Joe Manzo and Lisa Stowell paid off their mortgage – in full – late last year.
But their lender threatened to foreclose anyway.
"There was no doubt that it was paid off," Manzo said. "I just assumed that the bank was lagging behind and maybe the system was running every 30 days and it would be corrected."
But that didn't happen. Instead, they say, West Palm Beach-based Ocwen Loan Servicing charged them about $2,000 in penalties because they stopped monthly mortgage payments.
"We stopped because we had already paid off the loan," Manzo explained. "They say we're in default, and now I'm worried we're going to lose our home."
All the while, the couple's money – enough to pay the balance – is sitting in the bank's account.
Mistakes happen, but the scenario described by Manzo and Stowell shows the challenge homeowners can face just trying to get through to their lenders. When loans are sold and resold, to companies farther away, as they are in the current housing market, it becomes even more difficult.
In the case of Manzo and Stowell, the money they sent was deposited in an escrow account set up for flood insurance.
"They applied $44,493 to a balance of $423, leaving a $44,000 overage," Manzo said. "I could have flood insurance until the second coming."
Asked what went wrong, Ocwen executive vice president Paul Koches told the Tribune his employees made a mistake.
He said Ocwen services thousands of loans and a problem like this one is rare.
"We'll go ahead and correct that mistake, and as the homeowner intended, we will apply the full amount of those proceeds to pay off the loan," Koches said.
Koches said the homeowners did everything right in this case: They called repeatedly and sent many letters, trying to work things out with the lender. In this case, Koches said there was a communication error, and employees misunderstood what they were supposed to do with the money Manzo and Stowell paid.
It used to be that homeowners chose their bank, based perhaps on recommendations from friends and family. But now, loans are sold, sometimes multiple times, and many homeowners don't even know who owns their account.
Homeowners have no choice in whom they make their mortgage payments to. Ocwen is a company that services loans but does not originate them. That means no walk-up branch for consumers to visit when they have a problem.
Manzo sees that as a big problem.
"All of this could have been avoided if we could have gone to the right people in the first place," he said. "No one had information, and no one could help."