Timeline: Bankruptcy to Mortgage Chart

Experiencing a severe credit event such as foreclosure, short-sale, deed-in-lieu of foreclosure or bankruptcy does not mean you will never be eligible to get a home loan. This chart provides the time-out periods required by event. The assumptions are that you have established acceptable credit scores and meet underwriting guidelines. In certain circumstances, one may qualify for a mortgage upon discharge of a Chapter 7 or during a Chapter 13.

Financially Speaking™ James Spray RMLO, CNE, FICO Pro | CO LMO 100008715 | NMLS 257365 | Originally published in 2010 and updated regularly | September 19, 2017 Contact me to obtain a pdf copy of this chart.

Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct for your situation. This information is not legal advice and is for guidance only. You may reproduce this information in whole and not in part, providing you give full attribution to James Spray.

QWR: The RESPA Letter

 

Federal Reserve Board Building

Federal Reserve Board Building

QWR: The RESPA Letter

Most reading this post are reading it for a particular reason which is to learn about writing a letter to a mortgage lender and/or servicer regarding a specific problem or situation such as requesting the mortgage servicer report your payments to the credit bureau(s). For some, it may be that your mortgage servicer or bank is reporting incorrect information or you may need specific documentation. For others, perhaps this is being read for informational purposes. In any event, we trust the reader finds this information helpful.

 Step 1. Contact your mortgage servicer for the correct address for legal correspondence. You must use the legal (registered) address of the servicer. Some servicers actually have a specific address for a Qualified Written Request (QWR). This is  a different address than where you mail the payment or from where you get the periodic statements or notices. This procedure was established per the Real Estate Settlement Procedures Act (RESPA).

 Step 2. You may utilize the following template provided by HUD for your QWR. Or you may click here to open and read the information or you may copy and paste the pertinent paragraphs (opening and closing) as show below. Focus your thoughts and keep your letter brief and specific to the topic. less-is-more - erickimphotography.com

“Attention Customer Service:

Subject: [Your loan number]

[Names on loan documents]

[Property and/or mailing address]

This is a “qualified written request” under Section 6 of the Real Estate Settlement Procedures Act (RESPA).

I am writing because:

  • Describe the issue or the question you have and/or what action you believe the lender should take.
  • Attach copies of any related written materials (as applicable).
  • Describe any conversations with customer service regarding the issue and to whom you spoke.
  • Describe any previous steps you have taken or attempts to resolve the issue.
  • List a daytime telephone number in case a customer service representative from the legal department  wishes to contact you.

Sincerely, [Your name – Printed and Signed]

I understand that under Section 6 if RESPA you are required to acknowledge my request within 5 business days and must try and resolve the issue within 30 business days.”

If you are satisfied with the resolution to your situation, you may wish to compliment the servicer by sending a note to the Consumer Financial Protection Bureau (CFPB or Bureau) via their Comment Form.

Step 3. Send your QWR via Certified Mail Return Receipt. Keep copies of your letter and any enclosures as well as your Certified Mail Receipt from the post office and the Return Receipt from your mortgage servicer proving they have received your QRM

Finally, if you are still unable to resolve the situation, there is a complaint process that may get action. We suggest this be your last and not first step as you will then have evidence which will indicate to the Bureau that the servicer is either unwilling or unable to address your situation. Mortgage Complaint Form

There’s a New Sheriff in Town?????????????????????????????????????????

The following is excerpted from the prepared remarks of Steven Antonakes, Deputy Director of the CFPB which he presented to the Mortgage Bankers Association National Mortgage Servicing Conference in Orlando, Florida on February 19, 2014.

“…My message to you today is a tough one. I don’t expect a standing ovation when I leave. But I do want you to understand our perspective. I would be remiss if I did not share it with you … if you choose to operate in this space (mortgage servicing), the fundamental rules have changed forever. It’s not just about collecting payments. It’s about recognizing that you must treat Americans who are struggling to pay their mortgages fairly before exercising your right to foreclose. We have raised the bar in favor of American consumers and we are ready, willing and able to vigorously enforce that bar.

Ultimately, these profound changes will be good for all Americans, including industry. But please understand, business as usual has ended in mortgage servicing. Groundhog Day is over. Thank you.”

Sheriff – Update

In a June 22, 2016, Press Release, the CFPB said, in part: “In 2013, the CFPB established mortgage servicing rules designed to protect consumers against many of the practices that plagued the mortgage servicing industry during and after the housing crisis.

According to the CFPB, the rules require servicers to maintain accurate records, give troubled borrowers direct and ongoing access to servicing personnel, promptly credit payments, and correct errors on request.”

In addition to sending your RESPA letter, do not hesitate to file a complaint, with the CFPB. Click here for the particular complaint link.

