One would think that because they receive and process thousands of mortgage payments each month, banks and their loan servicing companies would be good at keeping track of payments. But you would be surprised how often banks mess up simple accounting.
We have handled many cases where homeowners were making monthly payments that the bank was not accounting for.
Sometimes, a homeowner's escrow payment (the monthly payment for their homeowners' insurance and taxes) goes up, but the bank does not tell them. So the homeowner sends in his or her ordinary monthly payment, and the bank rejects it.
But sometimes, the bank does not reject the payment. Instead, the bank keeps the payment but marks the payment as insufficient and does not apply it to the homeowner's loan balance. Banks are allowed to do this, but there are very strict rules about how they are supposed to do so. Among other things, banks have to ensure they keep track of the money they hold on to and apply the money to a monthly payment once they are holding enough of the homeowners' funds to make up a monthly payment.
If a bank violates these accounting and payment management rules, a homeowner can be entitled to money damages, and the bank has to pay the homeowner's attorneys' fees.
Not surprisingly, the banks do not always follow these rules.
For example, through intensive litigation and discovery in a wrongful foreclosure case, we figured out that a bank's servicer, Cenlar FSB, was accepting a homeowner's automatic monthly payments, cashing them, moving the cash to its own checking account, and then writing and mailing paper checks "back" to the homeowner to "reject" the payment because the payment was not enough to cover the full mortgage payment that month. But the homeowner did not receive all of the paper checks. In fact, the bank was sending those paper checks to the homeowner's house even though Cenlar knew the homeowner was no longer living there.
Cenlar and the bank fought us tooth and nail in our investigation. But after nearly nine months of litigating, we got a court order forcing Cenlar to provide us with an accounting of the payments. As we suspected, we discovered that Cenlar had not accounted for the paper checks it had written to the homeowner for "rejected" payments and had kept thousands of dollars of the homeowners' money.
If we had not fought the bank to uncover the truth, the bank would have kept the homeowner's money
This is just one of many examples we have come across in our hard-fought battles against banks.
We have also seen instances in which banks work out an arrangement with a homeowner to make more than one payment each month and screw up that agreement. Some banks allow a homeowner to split his or her monthly payment in half, making half the payment every two weeks. Banks also allow a homeowner to make extra payments each month to help them pay down their loan faster.
But banks do not always account for or apply those payments correctly.
For example, we have seen instances in which a homeowner was allowed to split the monthly mortgage payment into two payments bi-weekly. The bank accepted each payment every two weeks. But the bank failed to credit the second mortgage payment made in the second half of the month, over and over again.
Eventually, the bank foreclosed, in violation of the law.
Holmes Law Firm can help you if something similar has happened to you.
If you have been making your monthly payments and the bank did not apply them as it was supposed to, call us. We will evaluate your case for free. If you have proof of your payments and we can prove that the bank did not follow the rules on accepting, applying, and accounting for your payments, we will represent you at no up front cost to you and sue the bank on your behalf.
And if a bank has foreclosed on you because the bank failed to apply or account for your monthly payments, we will fight to dismiss the foreclosure and make the bank pay you.