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No Charge to Call Your Mortgage Servicer?

posted by Katie Porter

William Launder at American Banker did a story about my earlier Credit Slips post, What do Phone Sex and Mortgage Servicing Have in Common? In the post, I reported on an actual mortgage proof of claim that listed a the creditor's phone number that was a toll service that charged $9.99 per minute. After calling several people at Household Finance Corp and its parent, HSBC, Mr. Launder concludes in his story that the phone number was the result of a typographical error, a possibility that I acknowledged in my initial post. HSBC said that the misprinted phone number was an "isolated incident of error." However, HSBC never responded to the debtor's objection, causing the debtor's attorney and the court to need to take further action by entering an order resolving the objection in the debtor's favor. Additionally, the Chapter 13 trustee spent time trying to contact the servicer and did not have any other contact information than the mistaken toll-charge number. The effect of the servicer's mistake was to tax the bankruptcy system.

I'm glad to know that borrowers aren't being charged a per minute fee to talk to their mortgage servicers. That's a welcome change from standard servicing practices that do charge consumers to receive information: payoff statement fees, fax fees, email fees, etc. In this case, the debtors were fortunate. Their attorney didn't charge them additional legal fees to file the objection. As a general matter, however, the costs of servicing errors fall on debtors, who are already cash-strapped and struggling to save their homes.

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