Notice of Error
Empowering Borrowers to Halt Foreclosure and Rectify Mortgage Servicing Issues
McDonnell Property Analytics (“MPA”) takes the critical step of sending a Notice of Error on behalf of our clients only after a comprehensive investigation. This investigation aims to determine whether the mortgage servicer has adhered to the terms of the mortgage contract and all relevant state and federal laws governing the transaction. In accordance with Regulation X, 12 C.F.R. § 1024.35, we proceed as follows:
Regulation X Compliance
A servicer is obligated to adhere to the requirements laid out in this section in response to any written notice from the borrower that asserts an error. This notice must include the borrower’s name, information enabling the servicer to identify the borrower’s mortgage loan account, and details of the alleged error. While notices on payment coupons or forms supplied by the servicer need not be treated as notices of error, a qualified written request that asserts an error related to mortgage loan servicing qualifies as a notice of error. Servicers must fully comply with all requirements applicable to a notice of error in response to such qualified written requests.
Under specific circumstances, a borrower or their representative can halt foreclosure proceedings by sending a notice of error, provided that the servicer receives the correspondence more than 7 days before a scheduled foreclosure sale. Upon receipt of a notice of error, the servicer must respond either before the foreclosure sale date or within 30 business days after receiving the notice, whichever occurs earlier.
MPA’s Notice of Error letters meticulously outline the nature of mortgage servicing discrepancies or malpractices that warrant the postponement or cancellation of a foreclosure sale. Due to the rigor of our analysis, a properly constructed MPA Notice of Error has been instrumental in forming the basis for legal action. Here is an illustrative case study that demonstrates the effectiveness of a well-crafted Notice of Error.
CASE STUDY
Preventing a Foreclosure Sale
In January 2020, our Massachusetts Client reached out to us after receiving a foreclosure notice from an attorney’s office. The foreclosure auction was scheduled for February 18, 2020, at 12:00 noon.
We recommended that the Client engage MPA to send a Notice of Error (“NOE”) letter to the mortgage loan servicer. The Client concurred and provided an advance retainer.
On February 13, 2020, we dispatched the NOE to the mortgage loan servicer via U.S.P.S. Certified Mail Return Receipt Requested and also sent a copy by fax to the foreclosing attorney’s office. In the NOE, we delineated the error as follows:
Detailed Error Description
This Notice of Error is to inform you that there are fatal defects in the foreclosure related paperwork that cannot be cured. Consequently, should your attorney proceed with the foreclosure, it will do so in violation of paragraph 22 of the subject Mortgage as well as numerous state and federal consumer protection statutes, Massachusetts decisional case law, recording statutes, and a Court Order issued by The Honorable Kenneth J. Fishman on June 10, 2016, subrogating the subject Mortgage to a first and second mortgage granted by the Borrowers to Ohio Savings Bank on July 21, 2000.
On February 18, 2020 (approximately two and a half hours before the auction was set to start), the foreclosing attorney contacted MPA. They announced that the foreclosure was postponed for at least 30 days to allow the servicer time to review our correspondence and research the facts.
Subsequently, the foreclosure sale faced several more postponements due to the Notice of Error and, due to COVID-19 restrictions, was further delayed.
As of this writing (Nov. 2021), the law firm representing the servicer has not reinstituted a foreclosure action.
Frequently Asked Questions
What types of loan servicing errors does MPA address in its Notice of Error letters?
Our Notice of Error process covers eleven categories of covered errors as outlined in Regulation X, 12 C.F.R. § 1024.35(b). These errors encompass various aspects of mortgage servicing, such as payment acceptance, application, and crediting, imposition of fees, provision of accurate information to borrowers, transfer of information, and more.
How can a Notice of Error be used to stop a foreclosure sale?
Notices of error falling under categories nine (#9), ten (#10), and potentially eleven (#11) have the potential to halt a foreclosure sale, provided the servicer receives the correspondence more than 7 days before the scheduled sale. Servicers are mandated to respond either before the foreclosure sale date or within 30 business days of receiving the notice, whichever is earlier.
What is the cost associated with sending a Notice of Error?
The Notice of Error process is a tailored expert service, and its cost depends on the complexity of the situation and the availability of the necessary documents and data for the investigation. For an estimate, please contact our office.
We stand as an unwavering advocate for borrowers
At McDonnell Property Analytics, we stand as an unwavering advocate for borrowers, leveraging the Notice of Error as a powerful tool to rectify mortgage servicing discrepancies and safeguard the rights of our clients.
