MORTGAGE SERVICING ABUSES
12. The failure to advise the
debtor of cancellation rights
with respect to private
mortgage insurance.
13. The failure to notify the
debtor of any change in the
monthly mortgage payment
due to an increase in taxes.
14. The failure to notify the
debtor of any change in the
monthly mortgage payment
due to an increase in
insurance rates.
15. The unilateral post-petition
conversion of a nonescrowed mortgage to an
escrowed mortgage without
court approval.
16. The purchase of a
property tax claim postpetition so as to increase
monthly revenues and
funds available for use in
suspense accounts.
17. The use of various forms
of “suspense accounts” to
hold money for over-night
investment rather than
applying money to the
outstanding principal and
interest.
18. The failure to apply
payments received from
the trustee and the debtor
pursuant to the “Application
of Payments” Covenant
in the Uniform Mortgage
Instruments.
19. The failure to apply for
Court approval of all
“corporate advances” as
required by the Uniform
Mortgage Instruments,
applicable Bankruptcy
Law, and Rule 2016(a) of
the Rules of Bankruptcy
Procedure.
20. The failure to notify the
debtor or the trustee of
any change in the monthly
payments due to a reset of
the mortgage interest rate.
21. The failure to advise the
consumer credit reporting
agencies that the mortgage
is current after the entry
of the discharge in
bankruptcy.
22. The regular imposition of
additional legal fees during
the life of the Chapter 13
case without any notice and
hearing and court approval.
23. The systematic
misapplication of trustee
payments on the arrears
and debtor payments
on the direct payment
obligations.
24. The diversion of improper
National Association of Consumer Bankruptcy Attorneys
Winter 2015
fees and charges to various
“restricted” corporate
advance accounts so that
they will not appear on any
bill or statement issued
during the pendency of the
chapter 13 case.
25. The charging to the debtor
of legal fees for services
that are in reality services
provided by non-lawyers
or by automated delivery
systems.
26. The out-sourcing of core
servicing functions for the
purpose of enhancing the
overall fees generated for
each loan serviced. By
atomizing the fees, the
servicers can charge less
per each service but more
for all services.
27. The charging to the debtor
of fees for services that are
never actually performed.
28. The investment of
payments received from
debtor in over-night
interest bearing accounts
and holding funds in
those accounts in order
to capture the “interest”
received on floating this
money between receipt and
disbursement.
29. The holding of payments in
suspense so as to create
CONSUMER BANKRUPTCY JOURNAL
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