Think back to when you first stepped foot inside the doors of your soon-to-be mortgage company. Do you remember how smooth the transaction was?
Even though there may have been a lot of paperwork, facts and figures involved, everyone seemed to be helpful.
Fast forward to the present. Do you feel as if something has gone awry?
If so, you may be experiencing a problem with your mortgage lender which needs to be taken seriously.
According to Michael Wishnow of the Pennsylvania Department of Banking, “there are around 6,000 complaints each year involving all aspects of the banking industry and over one-third of them are directly related to mortgages.”
That means in Pennsylvania alone there are over 2,000 complaints each year involving mortgage issues. When you take that figure and adjust it to include the other 49 states, you are talking about a very serious and prevalent topic.
If you feel that your mortgage lender/broker has violated some law while dealing with your loan, you should always try to resolve the issue with the company first.
Because good word of mouth is important in the mortgage lending business, a reputable lender/broker should be willing to put an effort into keeping the customer happy.
Start with the person who has been handling your transaction. If that person is unable to solve the problem, try contacting that person’s supervisor or the branch manager.
If you cannot make any progress with company officials, file your complaint with the appropriate regulatory agency–in Illinois it’s the state Department of Financial Institutions or the Savings and Loan Commission.
Your official complaint should contain the following information: your name, address and phone number; the company’s name and address; the type of account (and account number if applicable); a description of the complaint, any correspondence with the company (include names of people you talked to and the dates you talked to them) and any actions that were taken by the company.
Most states have a State Banking Department (or similar agency) that handles complaints against state chartered banks, savings & loans, credit unions and mortgage bankers & brokers.
The state departments of banking have the ability to directly reach and raise concerns to senior management at the lending institutions.
Don’t forget to sign and date your complaint letter.
According to Robert Floyd of Alabama’s State Banking Department, “the major complaints which are filed against mortgage lenders usually take 2 or 3 days, and within a week we have an examiner at the mortgage office or contact has been made.”
Wishnow says “we have the ability to get to the right people.” By raising concerns, especially if it is the state regulator’s concerns, upper management usually acts fast to resolve disputes.
Often the state agency which has been involved in the process can direct a consumer to the federal level if there is reason to believe that the issue directly violates federal law.
There are numerous federal laws which have been enacted in order to protect consumers against problems regarding their mortgage lender:
– Equal Credit Opportunity Act. This law protects individuals from being discriminated against based on race, color, religion or creed. The law basically states that good credit is good credit, and all other factors are irrelevant.
– Fair Housing Act. This law states that individuals cannot be denied housing or financing based on factors other than income/credit.
– Several laws require a lender to provide disclosure statements to the borrower (i.e. characteristics of an Adjustable Rate Mortgage loan, Good Faith Estimate of closing costs, Annual Percentage Rate (A.P.R.) on the loan, the likelihood of the lender transferring the loan to another lender and notification if (and when) the lender actually does transfer the loan). These requirements are generally administered through the Department of Housing and Urban Development.
Complaints against federally chartered institutions usually are handled by the appropriate federal regulatory agency.
Federally chartered banks are regulated by the Office of Comptroller of the Currency, federally chartered savings banks and savings & loans are regulated by the Office of Thrift Supervision and federally chartered credit unions are regulated by the National Credit Union Administration.
Floyd says that mortgage lenders approved by HUD are exempt from state licensing. Without the licensing in place, the state has no control over the lenders’ practices.
“If such a complaint is made, we refer the individual to the appropriate federal agency which is the lenders’ regulator,” Floyd said.
If you are unsure of which agency to contact, the local office of attorney general may be able to help determine the agency you need to talk to, or call the Federal Information Center at 1-800-688-9889.
If you send your complaint to the wrong agency, it will most likely be forwarded to the appropriate regulator.
Consumers should not take lightly any problems with their mortgages or their mortgage lender.
By taking the appropriate action and following the proper channels, consumers should feel safe in knowing that there is help available to them and that their complaints will be addressed.
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Jim DeBoth is president of Mortgage Market Information Services. Address your questions to Mortgages, c/o the Chicago Tribune, Real Estate Section, 435 N. Michigan Ave., Chicago, Ill., 60611. Sorry, we cannot accept questions over the phone and will not give personal replies.
