We know the importance of reviewing our credit reports on a regular basis, but what is often overlooked is the importance of reviewing our monthly loan statements.

In a nutshell, if you are paying a mortgage, student or auto loan without the benefit of a monthly statement, you could be headed for trouble without knowing it. It's important to understand what can happen when payments are made without verifying how, or if they are being applied correctly. Without the aid of a monthly statement, borrowers are essentially operating on blind faith and trusting that accounting errors, or even fraud, won't happen to them.

Could some foreclosures be averted if the homeowner had a simple tool? Yes. That simple tool is a monthly statement that tracks your payments. The statement includes a breakdown of principal, interest, escrow payments or any additional principal payments, and alerts the borrower if any funds have been misapplied before they run into trouble.

Robert J. Wright founder of msfraud.org agrees, "many foreclosures could have been avoided had borrowers been aware of accounting errors and fraud going on with their loan servicing." Wright is one of countless consumers who claim he was falsely accused of being in arrears on his mortgage, and then unlawfully foreclosed on.

According to Wright, "Homeowners have been forced into bankruptcy or Forbearance Agreements and even lost their homes simply because they were unaware of fraudulent manipulation of their payments, or unaware their payments were not accounted for properly by their mortgage servicing company."

I agree. Devastating scenarios such as this are being played out across the country...

Many times, mortgages and/or the servicing rights are sold or transferred without notifying the borrower. Uninformed of the transfer, naturally the borrower continues sending their payments to the wrong entity, unaware their mortgage has now fallen into default and is incurring hefty penalties and late fees, and accruing additional interest charges. Eventually, the borrower receives a notice of default from the new company, demanding thousands of dollars be paid immediately or they will foreclose on the home.

The borrower assumes they only need to provide proof that all payments were made and the world will be right again. That assumption would be dead wrong.

Every action has a reaction. Just as in the game of dominos, when that first domino falls, it's not long before the entire stack comes crashing down.

The borrower quickly finds they are in trouble with a capital T. There is a Goliath that continues to demand they are owed money and they want it now. With the threat and fear of foreclosure looming over their heads, the homeowner sets out to refinance, but that road out of their nightmare is closed.

They soon discover the accounting errors on their loan block them from refinancing because their credit has now been destroyed due to the so-called "bad payment history" that crept into their credit reports. Their credit card interest rates soon spike, making their once affordable payments -unaffordable. Because their credit score has plummeted, soon they find their insurance premiums have risen drastically as well.

Next, they realize they're now be in need of legal assistance. Without having done anything wrong, they find themselves in over their heads and scrounging for money to pay attorney fees, higher credit card payments and insurance premiums along with the hefty fees and penalties that must be paid to stave off foreclosure. Sounds crazy -but it's true.