Suing Banks and Loan Servicers to Enforce Borrowers’ Rights

​

In addition to defending homeowners in state

court foreclosure actions, changes in federal

law have imposed strict standards of conduct on banks and mortgage loan servicers.

These laws provide powerful legal tools to hold financial institutions accountable when they fail to meet their legal obligations.

​

Payton Legal has been a national leader in bringing lawsuits on behalf of borrowers who have been wronged by their mortgage lenders and loan servicers. We regularly enforce borrowers’ rights under Regulation X of the Real Estate Settlement Procedures Act (RESPA) and Regulation Z of the Truth in Lending Act (TILA).

​

Many borrowers—including those who are behind on their mortgage payments, involved in a state court foreclosure, or currently in a Chapter 13 bankruptcy—may have valid legal claims against their mortgage loan servicer, even while the foreclosure is pending.

​

Common Violations That May Create Liability

​

The following conduct may trigger liability under Regulations X and Z, entitling borrowers to statutory damages of $1,000 to $4,000, compensatory damages, and attorney’s fees, including damages for emotional distress, credit harm, and other financial losses:

​

• Failure to Timely Process Loss Mitigation Applications
  Loan servicers must evaluate complete loss mitigation applications—including loan modifications, deeds in lieu of foreclosure, and short sale requests—within 30 business days. Servicers are also required to request any additional documents within five business days of receiving an application.
   

• Dual Tracking Violation:

Once a borrower submits a loss mitigation application, federal law imposes a 120-day prohibition on advancing foreclosure activity. This includes filing a foreclosure action, scheduling or conducting a foreclosure sale or sheriff’s sale, moving for summary judgment, presenting evidence at trial, or taking any action to advance judgment or sale before assessing late fees or other charges.

​

• Failure to Disclose Ownership of the Note and Mortgage:
  Under TILA, servicers must respond to proper written requests for information regarding the ownership of the note and mortgage within 10 business days.

​​

• Failure to Provide Loan Information:
  Servicers must provide accurate information regarding loan payments, payment history, and other loan details within 30 business days of a proper request.

​​

• Improper Application of Mortgage Payments
  Mortgage payments must be credited on the day they are received and applied to principal, interest, and escrow before assessing late fees or other charges.

​