The Bureau’s Enforcement Power – One Example

As an example of the Bureau’s enforcement authority, RealtySouth™, a Berkshire Hathaway Affiliate, was recently fined $500,000.00 for a RESPA violation which amounted to failure to disclose their affiliated business relationship(s) to consumers. This is a typical example of the enforcement action undertaken by the Bureau as one may readily determine with an Internet search. For those who don’t recognize the name Berkshire Hathaway, it is largely owned by one of the world’s wealthiest persons. Clearly, wealth does not buy immunity from the CFPB.

Exceptions to QWR: Those transactions excluded from the QWR are limited to “(1) subordinate lien loans or (2) open-end lines of credit subject to TILA, whether secured by a first or subordinate lien.”* Further, “(a) request does not constitute a QWR if it is delivered to a servicer more than one year after either the date of transfer of servicing or the date that the mortgage servicing loan was paid in full, as applicable.”*

NOTICE: I am not an attorney nor am I providing legal advise. This post is for educational purposes only. The images are for illustration only and not meant to imply in any way an endorsement or authorization by any government agency or authority of this blog or this post.

* Jonathan Foxx, President & Managing Director Lenders Compliance Group

Image Attribution: erickimphotography.com and  CFPB

Financially Speaking™  James Spray, RMLO, CNE, FICO Pro | CO LMO 100008715 / NMLS 257365 | Rev. April 27, 2018

 Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.

2013 Colorado Flood: Mortgage and Housing Help

]Aerial images from the Colorado FloodsThere are Federal Guidelines Mortgage Service Companies and Banks Servicing Mortgages have to provide disaster relief. Among the programs is mortgage payment forbearance relief for up to a year. For additional mortgage specific information refer to the following resources.

COLORADO FLOOD DISASTER RELIEF

The National Association of REALTORS® (NAR) REALTORS® Relief Foundation (“RRF”) is donating up to $100,000; matching CAR’s contribution of $50,000 plus additional donations CAR receives for the victims who were impacted by the recent horribly destructive floods here in Colorado. Click this link for more information.

FHA [HUD]

U.S. Housing and Urban Development Secretary Shaun Donovan today announced HUD will speed federal disaster assistance to the State of Colorado and provide support to homeowners and low-income renters forced from their homes due to severe storms, flooding, landslides and mudslides.

FNMA [Fannie Mae]

Mortgage Assistance – Fannie Mae works directly with mortgage servicers to offer special options for those impacted by disasters. Eligible homeowners in single-family properties with a Fannie Mae mortgage loan who are experiencing difficulty paying their mortgage may qualify for:

  •          Forbearance that can temporarily suspend or reduce mortgage payments
  •          Suspension of legal actions in process (i.e., foreclosures)

FHLMC [Freddie Mac]

Freddie Mac’s disaster relief policies enable servicers to help borrowers with homes in presidentially declared Major Disaster Areas where federal Individual Assistance programs are being made available.  Under the directive issued by Freddie Mac today servicers can place borrowers with properties affected by the flooding on forbearance and suspend foreclosures for up to 12 months.  This forbearance need not be reported to the nation’s credit bureaus.  Servicers can waive late fees assessed against borrowers whose homes were damaged by the disaster.  Evictions and lock-outs can also be suspended for up to 90 days.

When forbearance ends, a new Freddie Mac option allows servicers to add missed mortgage payments to the outstanding loan balance and extend the term of the loan in order to keep the monthly mortgage payment essentially unchanged. Freddie Mac is also reminding servicers to consider Freddie Mac’s standard relief policies, including forbearance or mortgage modifications, for borrowers who work in eligible disaster areas but live in unaffected areas. For additional information refer to these helpful tools for you to use with your discussions with your lender.

Flood Damage to Properties Under Contract Compliments of Colorado Association of Realtors (CAR)

The “Principal of Compensation” is always controlling when a parcel of land’s boundary line is actually a moving body of water such as a stream or river. When a title company insures a legal description and one of the boundary lines becomes a river channel or a stream, the title commitment will alert the purchaser that the property is subject to the “principal of compensation ” as an exception to the title disclosed under Schedule B-2 of the title commitment. Sometimes the course may run along the bank, shore, side or edge. Sometimes the course may run to the center or thread of the flow. If the stream was considered navigable at the time of statehood, the bed of the stream or river is owned by the state. Every state defines navigability differently.

 A parcel of land may be subject to the following:

1. Accretion (gain of land deposits) by water flow

2. Reliction (gain of land deposits) by water receding

3. Erosion (loss of land by water encroaching

4. Avulsion (loss of land by sudden change in course)

For additional disaster relief services one may wish to refer to, among others, the following resources:

From Senator Michael Bennet: All Coloradans who have suffered damage due to the flooding should register with FEMA even if their counties have not yet been declared in the Presidential Major Disaster Declaration.

