Consumer complaint received 2022-10-10
Company: Specialized Loan Servicing Holdings LLC
State: CO
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Trouble during payment process

Complaint:
Overview : Specialized Loan Servicing is inflating a mortgage balance by adding forborne payments during COVID-related forbearance to the principal balance. They have added {$34000.00} to my principal balance, so that now after leaving COVID forbearance I actually owe more than I did when they began servicing my loan prior to COVID. 

Details : Per the CARES Act of 2020 I applied for loan forbearance from my loan servicer, Specialized Loan Servicing. I was granted forbearance for a total of 17 months, with forborne payments ( including principal, interest and escrow amounts ) totaling {$34000.00}. I resumed normal payments on XX/XX/XXXX with forborne payments coming due at the end of the non-modified loan schedule and terms ( as a " balloon payment '' ). My original principal balance with Specialized Loan Servicing was {$390000.00} when transferred to them on XX/XX/XXXX. My account has always been in good standing, and I have never missed a monthly payment. These amounts, the forbearance period of 17 months, and the complete payment history can be verified in attachments 1-2, Loan Verification and Payment Histories. I am not disputing the total amount of these forborne payments. And I am not disputing that they are payable as a " balloon payment '' at the end of the loan schedule ( that they were not " forgiven '' ). 

However, Specialized Loan Servicing has added these forborne payments toward my original principal balance of {$390000.00} to my principal balance. They are reporting that after the COVID-related forbearance I now owe more than my original principal balance. They are incorrectly reporting a payoff amount of {$410000.00} ( see attachment 3 ). They have added the amount of my forborne payments to my outstanding principal rather than subtracted it. During forbearance there is a pause of monthly payments, and my principal remained unchanged ( interest and escrow did accrue during this period ). When the forbearance ended I resumed making payments toward this principal balance, with the forborne payments that would have been paid over the 17 months being paid as a lump sum at the end of the loan term. Given that the account has always been in good standing I can not owe more than I originally financed and more than the amount that Specialized Loan Servicing originally began financing. 

This is not the first time that Specialized Loan Servicing has reported an inaccurately high principal balance. After first making a dispute with the XXXX XXXX XXXX XXXX, I made a complaint with the CFPB on XX/XX/XXXX ( see attachment 4 ). At the time during the initial months of my forbearance period, they were reporting that my forborne payments totaling {$12000.00} were in addition to my principal balance, not payments toward my principal balance. So they were adding my forborne payments to my principal balance. After the complaint, they corrected their reporting to the XXXX  to reflect my then principal balance of {$390000.00} for several months ( see attachment 5 ). They did not explain why they had inaccurately inflated my principal balance and the complaint with CFPB was not satisfactorily resolved. 

They again began reporting an inflated principal balance after three months. I attempted to resolve this issue by again disputing the amount of the principal balance with the XXXX but Specialized Loan Servicing responded that this inflated balance, with the forborne payments added to the outstanding principal balance, was accurate ( see attachments 6, 7 from XXXX and XXXX ). I then attempted to resolve this issue by contacting the company and speaking to two different customer representatives on XX/XX/XXXX. This did not resolve the issue as the representatives reiterated that the payments during forbearance " were not forgiven '' and that I still owed them as a " balloon payment. '' All of this is not in dispute, but Specialized Loan Servicing keeps repeating it rather than identifying the error of adding this deferred amount ( " balloon payment '' ) to the principal balance, not as part of the principal balance. I then followed their formal " notice of error '' procedure and made a written dispute ( attachment 8 ). Their response from XXXX ( ID # XXXX ) was to reiterate what is not in dispute, that the forborne payments of {$34000.00} were deferred ( attachment # 9 ). 

I am not disputing that these forborne payments are still owed to Specialized Loan Servicing. I am, however, disputing that they have added forborne payments to inflate my principal balance. These payments during COVID forbearance were toward my principal balance of {$390000.00} when I entered forbearance. Subsequently, since resuming normal monthly payments my outstanding principal balance is currently {$370000.00} ( as of XXXX XXXX, XXXX, see attachment 1 ). This deferred amount of XXXX is part of this outstanding principal balance of {$370000.00}, not a separate loan amount. There has been an accounting and/or clerical error. 

I am not asking for Specialized Loan Servicing to repeat these amounts, dates and the fact that the forborne payments are due as a lump sum at the end of my loan term. This is not in dispute. I would like CFPB to help Specialized Loan Servicing realize that they have added this amount to my principal balance, so that I now owe more than I did when they first began servicing my loan. While this may seem like an innocuous accounting/clerical error, reporting that a consumer now owes {$34000.00} more than they originally financed is egregious. And given my previous disputes and attempts to contact them directly to resolve this issue, this appears to be a pattern of practice with Specialized Loan Servicing. Given this apparent pattern, CFPB ought to investigate whether other consumers are having their mortgage balances incorrectly inflated by Specialized Loan Servicing. Particularly considering that these additional hardships are anathema to the intent of the CARES Act and the government 's attempt to provide relief to those whose employment was impacted by COVID. 
Let me reiterate because the company keeps repeating what I already know and what I am not disputing. Forborne payments made as part of paying the principal balance are now being added by Specialized Loan Servicing to the principal balance. These forborne payments during COVID relief should not increase consumers ' financial obligations. They should only be deferred as part of the original principal balance.

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation