What does a home borrower do when his real estate loan is mishandled by the lender? How do you dispute irregularaties?

Your home is the largest investment you will ever make and it is equally important for you to safeguard your rights.  But there are circumstances where a lender has mishandled a borrower’s home loan, resulting in a dispute. An example of mishandling a loan consists of improper accounting of payments, sending of notices claiming amounts are owed on the loan when they are not and failure to advise the borrower when the loan’s servicing rights or the loan itself have been sold.

To make it pay off and get attention, first gather any papers and/or supporting information with respect to the loan. Call and speak to a representative in an effort to clarify and/or resolve the issue. To protect yourself, immediately following the conversation, prepare and send out a letter confirming what was said in the telephone call. Keep a copy of the letter for your files. This is valuable information should there be a later appeal.

If the problem concerning the mishandled loan is not timely resolved by the lender, or negotiations have reached an impasse, it may be time to schedule an in-person appointment with the lender's representative (or supervisor/manager), bringing in any detailed supporting documents. Take notes of the conversation. Following the meeting, send a letter to the representative (or manager) confirming the conversation, restating what was discussed. You may also want to send more than one letter--to the representative's manager or head of operations. Keep a copy of this letter for future need.

If there is still no success in resolving the dispute, at this stage, you may have to see an attorney well versed in mortgage disputes and file a lawsuit.  The threat of a lawsuit may be enough to move the lender into more promising negotiation. If you decide to consult with a lawyer, bring all your papers, documents, and correspondence with you. A lawsuit may be warranted when there is a serious accounting error where the consumer is not given credit for payments made on the loan by the lender.

Contact Your State Department of Corporations

Every state has a department or division or agency that oversees corporations engaged in financial services. In California, the Department of Corporations oversees financial institutions and does audits to ascertain any improprieties. Make a written complaint to the appropriate Department, setting forth the details and copies of all notes and correspondence.  How soon and what form of response or action the Department will take varies across the states. It may well be that the Department has received several complaints about the practices of the particular lender and might take a look at what can be done or send a letter informing the lender of your complaint.


Most grievances and disputes between a lender and the consumer concerning real estate loans and possible mishandling are resolved informally without the need of a lawsuit.