What Your Mortgage Servicer Can and Cannot Do

Your servicer is the company that takes your payment. It usually is not the company that owns your loan, and it may have changed hands more than once without your input.

Homeowners tend to treat servicers as all-powerful. They are not. Federal servicing rules give you specific, enforceable footholds — and knowing them changes how the conversation goes.

What they must do

Reach out early. A servicer generally must attempt live contact by the 36th day of delinquency, and send written information about loss mitigation options by the 45th day.

Wait 120 days. For most federally related mortgages, a servicer may not make the first foreclosure notice or filing until the loan is more than 120 days delinquent. There are exceptions, but as a rule this is roughly four months of runway before anything formal begins — and it is the single most underused window in the whole process.

Assign you someone. Once you are delinquent, servicers must have personnel available to help you with loss mitigation. Ask for that continuity rather than re-explaining your situation to a new person each call.

Actually evaluate a complete application. If you submit a complete loss mitigation application more than 37 days before a scheduled sale, the servicer generally may not proceed to that sale while it evaluates. This is the dual-tracking rule, and the word doing the work is complete.

Answer a written error notice. If you send a notice of error or a request for information, the servicer has to acknowledge and respond within set timeframes. This is a formal process, not a customer service complaint, and it creates a record.

What they cannot do

• Proceed to a foreclosure sale while a complete, timely loss mitigation application is under review.

• Charge you for the loss mitigation application itself.

• Ignore a properly submitted written notice of error.

• Foreclose before the 120-day mark on most federally related mortgages, absent an exception.

What they are not required to do

This is the part worth being clear-eyed about. A servicer is not required to approve a modification, accept a repayment plan, or agree to a short sale. Loss mitigation is an obligation to review, not an obligation to approve. The available programs depend on who owns your loan — FHA, VA, USDA, Fannie, Freddie and private investors all have different menus.

So ask directly: what loss mitigation options exist on my specific loan? Not what you read about, not what worked for a neighbor. Yours.

How to use this in practice

• Put substantive requests in writing, and keep copies. Phone calls evaporate; letters do not.

• Log every call: date, time, name, what was said, any reference number.

• When you submit an application, ask in writing what is missing and confirm when it is complete. "Complete" is what carries the dual-tracking protection.

• If something is genuinely wrong — a misapplied payment, a fee you cannot account for, a lost application — send a written notice of error rather than calling again.

• Know your state’s deadlines too. Federal rules set a floor; your state decides the rest.

The short version

You have more leverage than the hold music suggests, but it is procedural leverage — deadlines, written records, and a complete file. It rewards organization rather than persistence.

If you want help figuring out which options are realistically open on your loan, a confidential review costs nothing. HUD-approved counseling, at hud.gov or 800-569-4287, is also free and always will be.

This is general information, not legal advice. Federal servicing rules have exceptions and do not apply to every loan. An attorney licensed in your state can tell you how they apply to yours.

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