Posted by River City on September 15, 2005 at 06:48:01:
That depends. Question 31 in HUD’s FAQs about RESPA addresses the issue of liability that arises when a servicer neglects to pay the homeowner’s insurance bill out of escrow and, as a result, the consumer loses coverage.
HUD’s response: “The servicer is required to pay escrow items on time, so long as the borrower is timely in his/her mortgage payments. If the borrower is damaged by the servicer’s failure to pay for the insurance on time, the borrower can sue under section 6.”
So, if you were current in your payments and you lost coverage due to the lender’s non payment, you might have a case. However, you need to put all of your grievances in writing to Countrywide. When you do this, be sure to send a copy to their regulator and let them know you are CCing their regulator. Keep in mind that you will NOT be able to get out of the mortgage, as the mortgage far exceeds the amount of insurance coverage. Your lender will have to set things right with the insurance company. Some states are passing laws that state that if you have a fire, etc while not covered, the lender will have to pay what the insurance would have paid, plus some. Of course, this is only fair.
Posted by Marc Donovan on September 11, 2005 at 06:53:45:
I have 4 mortgages with Countrywide. They are escrowing taxes and insurance on all 4. I have an insurance policy with Lloyds of London that covers these 4 properties, plus two others. The premium for last year was around $4700, so when they computed the escrows, they divided the whole premium by 4, and allocated that to each property. That was not a problem for me, since I would not have to come up with the premium for the remaining two properties.
When the premium came due, I sent the bill to Countrywide. 30 days later they sent 4700 from one escrow account. They sent it to the wrong address and it came back. 2 weeks later they sent 4700 from the second property’s escrow account - to the wrong address and it came back. 2 weeks later - yeah you guessed it… So Im getting cancellation notices from my agent and I called Countrywide - these folks do not return calls. After 1 hour on the phone with my agent and Countrywide, I finally get it through to them what has been happening. I get promises and little else. Meanwhile, they send 4700 from the 4th property - yep - to the wrong address - and it never comes back. No premiums were received by my insurance company so they cancel the policy. After another hour on the phone with Countrywide, I finally get a check cut for three of the properties (but only for the actual premium on those houses). My agent writes a new policy and I have to come up with the premium for the three other properties. My agent says that Countrywide always does this and they always wind up cancelling the policies. This is Florida and its hurricane season… Anyway, after three more calls to Countrywide, they promised to stop payment on the missing 4700, and refund me the overage. After 6 weeks, there is still no check and my escrow account is -3770. I have sent e-mail, I have talked to supervisors, I have threated lawsuits, all of that failed.
So, what I want to do is sue to cancel the mortgages. They are in breach since they let my insurance expire. If the judge cancels the mortgage, they would become personal notes and I would be free to refinance again. Has anyone heard of this being done? There has to be some precedent - maybe even with Countrywide given my agent’s past experience with them. I’m also thinking that since I am not sueing for money (except for attorneys fees) I could do it through small claims court.
Is this doable or would my attorneys get a good laugh at my expense?