A law requiring servicers to provide monthly mortgage statements that update the account and explain all changes in it will not eliminate servicing abuses, but it will help alert borrowers protect themselves. It won’t help borrowers who sleep at the switch; they need other legal protections, which will be the subject of another column. Here are a few things that can happen to borrowers, which, in the absence of monthly statements, they might not find out about in time to prevent irreparable financial damage:

Monthly statements must include everything the borrower needs to know. This includes notice that taxes and insurance premiums were paid, and when. If a borrower does not make the full escrow payment and the lender raids his mortgage payment, this should appear on the statement. If the borrower is charged for a late payment, the statement should show when the payment was credited (the borrower knows when it was paid). If the lender purchases insurance for a borrower who already has insurance, the premium should appear on the statement, as should any other fees billed to the borrower. If the borrower makes an extra principal payment sometime during the month, the statement should disclose when exactly it was credited to his balance. If the borrower’s account goes to collections, all the related fees should appear on the statement.

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