How To Be Current on Your Mortgage, But In Danger of Foreclosure
The Mortgage Rights website focuses on a problem that was caused by the securitization of home loans: servicer driven foreclosures. By that I mean the situation in which a homeowner who is current in their payments winds up in foreclosure because of a mistake made by the servicer. Typically, the hom
THE HOMEOWNERS WENT 10 YEARS WITHOUT A PROBLEMMazonas v. Nationstar Mortg. LLC (N.D. Cal., 2016) is an example of homeowners can be current on their payments but have to file lawsuit to prevent a foreclosure because of a servicer mistake that the servicer refused to correct. When the Mazonas took out their loan, they entered into a special payment plan offered by Bank of America. The plan called for Bank of America to automatically withdraw one half of the total payment on the 15th and the other half on last day of the month. Bank of America payments were credited as having been made on the first of the month. The Mazonas entered into the plan because it reduced the amount of interest they would pay over the life of the loan. The Mazonas made payments under the plan for 10 years without any problems.
A NEW LOAN SERVICER CAME INTO THE PICTUREHere is what happened when Nationstar took over servicing the loan. In October 2013, BOA notified the Mazonases of Nationstar's plan to acquire the right to service their loan effective November 1, 2013. BOA informed them the transfer would "not affect any terms or conditions of [their] mortgage loan, other than those terms directly related to servicing of the loan." This notice further explained that BOA's automatic payment program would be discontinued as of October 31, 2013. Nationstar also sent the Mazonases a letter detailing how the transfer would go into effect. This letter informed the Mazonases that BOA would forward any payments received to Nationstar, which would credit their account once the forwarded payment was received. In addition, Nationstar agreed to accept partial payments "until the account becomes delinquent." Once Nationstar determines an account is delinquent, however, partial payments are placed in a suspense account until receipt of the remainder of the full amount due. On October 15, 2013, BOA withdrew $1,396.50 from the Mazonases' bank account--half the amount due on November 1, 2013. On October 31, 2013, BOA withdrew the second half of the November payment: $1,396.50. The Mazonases believed they had paid the full amount due on November 1, 2013. After the transfer to Nationstar, the Mazonases tried to establish a twice-monthly payment schedule, but could not do so because Nationstar claimed their mortgage was delinquent. Surprised by this news, they called, emailed, and sent letters to Nationstar representatives. In response to these requests Nationstar sent "boilerplate responses . . . that did not address the issues" in the complaints. Throughout 2014, Nationstar continued to treat the Mazonases' account as overdue. In February 2014, Nationstar sent the Mazonases a check in the amount of $1,395.15 (thirty-five cents less than the half payment).