There are two sections of the Real Estate Settlement Procedures Act (RESPA) that deal with servicing related issues.
Under Section 6 of RESPA, it provides borrowers with important consumer protections relating to the servicing of their loans. Borrowers who have a problem with the servicing of their loan (including escrow account questions), should contact their loan servicer in writing, outlining the nature of their complaint.
The servicer must acknowledge the complaint in writing within 20 business days of receipt of the complaint. Within 60 days the servicer must resolve the complaint by correcting the account or giving a statement of the reasons for its position. Until the complaint is resolved, borrowers should continue to make the servicer's required payment.
A borrower may bring a private law suit, or a group of borrowers may bring a class action suit, within three years, against a servicer who fails to comply with Section 6's provisions. Borrowers may obtain actual damages, as well as additional damages if there is a pattern of noncompliance.
Section 10 of RESPA sets limits on the amount that a lender may require a borrower to put into an escrow account for purpose of paying taxes, hazard insurance and other charges related to the property. RESPA does not require lenders to impose an escrow account on borrowers; however, certain government loan programs or lenders may require escrow accounts as a condition of the loan.
During the course of the loan, RESPA prohibits a lender from charging excessive amounts for the escrow account. Each month the lender may require a borrower to pay into the escrow account no more than 1/12 of the total of all disbursements payable during the year, plus an amount necessary to pay for any shortage in the account. In addition, the lender may require a cushion, not to exceed an amount equal 1/6 of the total disbursements for the year.
The lender must perform an escrow account analysis once during the year and notify borrowers of any shortage. Any excess of $50.00 or more must be returned to the borrower.
If you are a consumer with a question or complaint related to your mortgage or mortgage servicer, please contact the CFPB’s Consumer Response team at 855-411-2372 (855-729-2372 TTY/TDD) 8am-8pm EST.
If you are a settlement service provider with questions about RESPA, please email the CFPB at CFPB_RESPAInquiries@cfpb.gov
For more information go to the Consumer Financial Protection Bureau website at https://www.consumerfinance.gov/