Family Makes Their Mortgage Payments But Gets Foreclosed On Anyway

04/02/2015 01:12 pm ET | Updated Jun 02, 2015
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How ridiculous would it be if you made all your mortgage payments in full and on time for years and your mortgage lender foreclosed on you anyway? Surely that could never happen. Unfortunately, that's exactly what happened to Henry and Elizabeth Manfrediz, a lovely married couple with four kids and a cute dog, who live in Florida.

Henry and Elizabeth took out their mortgage in 2008 with JP Morgan Chase, who later transferred the loan to Fannie Mae, as often happens with many lenders who originate mortgages to sell them on.

In this case, the loan servicers for Chase and Fannie Mae appear to have so totally botched the handling of the mortgage that this family has incurred legal fees and other charges, like having to pay for a lender initiated homeowner's insurance policy they never needed. The only thing they did wrong was make their mortgage payments on-time, every single month, and continue to do so even today.

In 2010 the loan was being serviced by Chase who told the family they owed nearly $4,000 more for an insurance policy that Chase needlessly purchased to protect the property. Chase then sold off the loan to Fannie Mae and the loan got a new servicer who continued collection of the errant insurance premium. This very expensive insurance policy was forced on the homeowners despite there being no lapse in insurance and after receiving accurate and timely payments for more than two years into the loan. This insurance policy should never have been required if the servicer had not so totally botched the accounting of this loan.

When the mortgage was taken out, the Manfrediz family had met the lender requirements of not needing mandatory lender escrow because they had made a large 20% down payment. They gladly accepted the responsibility of making their timely taxes and insurance payments without the mortgage company's escrow service.

The taxes and insurance payments were received by the insurance company and tax authority as they were due. Their payments were never delinquent so the couple never needed an additional insurance policy. Regardless, that $4,000 policy was forced on them by the loan servicer even though they were covered by insurance and in good standing.

Month-after-month, year-after-year, mortgage payments to the loan servicer were refused and returned, even today, though the family has done nothing wrong. The family did not idly stand by, they took action. In fact they made repeated telephone calls and sent detailed letters pointing out the error and trying to the get loan servicer to fix their mistakes.

Henry Manfrediz is rightfully upset by all of this mess. He said, "I never thought it would ever be possible to face the loss of my home to foreclosure when I made my mortgage payments as required each month but that's exactly what has happened. If it can happen to me, it can happen to anyone."

The issue even went through mediation with the lender who would not budge to fix the situation to adequately repair the mess created. Until the court action, handled by Chad Van Horn, Esq., managing partner of the Van Horn Law Group, there was no movement towards a positive resolution.

According to court documents, the loan servicer says this is not the first time they've had to deal with similar situations. It's a problem that happens time-and-time again from many loan servicers. Seterus certainly isn't the only loan servicer that has to fix mistakes that have harmed good customers.

While the loan servicer Seterus describes themselves by saying they are, "one of the nation's leading specialty loan servicing companies" and a "loan servicing company consisting of experienced, skilled professionals using leading technology. Customer service is our top priority in all interactions that we have with the borrowers we serve." But in this case, while Seterus has now admitted the errors, they are steadfastly refusing to facilitate making the innocent homeowners whole again, according to court records.

In court documents, Seterus also admits they received payment every month from Henry and Elizabeth and rejected the payments.

At this time the couple is leaning on attorney Chad Van Horn to help make this situation right. The couple is just trying to get their mortgage corrected to show the payments they've attempted to make for years, get their credit report corrected, and receive reimbursement for all the legal fees they've had to incur to get this mortgage debacle fixed.

Attorney Van Horn said, "People face injustice every day but this case is especially egregious since this well organized and intelligent couple has tried to do everything in their power to get their mortgage servicer to properly account for the mortgage payments they've sent for years. Instead the mortgage payments were refused and the couple faced the loss of their home. My firm and I are proud to help Henry and Elizabeth and other couples facing these type of situations to get their mortgage companies to correct the mistakes they've made."

To add insult to injury, the loan Servicer for Fannie Mae, Seterus, is continuing to report the mortgage as late to the credit bureaus, month-after-month.

The damaged credit report has cost the Manfrediz family dearly. Due to their erroneously damaged credit report resulting from this mortgage debacle, they've had to pay more for subsequent purchases and have been unable to refinance their home and rental property. They've also had to face numerous collection calls for an account that should have never been considered delinquent in the first place.

Henry says "It's very frustrating to have UPS make daily stops at your house (including Christmas Eve!) for over a year, delivering default letters, demand letters, and other foreclosure documents. The neighbors all want to know what's going on. The kids know what's going on and are scared of the uncertainty. Every Realtor, property investor, and foreclosure specialist in the county has contacted us by phone, mail, or knocked on the door. I would have refinanced a long time ago if they hadn't marked up my credit from the beginning and trapped me in this loan. Our finances are in disarray. We do not deserve to be in this situation"

Henry added, "Thankfully Mr. Van Horn and the Van Horn Law Group have been fighting hard for us. I teach my kids to always do the right thing, and I think that's what Chad is doing for us. He and his team have been great and we're hopeful this will be rightfully resolved."

If there is any good news to be found in the situation at least Fannie Mae has since dismissed their errant foreclosure efforts while the counter-claims for damages are still in process.

Also, Henry took excellent action along the way. He kept a log of communications with the loan servicer, documented all the actions he took, sent detailed letters to correct the errors and sent them by traceable means. Henry and Elizabeth also continue to send their mortgage payments every month, trying to pay their mortgage. Henry created a clear paper trail that he's tried hard to get this unfortunate situation created by the lender and servicer, corrected. These are good lessons any other family facing a similar situation should adopt.

This article by Steve Rhode first appeared on and was distributed by the Personal Finance Syndication Network.