“I have a new servicer Nationstar and they claim to not want to honor my loan modification — is this legal?”
“I have a new servicer Nationstar and they claim to not want to honor my loan modification — is this legal?”
In the last twelve months, many of the large mortgage servicing companies have sold or transferred the “servicing rights” to another company.
For example, Bank of America has transferred hundreds of millions of dollars of servicing rights to Nationstar.
(A servicing company is simply the company that sends you bills, collects your payments, handles escrow, etc. for the company that actually owns your mortgage loan).
Here is a typical scenario we see with, for example, Nationstar:
- You entered into “loss mitigation” with Bank of America which simply means you explored ways to save your home from foreclosure
- Bank of America offered you a “loan modification” where the terms of your loan are modified, or changed, and you accepted the modification
- In the middle of your new modification, Bank of America told you it was transferring the servicing rights to Nationstar
- Nationstar sends you a “welcome to the Nationstar” family type of letter
- Oh, and it also tells you it knows nothing about the modification and it will start foreclosure procedures against you
Why does this happen?
Nationstar (or others who buy the servicing right) does not particularly seem concerned about getting all of the information from the previous servicer — Bank of America in this situation.
It serves its purposes to be “ignorant” so it can start tacking on fees, late charges, bogus inspection fees, legal fees, foreclosure fees, etc.
So it pretends it doesn’t know about your previous deal with Bank of America.
Nationstar will say “We don’t know about any deal or any documents your sent Bank of America — if you want us to consider you for a modification, you must start all over with us.
And by the way, we are moving forward with the foreclosure date.”
Is this illegal?
Yes. It violates Alabama state law and multiple federal laws including the new RESPA rules enacted by the CFPB (Consumer Financial Protection Bureau) and good old fashioned FDCPA (Fair Debt Collection Practices Act) claims.
How is this illegal under Alabama state law?
You and Bank of America entered into a binding, written contract, and now Nationstar is refusing to honor the contract. It is breaching the contract.
If it proceeds to a foreclosure, it has conducted an illegal foreclosure.
It is also breaching the contract by charging you bogus charges and fees because you have a modified loan and it is refusing to accept the payments so it can hit you with these illegal fees.
How is this illegal under the new Federal RESPA rules?
The new RESPA rules which went into effect on January 10, 2014, require the new servicer to obtain all of the information from the old servicer and to honor the modification with the old servicer.
We have many tools to correct bad behavior on the part of companies like Nationstar but for now I’ll leave it at the simple fact that when Nationstar does this, they violate numerous portions of the new RESPA/CFPB laws from January 10, 2014.
You mentioned FDCPA, how does that work with Nationstar?
Nationstar is considered a “debt collector” when it obtains a loan — or the servicing of a loan — that is in default.
Default simply means the payment is at least one day late.
Virtually all, if not all, of the loans Nationstar gets from Bank of America (or other servicers) are in default and so Nationstar is a debt collector.
A “debt collector” means Nationstar is subject to the Fair Debt Collection Practices Act which prohibits any type of false or unfair conduct by a debt collector.
So if Nationstar said “We don’t know about any modified loan you had with Bank of America” then this is almost certainly a false statement as it does know — or could know if it asked Bank of America.
When it charges you a late fee for not making the “un-modified” payment, this is unfair and deceptive because that is not the actual amount you owe.
When it threatens a foreclosure that it knows it has no right to do — that violates the law.
Or, when it reports on your credit report you are late, and you are not per the modified loan, this violates the FDCPA also.
(It can also violate the Fair Credit Reporting Act if you take certain steps).
It would be hard to list all of the violations of the FDCPA here.
However, this type of conduct is about as bad as it gets in trying to take your home illegally.
How do I fix this?
Sometimes it is best to sue right away.
Often it is a good idea to give Nationstar a chance to fix its error — fix the credit reporting — fix its false representations.
The arrogance you will find from Nationstar will lead you to believe it won’t admit it is wrong and won’t fix anything.
Normally you are right.
So after you have given Nationstar chances to fix this, and it doesn’t, then sue in Federal Court.
If I sue Nationstar, what can I recover?
Actual damages which means the damages you suffered. These can include:
- Emotional distress
- Lawyer fees trying to get Nationstar to fix the problems
- Time off from work to meet with lawyers or talk to Nationstar
- Mileage money going to and from lawyer’s office
- Extra money you had to pay on your mortgage
- Damage to credit reporting
You can also get statutory damages for which you do not need to prove any type of damage.