From Senator Mark Udall: As Colorado’s senior senator, I want to make sure flood victims also have the tools they need to rebuild. That’s why I have gathered
many of the most helpful resources on my website,

7th Congressional District Colorado 2013 Flood Response and Resources

Disaster Assistance

FEMA [Federal Emergency Management Services]

Help Colorado Now

Colorado Housing Search is helping flood victims in Boulder and Larimer Counties. Donations for VACANT rental properties, vacation homes, can be listed through Colorado Housing Search. Donated rooms in homes can NOT be accepted 

Colorado Farm Bureau Foundation

Aerial photo from

Financially Speaking™  James Spray, CCMB, CNE, FICO Pro – September 18, 2013 – CO LMO 100008715 | NMLS 257365

 Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give complete attribution to James Spray.

Internet Mortgages: Are Ya’ Feelin’ Lucky?

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This is a true story involving one of my clients. This is not about one of my mortgage customers. This is a client who hired me as an expert witness. He brought me aboard to help clear up a mess created when he sought and was approved for a mortgage refinance via an out-of-state lender he found on the Internet.

We’ll call my client Jed (not his real name). He determined that it was time to refinance and take advantage of the lowest mortgage interest rates in history. He searched the Internet, found a lender and applied for a plain vanilla, no-cash out, rate-term refinance. In other words, he simply wanted to shorten his loan from 30 to 15 years and get a lower interest rate.

Everything on the Internet is true… Right?

Jed found an out-of-state Internet lender who, for discussion purposes, we’ll call KwikNEZeeLoans.k0d (KNEZL)*. Jed researched KNEZL as best he could prior to submitting his refinance loan application. Not surprisingly, the information Jed was able to gather on the Internet about KNEZL was positive. Indeed, they have a high powered CEO who, prior to founding this company, had an impressive track record with one of the original Internet mortgage lenders. As we all know, everything on the Internet is true.

The initial interest rate offered was great! Almost unbelievably great, as the rate offered was 2.5% while most others were quoting rates in the range of 2.75/2.875% for Colorado at the time of his loan application.

Rate increase was not surprising.

Sufficient groundwork has been established, so let’s jump to one of the endings – indeed, the most obvious ending. You are quite right, perceptive reader; Jed did not get the initially promised deal. He ended up with an interest rate of 2.75%. Although a great rate, it’s not the rate initially offered. However this was not the most disturbing problem and the rate bump wasn’t really a huge surprise.

Was this attempted theft by conversion?

Let us now get to the real thrust of this story, and why Jed hired me in the first place. Jed paid his original lender the August payment. Jed’s loan with the Internet lender closed in August. The payment to Jed’s original lender was shown on the HUD1 Settlement Statement at closing as a credit to reduce the principal balance. In fact, it was not credited to the principal so he paid, in essence, an unearned bonus to the Internet lender in the amount of his entire monthly mortgage payment – principal, interest, taxes and insurance in the amount of about $2,500.00. Note that this amount was disclosed, just not credited in fact for Jeb’s benefit. Had this error not been corrected, it is conceivable this could be considered theft by deception and may have required a lawsuit to resolve. On such a lawsuit, it is possible the damages could have been trebled as well as having all legal fees paid. In such a situation as this, where an expert is required, it is typical for the expert fees to be paid along with all other legal fees including attorney fees and court costs.

Or just an honest mistake?

On the surface, one could have observed this Internet lender casually pocketed Jed’s August payment and only properly credited it for him when two events occurred. First, I had been retained to investigate the transaction. And second, upon my strong suggestion, Jeb filed a complaint with the Consumer Financial Protection Bureau (“Bureau”). The Bureau is perceived as being the nine hundred pound gorilla charged with protecting consumers of virtually all financial services conducted in the United States.
I am truly hopeful this oversight was not done as a normal course of business by this Internet lender. If this was deliberate, such activity is outrageous as very few customers would ever notice such deceptive accounting as the correct amount was printed on the Settlement Statement. As such, all appeared to be straightforward and honest.

The rest of the story.

Jeb’s loan closed in August 2012. He was concerned that the August payment he made to his former lender prior to the closing was not reflected on his final statement from the previous lender. The funds appeared to have vanished. He began writing letters to his new lender and his former lender attempting to get an accounting of his missing money. He received no responses from anyone. His phone calls were likewise ignored. Out of exasperation he called me in late October and explained the situation. I suggested that rather than engage me, just yet, he should go around all the middle people and write directly to the CEO of his new lender to see if he could get satisfaction. By the time he hired me in early December, he still could not get a response from his new lender. After four months he was fed up with getting the complete brush off. He was quite ready for me to document the problem(s) in order to file a lawsuit and force the issue into open court. For what it’s worth, KNEZL reimbursed Jed for my fees.

Jed is very detail oriented and a sophisticated borrower. 

He knew something was wrong, just not what it was. Rightly, he sought the help of an expert to help find exactly what was wrong. Frankly, though, no one should have to hire an expert to audit the closing trail to assure that the promised refinance was delivered as promised.

* KwikNEZeeLoans.kod (KNEZL) is a fictional name created entirely from my imagination.
 
Image attribution
 
Financially Speaking™ James Spray, MLO, CNE, FICO Pro 
CO LMO 100008715 | NMLS 257365 | January 11, 2013
 
Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.