Emerging Risks For Ohio Homeowners: AI-Driven Mortgage Servicing Errors & What To Do
Over the past couple of years, the mortgage servicing industry has quietly adopted artificial intelligence to handle its mortgages. Automated payment processing. AI-powered chatbots. Digital escrow management. All this technology now touches almost every stage of mortgage servicing. On the one hand, these tools can improve efficiency. On the other hand, they can introduce new risks. This is especially true when algorithms make mistakes. For homeowners in Ohio, these AI-driven servicing errors can have serious consequences. Misapplied payments, wrongful late fees, and damaged credit can make your situation worse. Understanding your rights under state and federal law is important.
How automation creates new mortgage risks
Mortgage loan services must manage millions of complex loan records. To do this, they are increasingly relying on AI and machine learning systems to process payments, apply escrow funds, and communicate with borrowers. These systems, however, are only as good as their programming. AI can and does make mistakes.
Common problems that we’re seeing now include:
- Misapplied or lost payments – An automated system can fail to credit payments to the correct account or loan period.
- Incorrect escrow calculations – AI models can misjudge tax or insurance adjustments, causing under- or over-collection.
- Communication breakdowns – Chatbots and automated notices can misinform borrowers about their payment status or default timelines.
- Failure to correct errors – Since the systems run automatically, a mistake can be repeated across thousands of accounts before it is detected.
Digital glitches can translate into serious harm, including unexpected fees, threats of foreclosure, and damage to the homeowner’s financial stability.
Your rights under Ohio and federal law
You, as a homeowner, are not powerful when facing these issues. Two major pieces of legislation protect you.
- The Real Estate Settlement Procedures Act (RESPA) – RESPA forces mortgage servicers to respond quickly to written “Notices of Error” and “Requests for Information.” If your mortgage servicer doesn’t correct an error within the statutory time limit, you might be entitled to compensation for actual and statutory damages, including attorney fees.
- The Fair Credit Reporting Act (FCRA) – When a servicing error leads to false credit reporting, you can dispute the error with both the servicer and your credit bureau. They must investigate and correct any inaccuracies within a reasonable time.
In addition to the aforementioned rules, Ohio law also prohibits unfair or deceptive practices in consumer transactions. If a servicer’s automation leads to systematic mistakes, that conduct could violate Ohio’s Consumer Sales Practices Act (CSPA).
What to do if you suspect an AI-driven error
If you notice a discrepancy or an inaccurate notice, you should act immediately.
- Document everything – You should keep copies of statements, emails, chat logs, and payment confirmations.
- Submit a written Notice of Error – You should describe the problem clearly and request a correction.
- Check your credit report – Ensure the error hasn’t impacted your credit score.
- Consult an experienced consumer protection attorney – Your attorney may be able to acquire damages on your behalf.
Talk to a Columbus, OH, RESPA Attorney Today
Kohl & Cook Law Firm, LLC, represents the interests of Ohio mortgage holders who are disputing a claim. Call our Columbus RESPA lawyers today to schedule an appointment, and we can discuss your next steps right away.
