Have you ever received a letter from your mortgage servicing company that not only read like VCR-programming instructions, but also made you feel like you'd just backed your car over the family pet? If so, you're not alone.

More consumers admit to receiving erroneous "late payment" letters, as well as unfounded, arbitrary fees tacked on to their mortgage loans.

While it's tough to tell if it's merely the servicing company's attempt to prey on unwitting consumers to generate additional revenue, you have the right to investigate the loan servicer's claims and fight back to right errors regarding your mortgage.

Once a mortgage is made, a lender may sell the servicing rights to the mortgage. This means that a new company collects the monthly payments, pays the property taxes and insurance from the escrow account, and interfaces directly with the consumer.

I've signed for myriad mortgages since 1971, but have never been plagued with as many loan servicing glitches as I have in the past two years.

It all began with the purchase of a second home. After the smooth-as-silk closing, it was almost as though the servicer felt empowered to make up for the lack of misery sidestepped during the purchase process! The second month of the loan, I was charged for a check that supposedly didn't clear the bank.

I received the servicer's statement showing $26 in service/overdraft charges and promptly called my personal banker. She responded that not only would she not bounce a check on my account, the average balance in my checking account was more than ample to cover the check several times over. Bottom line: When I confronted the servicer, they admitted that it might have been their oversight especially since they could produce no copy nor documentation of the supposed un-honored check.

Several months later, an additional principal payment I made showed up as a credit to an escrow account for property taxes and insurance. This was blatantly wrong since by making a 20 percent down payment on the property I was not required to even have an escrow account for this loan.

I caught the error when reconciling the prepayments with the annual mortgage statement at years end. The score? Two strikes and counting against the mortgage servicer.

The third mess was not only the most disturbing, but the most blatant. In an effort to streamline bill paying, I completed the paperwork to have monthly payments automatically withdrawn from my checking account. The form stated that the process could take "up to thirty days to complete" so I allowed an ample forty-five days. By my calculations, the direct withdrawal would begin with the May payment.

On May 16th , the loan servicer's computer spit out the first late mortgage payment notice. Assuming that the direct withdrawal had taken more like sixty days instead of thirty and/or that the notice was generated simultaneous to the payment being made electronically, I tossed the late notice in the circular file.

When a similar one arrived a second time, I knew there was trouble and called the loan servicing company's "customer service hotline" -- a term that by now was clearly an oxymoron!

The transition to automatic withdrawal had taken the servicer more than sixty days. And since, by that time, the mortgage was one payment late, they couldn't instigate the new process until all payments were current! If that wasn't enough, they had the gall to state that for an additional charge of $9.95, they would allow the delinquent payment to be debited over the phone from my checking account.

Two supervisors and three legal threats later, the matter was taken care of including a fax to me stating that my credit report would not be negatively impacted due to the mix up. The final score? Three strikes against the loan servicer in the first two calendar years of the loan.

Are these mishaps isolated occurrences?

Hopefully. And while the majority of mortgage lenders and servicers are conscientious and concerned about the consumers they assist, situations similar to mine are definitely on the rise.

Under federal law (Section 6 of the Real Estate Settlement and Procedures Act -- RESPA) you have the right to send the loan servicer a "qualified written request" that they are required to acknowledge within twenty business days. (I'm still waiting for an answer to my first "qualified request" from last year!)

And you can always file a complaint with Housing and Urban Development (HUD) as well as the Consumer Protection Division of the state attorney general's office. But if all you really want to do is to make sure the hard-earned dollars you send to the lender are correctly applied in a timely fashion to eventually pay off the tens of thousands you owe, picking up the phone and being patient enough to troubleshoot the errors may be the only reasonable solution.

There were times during the past two years when I was motivated to refinance the current mortgage just to get the loan servicing company out of my life. But on further reflection, perhaps that's just what they'd like me and others to do --refinance to move the low-interest rate loans off their books. For now, I think I'll stay the course.

After all, what's life without a challenge now and then, especially since I've memorized their "customer service hotline" number!

For more articles by Julie Garton-Good, please press here.

Published: July 10, 2001

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Julie Garton-Good, DREI “The Frugal HomeOwner™” As a syndicated newspaper columnist, author and international speaker, Julie Garton-Good DREI, C-CREC™, is called “America’s Home Affordability Expert”, addressing more than 25,000 persons annually on topics of real estate industry trends and home affordability. She is the author of five real estate books and is the sole two-time recipient of the international "Real Estate Educator of the Year" award from the Real Estate Educators Association. In 1997, The National Association of Realtors® nominated Julie as one of the fifty most influential people in the real estate industry. She shared the list with only three other women.