Contacting Your Loan Servicer

When you're struggling with making mortgage payments, things can get stressful. If you're many days late making payments, the sense that things may get very bad very fast can be tough to handle. How to navigate this stress can be very confusing, as you might not even know something as simple as how the bank may no longer own your mortgage. It might, for example, have been sold to a handler or another third party.

Continue reading to learn more about how to contact your mortgage loan servicer. It may very well be an entity different from the one that originally issued your home loan. This article will also address other varieties of debt, including credit card and student loan debt. In cases where you default on a credit card, your debt may also be transferred to a third-party servicer, as well. The same is true of student debt.

Who Is My Loan Servicer?

In the period of time preceding a foreclosure, it's possible your bank or the entity that issued your mortgage might have sold the mortgage to a loan servicer or other third party. It's possible that the original lender is no longer in control of the loan. Banks will sell defaulted debt to such entities at a fraction of the defaulted loan's value. That entity will then try to recover more than the cost for which they purchased it. They will do so by pursuing you for the debt.

This may leave you wondering whom to contact about your loan. Perhaps you've contacted your bank and discovered they are no longer able to answer questions about your debt. They will, however, be able to tell you to whom they've sold the debt, if they have indeed sold it. 

If you have not received correspondence from another entity, you may wonder who is servicing your loan. You might not even know where to start the process of preventing a foreclosure. To learn more about this, review FindLaw's article on this topic.

In cases where you have defaulted on a credit card, it is possible the same will occur. A bank can tell you to whom they've sold the debt, but you could also determine who may have the debt by obtaining a credit report. The same is true of student loan debt. If you cannot determine who your student loan servicer is, you will be able to see it on a credit report. Such a report will list all account numbers and all amounts outstanding in those accounts.

What To Prepare Before Speaking With Your Loan Servicer

Once you have determined who your mortgage loan servicer is, you should only contact them after you have prepared to speak with them. Record your income and expenses. Calculate the equity in your home. To calculate the equity in your home, estimate the market value of the home. Subtract the balance of your first and any second mortgage or home equity loan from that value. 

At the same time, write down the answers to the following questions, as you'll need responses ready for the following questions that the servicer will definitely ask:

• What happened to make you miss your mortgage payment(s)? For this question, be prepared to provide any documents that back up your explanation for falling behind.
• How have you tried to resolve the problem that caused you to fall behind on your loan payments? Again, have records ready to prove that you attempted to resolve this problem. Attempts to resolve this problem could have taken the form of loan modification, searching for a lower interest rate, or attempts at negotiating lower monthly mortgage payments with your original lender. Other examples of attempts could have included negotiating adjusted mortgage repayment plans.
• Is your problem temporary, long-term, or permanent?
• What changes in your situation do you see in the short term that could make it more or less difficult to make payments? What changes do you foresee in the long term?
• What other financial issues may be stopping you from getting back on track with your mortgage?
• What would you like to see happen? Do you want to keep the home? What type of payment arrangement would be feasible for you?

Records and Notes to Keep

Throughout the foreclosure prevention process, you should collect and retain all the following:

• Notes of all your communications with the servicer, which should include all the following details:
  • The date(s) and time(s) of contact
  • Whether the contact was face-to-face, by phone, email, fax or postal mail
  • The name or names of all representatives with whom you spoke
  • The outcomes of those conversations
• Follow up any oral requests you make with a letter to the servicer, and keep copies of those letters that must be sent by certified mail and marked "return receipt requested"
• Meet all deadlines the servicer gives you, and keep any records providing proof that you have met those deadlines
• Stay in your home during the process, since you may not qualify for certain types of assistance if you move out
• Keep all records related to payment history

Additional Strategies for Caution

Always verify that you are contacting a legitimate entity. Keep records of the entity's contact information. It's important to know who your mortgage servicer is. It is possible that your original mortgage lender or mortgage company has sold the original mortgage debt to another entity. Keep in mind that it's also important to protect yourself against fraud. Some entities might try to defraud you by claiming they're your loan handler.

You can verify whether they are fraudsters by contacting the Consumer Financial Protection Bureau (CFPB). Be aware of scams. The CFPB can help. You can submit complaints to the CFPB if you've been the victim of a scam. You can also review credentials for loan servicers on CFPB's site. You should also collect and have available similar records for any other varieties of debt. The same is true of federal student aid and federal student loans.

Other Important Considerations: Renting Your Home

You might think that it could help to rent your home. It's possible it could, but you must keep in mind that doing so will change it from a primary residence to an investment property. This can disqualify you from any additional workout assistance from the servicer. If you choose this route, be sure the rental income is enough to help you get and keep your loan current.

Related Resources:

To learn more about other related topics, review the following resources from FindLaw:

• In the wake of the pandemic, many people are asking about loan forgiveness. To learn more about how it works, review FindLaw's resource on the topic.
• Real Estate Settlement Procedures Act: Under this law, important aspects of settling defaulted-upon real estate loans are laid out. If you're facing a foreclosure, review this resource to learn more.

Need More Help? Contact a Lawyer

If you encounter any legal problems related to foreclosure, it's important to contact a real estate attorney near you. This process can be very confusing as a borrower in default. It's important to get the help you need. As many legal issues can arise while you deal with foreclosure, you must keep yourself informed about the process. 

However, you must also recognize when it is necessary to seek help, and not engage in a do-it-yourself process any longer. Attorneys can help with all legal issues arising related to foreclosures, forbearances, and refinancing. They can also assist with loss mitigation.