Never Ending Saga of Creditor Bad Behavior – Continued…

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I Filed My Bankruptcy Case And Now My Payments Are In A Suspense Account, What is that?

You were behind on your mortgage but you solved the problem by filing a Chapter 13 Bankruptcy Case.  Now the Bankruptcy Trustee is paying your mortgage arrearage through the Chapter 13 Plan and you are making your current monthly mortgage payments on time outside the Plan.  Your situation should be improving but an examination of your monthly statement reveals new charges to your account and your monthly payments are not being applied to your mortgage, the payments have been deposited into a “suspense account”.  What is that?

Most mortgage documents allow the mortgage lender, or servicer, to place partial payments in a suspense account and to keep the payments in that account until you have sent in a full payment that can then be applied to the mortgage.  In some cases mortgage lenders, or their servicers, place payments in a suspense account that should be applied to the mortgage and they may deposit multiple monthly payments into the suspense account without applying the payments to the mortgage debt.  Why do they do this?  Two words … late charges.  If a mortgage servicer is handling a mortgage, that entity receives a fee for handling monthly payments but the real money is in late charges that often the servicers can keep for themselves.  This fact provides a big incentive to charge fees to accounts.  The payment is declared “late” and a fee is applied to your account.  Often additional late charges will be added to each payment you make after the first so called late payment.

Abusive Mortgage Servicing Defined:

Abusive mortgage servicing is generally defined as attempts by a mortgage servicer to obtain unwarranted fees from a borrower.  This might occur intentionally or through the negligence of the servicer in processing payments.  These fees could be late fees, property inspection fees, or charges for forced place property insurance.

What Should You Do?

Examine your mortgage statements carefully.  Make certain that your monthly payments are being properly applied to the mortgage obligation.  Watch out for the addition of fees and charges.  If your monthly statement contains inappropriate charges contact an experienced lawyer.  In Springfield, MA or anywhere else in western Massachusetts call Gogel & Gogel, or find us on the web at http://www.gogel-gogel.com.