Complaints Against Mortgage Companies

• Borrowers often complain about billing errors regarding their mortgage accounts. Piotr Stryjewski/Digital Vision/Getty Images

  It is common for some borrowers to have complaints about how their home loans are serviced. While a number of complaints can be attributed to simple oversights, others are quite serious and spawn from dishonest lending practices that can be considered predatory. From being charged excessive fees and interest rates to bait-and-switch tactics, there are several common areas that result in angry borrowers who log thousands of mortgage company complaints every day.

Classic Bait-and-Switch

• Some dishonest loan officers will entice borrowers to apply by advertising extremely low interest rates. Borrowers complete applications with the idea they will obtain a fixed-rate loan. However, after loans are underwritten, borrowers learn that fixed-rate periods are temporary and their loans will convert to adjustable loans, which can come with higher interest rates after six to 12 months. Some borrowers also complain that they were unaware they were applying for adjustable-rate loans. Victims often discover the problem when they begin receiving monthly statements or when payments begin to increase. Complaints regarding bait-and-switch scams can result in lawsuits and criminal charges against dishonest loan officers.

Hidden Junk Fees

• Although each state enforces predatory lending laws that limit lenders in the amount of fees they can charge on every loan, it is possible for some mortgage companies to charge excessive, hidden junk fees. Some fees are disguised as standard fees such as "administrative fees" and "consulting fees," which are simply fees paid directly to the lender, which then splits them with their loan officers. This practice generates a significant number of complaints as borrowers are often unaware of such charges until after their loans fund.

Account Billing Problems

• One of the most common complaints mortgage companies field on a daily basis are those surrounding billing errors. It is common for borrowers to send in regular monthly payments and, soon after, experience collection calls. Most problems arise when servicing officials fail to correctly credit borrower accounts. Billing problems are common when loans and servicing are transferred from one lender to another. A similar problem arises when borrowers send lenders monthly escrow payments, which are sometimes incorrectly applied to accounts set aside to pay real estate taxes and hazard insurance.