John has a mortgage with Friendly Bank. When John signed the mortgage papers, among other things, he filled out and signed a document setting up automatic payments, with the clear expectation that the system would persist throughout the duration of the loan.

Friendly Bank later sold the mortgage to Sharks 'R' Us, and sent John a letter saying that the mortgage servicer was changing to Sharks 'R' Us on such-and-such a date.

Sometime after the sale date, John receives a letter from Sharks 'R' Us stating that his mortgage payment is due on the first of the month. The letter was postmarked on the third of the month, and not received until a few days later, making it quite impossible to have been paid on time.

In confusion, John calls Sharks 'R' Us and asks them why he's being asked to make payments when he has automatic payments in place. They tell him that the automatic payment agreement was only with Friendly Bank, and the details were not transferred to Sharks 'R' Us "for privacy reasons." John finds this absurd, as the entire point of setting up automatic payments is to never have to worry about making payments manually, and a change in loan servicers is 100% irrelevant to that purpose.

At no point in the letter that Friendly Bank sent to John regarding the upcoming change in loan servicers does it mention that the autopay was going to vanish out from under him. Is there any way that Friendly Bank and/or Sharks 'R' Us can be held legally accountable for failure to ensure the continuity of the automatic payment system, which was reasonably expected to continue in perpetuity throughout the duration of the loan, the failure of which caused John to become delinquent in his payments?

  • 2
    Did Friendly Bank at any point in their letter affirmatively state something like "you don't have to make any changes to your existing loans"? A clear statement that was breached is a lot more bright-line than a "reasonable expectation".
    – Cadence
    Nov 8 at 23:56
  • Is the note based on the FHLMC/FNMA uniform instrument (as of 2023, apparently over 70% of single family home mortgages conform to this) or a bespoke contract?
    – user662852
    Nov 9 at 4:25
  • 1
    Was there any damage? Did John incur any late fees or other problems? For what would John want to hold anyone accountable?
    – nvoigt
    Nov 9 at 7:08


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