Predatory Mortgage Servicing is a term that is used for describing the abusive, unfair, fraudulent or deceptive mortgage servicing practices used by the mortgage servicers. These mortgage servicers are a third party and is usually not the lender and thus mortgage servicers have the opportunity of deceiving the borrowers into paying more that required. Predatory mortgage servicing should no be confused with predatory mortgage lending which involves similar abusive practices by mortgage brokers and lenders during the loan origination process.

• Predatory mortgage servicing usually involves practices that wring money from borrowers in the form of unwanted fees such as late fees, inspection fees, and other fees charged or assessed to a borrower’s account. Furthermore these mortgage servicers also have financial interest in the property that is liquidated or foreclosed which gives incentive for them to add up fees and unfair charges to cause default in cases where the borrower is financially weak or incapable of paying such amounts.
• Mortgage servicing is something that is rarely comprehended by borrowers because of its obscure and convoluted nature. This in turn means that the lack of knowledge on the part of the borrower becomes a tool for these servicers to swindle unsuspecting consumers. The actual lender sells the mortgage servicing rights to the mortgage servicer in a contractual agreement. For providing these services the servicer charges a fee and in many cases these fees are abusive and unnecessary.
• There are countless types of abusive mortgage servicing practices that are used and some of these may be easily detected and some remain unveiled. Such practices include but are not limited to refusing to supply loan or account histories to the borrower; declining to send borrowers payment coupons to their designated “mailing” address, not the property address; sending borrowers payment coupons after the due date of the loan; intimidating to improperly damage a customer’s credit status; employing of offensive and threatening collection practices; employing “property inspections” as a collection tool; using the incorrect date for interest computation on loans; using the incorrect due date on payment notices; using the incorrect index for application of interest for arm loans; and using the incorrect behind schedule fee assessment date on payment notices.
• Some other abusive practices employed by mortgage servicers include – insisting on unwarranted prepayment fine; requirement of expenses and fees not obliged for; failing to classify charges made to a borrower’s account on their statements; not posting or reporting a customer’s good quality credit to credit agencies; not giving precise loan balance amounts and loan payoff sum; not preventing credit reporting for sixty days after getting a written dispute and compel placing an insurance policy on a borrower’s property when a borrower already is in possession of their own insurance.
• Some other fraudulent practices may include – holding funds in suspense and not attributing or crediting them to account so as to enlarge calculations of escrow balances and payments around escrow examination and adjustment dates; holding payments in suspense or unapplied accounts and failure to notify the borrower of such actions or showing the credit of the payment in any payment or escrow balances on loan statements, require letters or notices sent to the borrower telling the borrower not to send in any payments when their complaints or disputes are being inspected and then charging them a late fee; mislabeling or hiding charges made to a borrower’s account on their statements; not reporting disputed accounts as dubious to credit reporting agencies and over-computing and then over-demanding escrow payments.
• In fact all these practices have been blamed by many for the sub-prime mortgage crisis that resulted in the bursting of the mortgage bubble. This was a major factor that attributed to the recent recession. The forwarding of loans to people in the low income class who are incapable of paying for the mortgage and then making them victims of foreclosures and bankruptcies have been the reason for rendering millions homeless and extorting money from poor people.

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