What is a Servicer and What is its Role in Foreclosure Trials?
If you are in foreclosure—or even if you aren’t but have gotten any type of notices or letters from your bank—you may have noticed that the communications don’t actually come from your bank or from the company that lent you the money originally. Who is this company sending you all this information about your mortgage loan?
What is a Servicer?
One reason why you may not recognize who is contacting you is that loans are and have been bought and sold, often many times. But another reason may be because the communications aren’t from your bank – they are from your bank’s servicer.
Servicers are companies that take care of the busy work of managing loans for banks and lenders (or sometimes, trusts full of loans in a loan pool). Banks are in the business of lending money—they aren’t so adept at keeping amortization tables, tracking interest, applying payments, reviewing escrow payments, sending out notices required by the mortgage, or handling the litigation that ensues when and if a foreclosure is needed.
They hire servicers to do that, and there is nothing wrong with this practice outside of litigation. The problem is that once a foreclosure is filed there is a big debate over what a servicer can and can’t do on behalf of a bank.
The Servicer’s Role in Foreclosure
You (possibly) owe the money to the bank, and you (presumably) took out a loan from the bank (or at least, some bank or lender). However, you have no legal relationship with the servicer—you owe the servicer nothing. That raises the first question of whether or not a bank you owe money to must foreclose, or whether the servicer can foreclose.
To avoid this issue, many banks (or lenders, or trusts) foreclose in their own name, but the servicer will be the party providing information to you during your case, and testifying against you in court.
Legally, most appellate courts have held that as long as the servicer has personal knowledge of your loan, your payment history, and anything else they testify to, there is nothing that bars a bank from having a servicer testify on their behalf.
Having Personal Knowledge
Whether the servicer actually has that required knowledge becomes a central issue in most foreclosure trials. Many witnesses know surprisingly little about how your loan was transferred, about your payment histories, or about whether your payments have been properly applied. They may not have the most basic knowledge of the bank’s or lender’s policies or procedures, even though they are the servicer.
Many servicer witnesses don’t even have knowledge of how the servicer itself even operates. Rather, many are “professional witnesses,” whose job is to simply testify in hundreds of foreclosure cases for the servicer. They may have nothing to do with the maintenance of loans or calculation of moneys owed.
It is up to a court whether to admit the testimony or exclude it, and a good foreclosure attorney knows what a servicer should and should not know in order for their testimony to be legally admissible.
At Jacobs Legal in Miami, we know how to fight foreclosures. Contact us to schedule your free initial consultation if you are involved in a foreclosure case.