For the FDCPA, this is $1,000 per case. For RESPA, it can be $2,000 per violation.
In this example, there would be half a dozen or more violations so you are looking at the $10,000 to $20,000 range.
You can also receive punitive damages if Nationstar has committed fraud or violated the Fair Credit Reporting Act.
Finally, you receive attorney fees.
Our hourly rate is $400 per hour.
This can add up if Nationstar refuses to settle and wants to fight the case.
What do I need to do next to figure out my options?
Give us a call at 1-205-879-2447 and we can talk through your options.
We have experience suing Nationstar and have handled RESPA and other claims since the late 1990s.
We train other lawyers in how to handle foreclosure defense cases and lawsuits against mortgage companies, especially using federal laws.
We’ll be glad to chat — call us at 205-879-2447 or fill out this form and let us know what is happening and we will get right back with you.
John Watts
Birmingham, Alabama
Hello! I’m very interested in your expertise with Nationstar.
However, I am not in Alabama: have you ever trained any attorneys in western New York state(Buffalo area?)
Also, I’m curious about your reference to the sale of servicing rights by BoA to Nationstar – you mention nearly all loans were in default…. Mine wasn’t. I haven’t missed a P&I payment in 12 years. But they have still threatened me with foreclosure. (I actually know they don’t have grounds for this…)
Just to clarify, they service a mortgage on my income property, not my home.
Deborah,
Sorry I don’t know many people in Buffalo and haven’t trained any lawyers there that I know of.
That’s great you haven’t missed a payment in 12 years. If Nationstar takes the position that you were late when they took over the loan then normally the law says the FDCPA (Fair Debt Collection Practices Act) applies which is very helpful. Now depending on whether the property has always been a rental property, this can impact whether the FDCPA applies.
You need to get with a lawyer who understands the new RESPA rules as there are letters you need to send out ASAP. You don’t have quite as many rights under the new laws with it being a rental property but you do have some.
Best wishes and thanks for your comment — wish I could help you more!
John Watts
like deborah nationstar is my servicer ive tried to negotiate with these crooks for years i spent over 6000 dollars on fraudulant loan modication scams one said they would do a forensic audit and use it for leverage in the audit they discovered on the truth and lending that they understated my finance charges by over 90000 dollars i bought to their attention they foreclosed anyway they ruined my life i had to spend several thousand dollars for chapter13 i live in the central illinois area as you can see im not to computer savy i live in the central illinois area my phone is 217 3815521 appreciate any guidance thank you
do you know of any attorneys in central illinois
I don’t but try http://naca.net/find-attorney and you should be able to find an attorney that can help you. Best wishes!
John
Hi I’m Rob,from bucks county PA.just out of philadelphia.I would like to know if you have trained any attorneys in this state,that could help me with my problem with nationstar.In July 2013,while going through a modifiction with boa.my mortgage was sold to nationstar,and i have been subject to all of these fraudulant practices mentioned and then some.They are currently trying to enforce a forcloser on my property with a bait and switch modification agreement that was rejected by the state for improper noterization,the note recorded on the property was aquired by boa,from countrywide 2008,and is raught with fraud.they are playing ignorent to the fact. Would be thankful for any info.
Robert I’m sorry I don’t personally know of any lawyers in PA that handle these types of cases but I’m sure there are some. You can always go to http://www.Naca.net and see if you can find one there.
Sorry I can’t help you directly and hope you can get this foreclosure stopped and get the relief you need.
Best wishes
John Watts
Is it advisable to sue Nationstar in Small Claims Court?? Today, I have to make a second payment to them to ensure I don’t get charged late fees. I also need to sue them for monies for PMI that never should have been collected.
CA home owner…
Crystal,
I don’t know the rules in California but normally I think if a mortgage company such as Nationstar violates the law, it is better to sue them in Federal Court.
Normally Nationstar is going to be a “debt collector” under the FDCPA (Fair Debt Collection Practices Act) so that law can be very helpful to you — pays for your attorney fees, you can get mental anguish damages, etc. If Nationstar is a debt collector (i.e. it got your loan when it was not current) then it can’t lie to you, can’t do anything unfair, and can’t do things that the contract (note and mortgage) forbid.
Also, you should consider using the new (January 10, 2014) RESPA laws to send request for information and notice of error letters about the late fees, PMI, etc. You should be able to see a pretty lengthy discussion of this in a comment right above or right below this for a lady living in Colorado.
