I had an FHA mortgage which was taken over by HUD when I couldn't make my payments. HUD then sold the mortgage to EMC Mortgage. My FHA mortgage allowed pre-payment of any amount of principal with no penalty. EMC Mortgage insisted that as soon as HUD took over, the mortgage was a conventional mortgage.
From 1995 when EMC Mortgage bought my mortgage until 2001 when I paid it off, they overcharged me, by my calculations, a year's worth of payments. If HUD had to take over on my mortgage, you can sure that I couldn't afford to pay that much in excess charges.
As you can imagine, if I couldn't keep up with my mortgage, I certainly couldn't afford to hire a lawyer (couldn't even find one interested - by their standards, a year's worth of mortgage payments was too piddling for them to bother with.)
From the very first, I had problems. Because I was so far behind on principal payments, I started sending a bit extra as I could afford to. That money went into a suspense account (awaiting enough to make another payment) or the escrow account. If it went to the escrow account, they refused to take it out.
I had insurance on my house but they charged me for. Their.insurance. They finally reversed those charges but didn't send a refund.instead, it went into the escrow account at a time when they had scheduled escrow payments to pay more than twice the amount of the taxes. (I paid insurance myself, but every year would receive a notice that I had no insurance on the house and that they would insure it, but only for the amount of the mortgage so I had no coverage at all). I certainly didn't need the equivalent of four to six months of house payments as excess in the escrow account, especially when I was paying interest on the unpaid mortgage principal and they weren't paying interest on the escrow balance.
In early I realized that I was looking at a substantial balloon payment (about 18 months gross income as I recall) in 2002 because payments to HUD hadn't paid the interest much less the principal payments. EMC told me that they would consider refinancing that amount. However, after the problems I'd been having with the company, I figured that not only would their terms would be onerous but I didn't want to deal with them for who-knows-how-many-more-years. Quite possibly the rest of my life.
So, I found a temporary job with the Census, hoping I could, essentially, bring the principal amount up to date thus eliminating the balloon payment, then just have the regular payments until it was paid off in early 2002. I intended, in effect, to take the regular payment out of my Social Security check and send the entire Census paychecks to be applied to principal.
By this time, I was often making a copy of the payment coupon for my records to show that my payments were not being applied as I directed. They were very inconsistent with how they applied any excess - sometimes it went to principal, sometimes to escrow, sometimes to a suspense account.
In March I sent a relatively large check for the March payment and the rest to principal. It was applied as March, April, May, and June payments with the remainder to June principal. I mailed another check for the April payment before I knew what they'd done, so the April payment was applied as the July payment.
This kind of thing happened over and over and they NEVER corrected any of it.
In July, I sent them $5000 to be applied to principal. They received that check (certified mail) on July 31st, but didn't post it until the next day, allowing them to charge $27 more in interest as well as taking the August payment out berfore applying the rest to principal.
I wrote a letter of complaint in March. They were supposed to have 60 days to respond.in June, I received a letter saying they needed another 60 days.in July, I wrote a letter which I sent to every agency both in my home state and theirs (HUD, Congressmen, Better Business Bureaus, Attorneys General, state banking departments, etc - about 20 total). They never replied to my original letter. I was told that there was no need to after I'd sent the letters of complaint to others. I took that to mean that they wouldn't have replied at all if I hadn't complained to others in mid-July.
In September, they replied to the people and agencies I'd complained to, and provided a modest (even by my standards) payoff amount. I went ahead and sent it (I'd made the September payment earlier in the month), receiving a form letter acknowledging receipt of the check.in December, they wanted the same amount.
I talked to someone at an agency (United Way?) who wrote to them on my behalf.in January, they removed my September check from a suspense account, reversed some additional interest and late charges, and paid the mortgage off. Meanwhile, with the pay-off money sitting in a suspense account, they reported me as. Five. Months behind in my mortgage payments! When I found out about that, I disputed that with the credit bureaus and EMC removed all reports to the credit bureaus.
I didn't receive the paperwork showing the pay-off until MAY! When I asked why it took so long, I was told that it didn't matter. I'd received them and the delay was unimportant.
It's probably too late to recover the the excess charges, especially if, as some of the other reports indicate, they are bankrupt.
But why was HUD selling mortgages to such an unethical company?
For quite some time, EMC was saying that the problems were because they'd just purchased 3500 mortgages. If they couldn't handle them, why were they buying them?
While I cannot document every overcharge, I can document many of them, enough that I feel the undocumented ones are credible. I would have loved to file suit or, even better, a class action suit, but never found out how to locate an attorney who would do so.
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