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Having Problems with Your Mortgage After a Chapter 13 Discharge?

Are you STILL having problems with your mortgage servicer after catching up with your mortgage while in a Chapter 13?

Are you being charged a huge sum to catch up even after the bankruptcy is over?  A mortgage servicer is required by federal law to perform an annual escrow analysis on all loans for which it manages an escrow account.  But do they always do this?

Are you suffering not only from payment shock, but also negative credit reporting for these alleged deficiencies?

Here are some of the requirements (please notify us if you are having problems as you DO have recourse, including an award for damages):

  • When performing an escrow analysis, the mortgage servicer must estimate a borrower’s future homeowner’s insurance premium and tax obligations, then calculate the monthly amounts the borrower should be charged to ensure the escrow account has sufficient funds to make required tax and insurance payments for the year.
  • Servicers must also accurately compute the borrower’s monthly payment obligation to determine whether any surplus, shortage, or deficiency exists in the escrow account.
  • Under most circumstances, mortgage servicers are required to provide an annual escrow statement to borrowers each year.  Mortgage servicers are not, however, required to provide an annual escrow statement to borrowers with escrow accounts while those borrowers are in bankruptcy.
  • This exception only relieves the mortgage servicer from providing the borrower the results of the annual escrow analysis in an escrow statement; the servicer’s obligation to perform the escrow analysis remains.  This analysis enables the servicer to understand if and how a borrower’s tax and insurance obligations have changed during the pendency of a borrower’s bankruptcy, which may create a surplus,  shortage, or deficiency in the escrow account.

However, sometimes a mortgage servicer fails to perform the annual escrow analysis during the pendency of someone’s bankruptcy.  When this happens, the servicer collects too little during the bankruptcy.  Taxes and insurance premiums may have gone up during the bankruptcy as well due to regular market conditions and the passage of time.

As a result of the servicer’s failure to analyze the borrower’s account while in bankruptcy (which could be up to five years in a Chapter 13), there is a deficiency or shortfall in their escrow account — even while a borrower makes all of their court-approved plan payments under a Chapter 13 bankruptcy.

The servicer then tries to collect this shortage  – even though any attempts to collect this are impermissible without obtaining the required bankruptcy court approval.  This also causes large payment shocks.  The borrower debtor has no way to anticipate this, nor plan for this.  Negative credit reporting results.

If you see this happening, you are not alone.  Please reach out for help.

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