Definitely get with a California lawyer who practices in the area of FDCPA and RESPA to help you with this situation — if your house is in any jeopardy, it is worth it to spend money to save your home and your credit, etc. And if you sue, normally the laws I mentioned above (RESPA and FDCPA) provide that Nationstar has to pay your attorney fees if you are successful.
Best wishes and stay vigilant when you are dealing with any mortgage servicer, particularly the one you have….
John Watts
Good day Mr. Watts,
I am a homeowner currently living in Colorado. I am seeking advice regarding my home loan predicament. After being accepted for a loan modification through Bank of America and having made all the trial payments for them, etc., I was notified by BofA that my modification loan was sold to Caliber Home Loans. Caliber Home Loans initially told me that they had received all the approved modification documents from Bank of America and that they would “honor B of A’s approved modification”, under the condition that I undergo an “additional trial modofication period for three months with Caliber Home Loans” (per their said policy). They, then, sent me a welcome packet with the modification papers for Caliber Home Loans to sign,etc. I signed the documents and faxed them, along with mailing the original documents back to Caliber. When I called to make a payment and check on the status of the Caliber Home Loan paperwork having been received, I was told that they had only received the faxed signed modification documents for Caliber. They, then, told me that I was no longer eligible for their modification (which they had already said they would honor from Bank of America) because they never received the original signed modification documents for Caliber. They, then, told me that they had no modification papers from B of A on record (after they had already confirmed with me, earlier, that they HAD received the original B of A documents in their records). I was notified that I would be in forclosure very soon if I didn’t go through the whole modification application process with them, again. I would greatly appreciate any advice on how to further proceed because not only did they lie about not receiving the Bank of America modification documents, along with the modification approval notice fom B of A, but I am having to apply all over again to be considered for the loan that I was approved for from B of A in the first place!
I look forward to hearing from you. Please contact me at your earliest convenience with additional questions Thank you for any help/assistance which you may be able to offer in advance.
Sincerely,
Catherine
Catherine,
I’m so sorry you are going through this. I have a current lawsuit against Caliber and find their practices to be surprising, even in the world of mortgage servicers which doesn’t have the best reputation anyway.
I don’t practice in Colorado so you’ll need to find a lawyer there that can help you — may want to start with http://www.consumeradvocates.org/find-attorney and search in your state.
But if you were here in Alabama, here’s how I would respond.
First, the modification agreement from Bank of America must be honored. Particularly if what you described happened after January 10, 2014 (when new RESPA regulations went into effect).
Second, on the Caliber papers, did you mail those back by certified mail or in a FedEx package Caliber provided or did they go in regular mail? It will be helpful if you can show that you did mail them and they were received. A favorite dirty trick of mortgage companies is to claim they never received the papers when they did. They will, amazingly, make this claim even when FedEx or certified mail shows they received the papers. But if there is no proof, then they almost can’t help themselves but to lie about this.
Third, Caliber lying about not getting the BoA papers is troubling. Probably Caliber is considered a debt collector under the FDCPA if: (1) this is your personal residence and (2) the loan was in default when Caliber received it. Sounds like they claim it was as you were still in the modification process with BoA and now Caliber is claiming they never received any BoA papers and don’t have to honor it anyway.
The case we have right now with Caliber involved Caliber not honoring a Chase loan modification and so when our clients went to sell their house and close on it, Caliber jacked up the amount owed by over ten thousand dollars. Phone calls and letters couldn’t fix this — Caliber waited until after the closing (and the sale) was cancelled to suddenly “discover” their error.
So what you are describing is not surprising at all. Caliber likes to claim it doesn’t know about previous modifications.
Fourth, my suggestion is you do a lot of Request for Information and Notice of Error letters under RESPA. These letters basically ask Caliber to give you information and to fix errors. A few points about the letters and then some suggestions about topics to ask about:
**Each letter should contain one request or one notice of error
**Normally if you have a notice of error, there should be a request for information asking why Caliber did the wrong deed
**These must go to a specific address Caliber has mentioned on its website or on its letters — it will say something like “For Qualified Written Requests, Notices of Errors, or Requests for Information, use the following address.” If they give you this type of address, that’s the only one that will work.
**Must go by certified mail or they will claim they never received them.
**Keep a signed copy of each letter.
**Staple your green card to the appropriate letter so make a note on the back of each letter the tracking number so you can match the right green card (where Caliber signs the certified mail) with the right letter.
