right to manage the loan account to a different company for servicing. That company then handles the account on the lender's or investor's behalf for a fee.
Servicers, unfortunately, are known for making mistakes when managing borrowers’ mortgage loans. Sometimes, an error is relatively minor and easy to resolve, like if the servicer charges an incorrect late fee.
However, a big mistake, such as if the servicer misapplies payments and wrongfully starts a foreclosure, might cause massive problems for a homeowner. Federal law gives you a way to dispute mortgage servicing errors by sending a notice of error or request for information.
What Kinds of Mistakes Do Servicers Make?
Servicers sometimes make mistakes when handling loan accounts by:
- misapplying a borrower’s mortgage payments, like not crediting a payment to the account or applying the payment to the wrong account
- overcharging the borrower for fees or charging unreasonable types of fees
- buying expensive, unnecessary homeowners’ insurance (“lender-placed” insurance) for a borrower’s property and expecting the borrower to pay for it
- improperly starting a foreclosure
- dual-tracking a foreclosure while a mortgage workout option, like a modification, is in progress
- failing to properly implement a loan modification, and
- failing to appropriately pay taxes or insurance when a borrower has an escrow account.
Getting a Servicer to Fix a Mistake or Give You Information
If you think your servicer made a mistake when handling your loan or need information about your loan account, you may call or write a letter to your servicer. However, you’ll get more legal protections if you write a letter.
Under the federal Real Estate Settlement Procedures Act (RESPA), if you send a written "notice of error" or "request for information," the servicer has to respond to your letter within specific time limits.
Notice of Error: Fixing a Mistake
If you send a servicer a "notice of error" (a letter saying that the servicer made a particular error when handling your loan account), the servicer has to acknowledge the letter within five business days and fix the error within a specific period. (12 C.F.R. § 1024.35 (2024.)
The amount of time a servicer gets to respond to a notice of error depends on the type of error.
- Payoff statements. If you say the servicer didn’t give you an accurate payoff statement after you asked for one, the servicer has to respond no later than seven business days after getting your letter.
- Wrongful foreclosure. If you say the servicer shouldn’t have started a foreclosure or wrongfully scheduled or conducted a foreclosure sale, the servicer has to respond before the foreclosure sale or within 30 business days after getting your letter, whichever is earlier, if it got your letter more than seven days before the sale. The servicer must make a good-faith effort to respond to your letter if it received the letter seven or fewer days before the sale.
- Other errors. If you say that the servicer made some other type of error, the servicer has to respond within 30 business days after getting your letter. In most cases, the servicer can get a 15-business-day extension so long as it tells you about the extension within the 30-day period and gives a reason for the delay. (The servicer can't get an extension if your notice of error concerns a payoff statement or that the servicer started a foreclosure or moved for a foreclosure judgment or order of sale, or conducted a foreclosure sale in violation of the law.)
After receiving a notice of error, the servicer must fix the mistake by the deadline, let you know about the correction, and give you contact information so you can get further help if needed. If the servicer determines it didn’t make an error, it has to let you know there wasn’t a mistake and explain why it came to this conclusion.
Request for Information: Getting Details About Your Account
If you think the servicer might have made a mistake, but you aren’t sure and need more information about some aspect of your account, you may send the servicer a letter asking for details about your account. This type of letter is officially called a “request for information” under RESPA. (12 C.F.R. § 1024.36 (2024.)
The servicer then has to:
- acknowledge your letter within five days (excluding legal public holidays, Saturdays, and Sundays) and
- generally, give you the information you requested within 30 business days (10 business days if you want to know the identity, address, or other contact information for the owner of your mortgage loan) or tell you why the information you want isn’t available, as well as give you contact information, including a telephone number to get further assistance. Again, a servicer can usually extend the 30-day response period by 15 business days if it tells you about the extension within the 30-day period and explains the delay. (It can't get an extension if you asked for the identity, address, or other contact information for the owner of your loan.)
How to Find Sample Letters to Use
The Consumer Financial Protection Bureau provides sample letters, along with useful information about what to include in a notice of error or request for information letter. Make sure you send the letter to the address that the servicer has designated for notices of errors and requests for information, called "qualified written requests" under RESPA. Or you might be able to send your notice of error or request for information to the lender online through email or a secure messaging system.
When a Servicer Doesn’t Have to Help You
In some cases, the servicer doesn't have to help you with a notice of error or request for information, like if:
- You already asked about the matter, and the servicer previously responded.
- Your request is too general. For example, suppose you send your servicer a letter that says, “I think you made a mistake on my account. Please send me all of your records.” In this situation, your letter is overly broad, and the servicer probably doesn’t have to respond.
- You ask about a loan that already transferred to another servicer (or was paid off) over a year ago.
However, even if the servicer doesn’t have to address your concerns, the servicer has to let you know within five business days that it isn’t going to deal with your letter and tell you why.
Talk to a Lawyer
If you're facing a foreclosure and believe it's due to a servicer error, contact a foreclosure attorney immediately to get advice about your circumstances. Just sending a letter to the servicer probably won't be enough to stop a foreclosure.
If you aren’t in foreclosure yet, sending a letter might resolve a servicer mistake. But if the servicer doesn’t respond to your notice of error or request for information—or if the servicer disagrees that it made an error or refuses to provide certain information—consider talking to a foreclosure attorney who can advise you what to do in your situation. If you can’t afford a lawyer, a HUD-approved housing counselor might be able to help you.