Keeping Your Mortgage Servicer Honest

Every month millions of Americans are sending off payments on their home mortgages and assuming they are being sent directly the mortgage holder.  What they do not know is that their payments are actually being sent to a mortgage servicer who then forwards your payment off to the mortgage holder.  These middlemen often deduct from your mortgage payments necessities such as taxes, PMI and other agreed upon fees and send them to the appropriate entities.  However, they can also sneak in hidden fees that can in some cases add thousands of dollars to your mortgage without your knowledge.

Few of us keep strict tabs on our mortgage until we get close to paying it off.  For many, they just mail the payment off - or have it deducted from their bank accounts - and think nothing of it until the next payment rolls around.  It's this type of inattention that some mortgage service companies count on when they sneak in fees that they deduct from your payment without you realizing it. 

These fees can range from bogus late payment fees to charges for simply requesting your current pay off balance.  Over the life of a 30 year mortgage, these fees can quickly add up - not to mention the interest charges that accumulate because not all of your payment you thought was going towards your balance actually is.

Consumer advocacy groups, as well as many financial institutions that issue mortgages, encourage you to request a detailed listing of where your payments went each year from the mortgage servicing company.  They must provide you this information, without a fee.  After all, you have the right to know where your own money is going.  Once you obtain the listing, go over it and look for fees that you don't recognize and call the mortgage service company on them. 

Don't think it adds up to much and is too much of a hassle?  A recent MSNBC report highlighted people who ended up getting tens of thousands of dollars back from their mortgage servicing companies because of miscellaneous charges and fees that they were never informed about. 
So what do you do when your find a fee you don't agree with and the mortgage servicing company won't explain it or remove it? 

Get out your paperwork - mortgage agreement, cancelled checks, etc. - and then get your mortgage provider involved.  Many times they have no idea this is going and until a consumer brings it to their attention they can't take action.  Mortgage lenders, such as Bank of America, Citi, J.P. Morgan, etc., are not obligated to use any particular servicer.  In fact, it is a competitive industry and when consumers speak up they often want to get involved before it makes them look back. 

Don't let dishonest and unethical mortgage servicing companies try and rip you off of your hard earned money.  Take a few minutes at the end of each year to review your payment history and let them know that you are watching them.  An informed consumer is the best weapon against these tactics.