Examples of the type of letters (you’ll need to expand these but this will give you an idea) to consider sending:
1. List every document you received from Bank of America when you took over the servicing of my loan
2. When the loan was received by you, was it current or in default?
3. When did you receive my signed loan modification documents with your company — identify this for faxed and documents received through the mail or by FedEx/UPS/etc.
4. Why did you not honor the signed loan modification with Bank of America?
5. You made an error not honoring the signed loan modification with Bank of America
6. Send me all the account notes that you have on my loan
7. Send me the payment history — the life of the loan — so I can see if you are keeping up with the payments I made under the loan modification to Bank of America
8. Are you considering foreclosing against me?
9. You made an error in threatening to foreclose against me
10. Why are you making me go through the loan modification process again?
11. What loss mitigation options are you considering me for?
12. What loss mitigation options are available under my loan?
There are others but this will give you an idea.
Basically, the mortgage company Caliber has to respond to these within 30 business days and has to acknowledge receipt of them within 5 business days. Often mortgage companies won’t do this or they won’t give you real responses. Every time they do this can be a violation of the law and result in up to $2,000 in statutory damages per violation. And your attorney fees get paid also. So RESPA is a powerful law.
You can also use the FDCPA (Fair Debt Collection Practices Act) to sue Caliber — this law also pays for your attorney fees and prohibits Caliber (if they are a debt collector) from lying to you or taking unfair action against you.
My suggestion is get with a good consumer lawyer in Colorado ASAP to help you with this.
Wish you the best!
John Watts
Dear Mr Watts,
I have read all the questions and your answers and I have an other question from Florida.
We signed our morgage with BofA 2009 (an FHA loan)
When the interest rates went down we applied and where finally approved for a lower interest rate/loan modification.
We signed the morgage loan modification with BofA 08-01-2013. A week or two after we where informed by BofA they sold our morgage to Nationstar.
Two years later, July 2015 Nationstar is calling us every day and sending us certified mail with our morgage to sign, to re-execute our loan.
Nationstar tell us BofA neglected to file our morgage transfer and they need our signatures on their own letter head with a notarie signature.
We have been paying our morgage to Nationstar since 09/2013
The documents they keep seending us are exactly the same as our morgage contract with BofA with the same loan modification.
Now to my question:
If we already signed all the morgage contracts and loan modification with a notarie at a BofA location and Nationstar have been honoring the same.
Is it common to re-execute a morgage/loan modification with Nationstar two years after the fact?
I cannot find our morgage listed online anymore but we are listed as owner. Who legally own our house if neither Nationstar and BofA have a morgage contract with our signatures?
What we can find searching official records online is BofA was lending money to us for the morgage 2008, 08/08/2013 it looks like BofA transfered the deed/house to us, not Nationstar.
This is very confusing for a lay person and with our own experience we feel we cannot trust everything Nationstar tell us.
Are you able to give us any advice and maybe any recommendation for a litigation attorney in Florida?
Thank You in advance for any advice you can share with us.
All the best,
Tom and Sue
Tom and Sue,
I can’t tell you about Florida law but will give you some thoughts.
IF the terms have not changed, then there may be no harm in signing if BoA truly left something out. But you would need to verify with a Florida lawyer that there is no some “trap” for you in doing this.
Basic rule is when the loan transfers (either the actual debt or the servicing rights) then the new company (Nationstar here) must honor the contract and any deals in writing.
Sounds like they have been doing this and they are taking your payments, etc.
Now as far as finding your records online, etc. I’m not sure. You owed the money to BoA and they apparently sold the loan or the servicing to Nationstar.
My suggestion is get with a foreclosure defense lawyer in your area (sorry I don’t have anyone to recommend right now) and have them make sure all is ok and you aren’t going to get any nasty surprises.
Best wishes and let me know that all is ok.
Thanks!
John Watts
John, I watched your video and it intrigued me to look deeper into what I already felt uneasy about in our situation with Nationstar. We had done a loan mod with another mortgage company back in 2010. Our loan was sold to Nationstar a few years ago. We got a letter from Nationstar telling us our rate was going to increase up to 5% every year from then on, when our original loan mod capped our rate at 3%. It has risen every year and felt it was unfair and I had no idea I could do anything about it. I knew it felt wrong but they don’t work with us on anything. Can you point me in the right direction and steps to take on this matter. I am in Utah and I’m not sure if you are aware of what to do in this state? Thanks for any help you can give me!
Mary,
Sorry I missed your comment — been out in trial a good bit.
