by Denise Richardson
It is imperative that you review your credit reports on a regular basis. But it's equally important to review your monthly loan statements as well. If you are paying a mortgage, student or auto loan with a coupon book -and without the benefit of a monthly statement...be careful. It's important to track and verify how and if your payments are applied. By using payment coupon books, consumers are forced to blindly trust that their payments are being applied timely and accurately.
Don’t forget what I discovered—that over ninety percent of all national deficits from 1921 to 1939 were caused by payments for past, present, and future wars.
—Franklin D. Roosevelt (1882–1945)
To facilitate the tracking of our payments, we need monthly statements providing us the breakdown of principal, interest and escrow payments applied monthly. Many consumers complain that the use of payment coupon books is exacerbating mortgage servicing errors, negligence and fraud. Illegal late charges have been applied when payments were made timely, taxes and insurance escrows are not routinely paid on behalf of the consumer timely, and additional principal payments and/or monthly principal and interest payments can not be verified. Costly errors or fraud against the borrower often go undetected, until too late and then become impossible to correct without placing a huge burden on the borrower to prove their innocence.
Watch for erroneously applied late fees for payments made timely, misapplied additional principal payments and ascertain if your escrow accounts (taxes and insurance) were paid in time for you to receive the standard discounts, often offered by city taxing authorities, when taxes are paid within a mandated time frame.
These serious errors have the effect of extending the life of the loan and the amount of interest accrued without the your knowledge. Too many times, costly errors and illegal fees are often discovered too late and force innocent, unsuspecting consumers into foreclosures because they falsely believed their payments were received and applied accurately -only to find out their mortgage servicing company had sold the loan and not forwarded along their payments. One would think they could simply provide receipts and all would be okay -but that assumption would be wrong. Many have been wrongly forced to defend themselves in a court room and after exhausting their life savings -end up losing their home anyway. If you find this hard to believe, visit msfraud.org and read a few articles.
Do you know where your payments are going? Do you send in extra principal payments without verifying how they are applied? How many foreclosures may have been averted had borrowers been aware their mortgage was sold to another servicing company or their payments were not applied accurately. Do you know if your credit report is littered with errors? Remember, reports indicate that 79% are. Denise Richardson is a board member of Amercian Consumer Credit Education Support Services, a non-profit organization dedicated to educating the public on consumer credit and debt issues. She is a member of the National Association of Consumer Advocates and Author of the recently released book Give Me Back My Credit! Additional information can be obtained at her website and blog at http://www.givemebackmycredit.com If you believe consumers should have access to a monthly statement let us know.