Help for homeowners when mortgage problems arise

(Reuters) - Even homeowners who play by the rules can run into problems with lenders.

Perhaps a payment is not recorded or a sudden and surprising request for increased escrow funds arrives in the mail. Or sometimes a loan changes hands between servicers and a homeowner sends the check to the wrong one. Glitches like these can derail even the most conscientious homeowners.

Given that mortgage complaints are rising - up four percent at the Better Business Bureau between 2010 and 2011 - it's good to know your options if you run into complications.

Where do I go first?

That depends on the nature of the problem. Generally, consumers should contact their lender or loan servicer directly to discover the source of an error.

If a dispute arises, they should log the steps they have taken with the company to resolve the issue, keeping time-stamped faxes and e-mails and using certified mail for hard-copy correspondence.

Where do I file a complaint about my mortgage?

If you need an advocate to help with your dispute, try the Consumer Finance Protection Bureau (www.cpfb.gov), which established a mortgage complaint hotline in December.

The bureau will refer complaints to the company in question and the company is required to respond to them to the CFPB. The agency will track the issue and allow consumers to log progress with it online.

The Better Business Bureau (www.bbb.org) also accepts complaints against mortgage-related businesses, including mortgage bankers, brokers and lenders, and gives the company 30 days to respond.

If a company doesn't sufficiently resolve the complaint, the Better Business Bureau will factor that into future company ratings. The Office of the Comptroller of the Currency's Help With My Bank (www.helpwithmybank.gov) site also accepts complaints, as does the Federal Trade Commission (www.ftc.gov) in instances of potential criminal activity.

What if my loan is transferred?

Loans are often be sold. This can create confusion for many homeowners and is an occasional source of mistakes.

If your loan is transferred among servicers, its terms won't change, but you may need to write your check to a new company.

According to the Federal Trade Commission, you should receive two notices about the change - one from your current servicer and another from your future servicer - and they should arrive at least 15 days prior to the transfer date and specify when you are to begin paying the new servicer.

The FTC states that you get a 60-day grace period following the transition in which you cannot be charged late fees for writing a check to the wrong party.

How can I prevent future mortgage problems?

"The number one thing consumers need to do is be aware of their mortgage terms," says Bryan Hubbard, an OCC spokesman.

It sounds simple, but consumers need to make sure they understand their mortgage at the time of purchase. Consumers also need to open and save all correspondence from their lender to make sure they don't miss important news about their mortgage. They should also keep records of payments made.

What if I believe I'm a victim of mortgage fraud?

In addition to the national organizations mentioned above, consumers can file a complaint with their state's attorney general.

Many states, especially those which saw steep increases in home values followed by precipitous drops, have also seen fraudulent mortgage loan workout schemes and have formed initiatives to help consumers fight back in instances where incomplete disclosure or bait-and-switch tactics have left their mortgage vulnerable.

The National Association of Attorneys General (www.naag.org) provides a list here:

(here).

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(Reporting By Jane Hodges; editing by Chelsea Emery, Alwyn Scott and Andre Grenon)