That sounds wrong what is happening with you and Nationstar — definitely get with a consumer protection lawyer in your state. Can check Avvo or National Association of Consumer Advocates. I wish I knew someone in Utah but no one comes to mind.
Not sure what the laws are there but it is certainly worth checking out your options.
Best wishes and let me know how this turns out for you thanks!
John Watts
I had the same issues for 2 years,first with Bank of America & they sold my loan to Nationstar and Hell for the next year . I did everything they ask & they still took my town home. I have all the papers names & people I talked to for those two years. Can I do something to get some sort of a settlement. This seems to my a crisis for so many people who did what Nationstar ask & they still took our homes. We need to get even somehow.
My town home was in North Carolina
Thank you
Mary,
You’ll need to get with a lawyer in NC. Try Max Gardner — he may can help or point you to someone who can.
There could be upcoming statute of limitation issues so I would move pretty fast to see if you still have any options.
Sorry you had to deal with these guys — can be a real pain.
Best wishes
John Watts
John:
My situation with Nationstar is somewhat different than the previous posters, but it is just as irritating to me. I am curious if you have ever encountered this situation.
Nationstar took over the servicing this past July on a first lien, 15 year fully amortized fixed rate loan that was originated in 2004 and sold to CitiMortgage in 2005. This loan is for a single family investment property in FL but I am a resident of IN. This loan now has a balance of under $11,800 and will be paid off by April 2019. I do NOT escrow for taxes and insurance on this property and the mortgage payment is less than $450 a month.
Your statement regarding FDCPA and Nationstar struck a chord with me because of your statement “Virtually all, if not all, of the loans Nationstar gets from Bank of America (or other servicers) are in default and so Nationstar is a debt collector.”
My loan, however, has NEVER been in default for the 12.5 years that it has been in existence, yet my monthly mortgage statement indicates that this is “an attempt to collect a debt”, and this message is also on the customer service line recordings for Nationstar. Every month since this loan was transferred from Citibank I get a separate letter from Nationstar along with a credit counseling letter. I have sent two cease and desist letters to Nationstar to get them to stop this practice, yet it continues.
You should be aware that the previous servicer, CitiMortgage, started sending out a separate letter and CCCS attachment starting in March 2009 when the payment wasn’t received by the 10th of the month, but this had never occurred during the first 5 years that they had the loan. I tried repeatedly to get Citimortgage to stop this practice, and escalated it to the CEO’s office and got nowhere, even with several cease and desist letters. They finally told me in 2012 that they had to send out a collection letter during the grace period to comply “with the investor’s requirements” but I could never determine who the investor was. When Nationstar assumed the servicing of the loan last summer, they also continue to send collection letters, except these are dated even earlier…on the 3rd of the month.
I do have a 15 day grace period which is stipulated in the mortgage note so I cannot understand why this practice exists. I sent to Nationstar a cease and desist letter but I still continue to get these collection letters.
Wouldn’t this be a violation of the FDCPA? Why would a lender even bother sending out collection letters on a loan that is being paid during the grace period? Is there any possibility that my loan was sold to Nationstar by CitiMortgage because I attempted to get them to cease and desist? How can I determine who the investor is that owns this loan so that I can contact them?
Your comments are welcome…I can only take solace in the fact that I only have 28 months left on this loan and these idiots will be out of my life forever.
28 months my friend! 🙂 Then you have them gone!
Here’s the short version — you need to find out if they claim you were late when the loan transferred.
You can send them a RESPA letter — what is known as a Request for Information to them — use their special address for this. Ask them whether the loan was in default at any time since they have had the loan. I suspect they will say “No”.
But since this is an investment property, normally the FDCPA (Fair Debt Collection Practices Act) will not apply anyway. So I would not be looking to this to see if FDCPA applies but just if they say you are late.
You could also ask them why they send the letters out so soon. They have the right to do that but it is annoying.
So bottom line here are some suggestions:
1. Send a request for information letter
2. If you can, pay the account by due date and that will get rid of the letters
3. Get with a consumer protection lawyer in Florida (where property is) and see if you have any options under the FDCPA or the Florida equivalent. I doubt you do but worth asking….
4. Do the same with lawyer in Indiana where you live — probably you don’t have any options to sue but worth looking at.
5. Be very careful with Nationstar over the next 28 months. Check your credit reports. Read each statement closely. I can’t tell you how many times they have “accidentally” (intentionally?) created errors. It would be funny how inept they are in my opinion except this is a very serious matter.
Best wishes and thanks for reaching out to us!
John Watts