Mortgage Servicer Errors: Your Rights in Florida

Your mortgage servicer collects your payment, runs your escrow account, and decides whether you are late. It may not be the bank that made your loan, and you never chose it. When it gets the basics wrong, you pay for it: late fees on payments that arrived on time, insurance you already had, a late payment on your credit report for a month you paid.

Federal and Florida law set rules for servicers, with deadlines they must meet and damages when they break them. Newhart Legal represents Florida homeowners against mortgage servicers in state and federal court.

Servicer problems we handle

• Payments credited late, applied to the wrong balance, or parked in a "suspense" account

• Late fees and default charges on payments that arrived on time

• Force-placed hazard or flood insurance when you already had a policy

• Property taxes or insurance premiums the servicer never paid from your escrow account, or paid late, leaving you with tax penalties or a lapsed policy

• Escrow shortages caused by the servicer's own mistakes, and surplus refunds never sent

• Property inspection and "property preservation" fees charged while you lived in the home

• Letters disputing an error or asking for information that go unanswered, or get a form reply

• Payments and modification paperwork lost when your loan moves to a new servicer

• Late payments reported to Equifax, Experian, or TransUnion that you never made (see our Credit Report FAQ)

What the law requires of your servicer

The Real Estate Settlement Procedures Act (RESPA) and its rules, called Regulation X, give you two tools: a notice of error and a request for information. Both must be in writing. A phone call does not start the clock.

Once the servicer receives your letter at the right address:

• It must acknowledge the letter in writing within 5 business days.

• For most errors and requests, it must fix the error or explain in writing why it found none, or send the information, within 30 business days. It can extend that once, by 15 business days, if it tells you why before the 30 days run.

• A wrong payoff balance must be corrected within 7 business days. A request for the name and contact information of the company that owns your loan must be answered within 10 business days.

• For 60 days after it receives a notice of error, the servicer cannot report negative information to the credit bureaus about the payment you disputed.

A separate federal rule requires the servicer to credit your payment as of the day it arrives, not the day it gets around to posting it.

Escrow, force-placed insurance, and junk fees

Taxes and insurance paid from escrow. If your loan has an escrow account and you are no more than 30 days behind, the servicer must pay your property taxes and insurance premiums from that account on time, before any penalty attaches. A shortage in the account does not excuse a missed homeowner's insurance payment; the servicer has to advance the money and collect it from you later. When the servicer pays late or not at all, the county's penalties and interest, and the cost of any gap in your coverage, are damages the servicer may owe you.

Escrow surplus. When the yearly escrow review shows a surplus of $50 or more and your payments are current, the servicer must refund it within 30 days.

Force-placed insurance. Before a servicer charges you for homeowner's insurance it buys on your house, it needs a reasonable basis to believe your policy lapsed. It must also send a first written notice at least 45 days before the charge and a reminder at least 15 days before it. Once you send proof you were covered, it must cancel the force-placed policy and refund the premiums for any overlap within 15 days. Force-placed flood insurance follows separate federal flood rules with their own notice requirements.

Junk fees. Property inspection fees, "preservation" fees, and "corporate advances" often appear on a statement with no explanation. A servicer may charge only what your mortgage and the law allow. Regulation X treats a fee the servicer has no reasonable basis to impose as an error it must correct. Florida's Consumer Collection Practices Act (FCCPA) separately bars collecting a charge the servicer knows is not owed.

What you can recover

Under RESPA (12 U.S.C. § 2605(f)): the money you lost because of the violation, such as fees, penalties, and interest you should not have paid. Depending on the facts, it can also cover emotional distress and the time you lost fixing the servicer's mistakes. If the servicer has a pattern or practice of breaking the rules, up to $2,000 more.

Under the FCCPA (Fla. Stat. § 559.77(2)): your actual damages, up to $1,000 in statutory damages, and punitive damages if the court allows them.

Both laws let the court order the servicer to pay your attorney's fees and costs if you win.

The deadlines are short. A RESPA servicing claim must be filed within three years, and an FCCPA claim within two years of the violation.