Consumer complaint received 2018-04-24
Company: NATIONSTAR MORTGAGE LLC
State: KS
Product: Mortgage
Sub-product: FHA mortgage
Issue: Trouble during payment process

Complaint:
This took place during XX/XX/2018 and XX/XX/2018 regarding multiple payments approximately {$520.00} each. 

I have a mortgage account that was sold to MrCooper and I now make payments through them. They have deceptive payment collection information on their website, and also apply some payments to the account in a manner that mitigates the payments impact upon interest calculation to their benefit. 

Regarding Deceptive Payment Collection Practice on Website Payment. 
When making a payment on their website I am presented with four payment options. 
a ) Full Monthly Payment b ) Payment direct to principal c ) Payment direct to escrow d ) Partial Payment These are self explanatory, but the partial payment is not a partial payment as implied. The partial payment is a Payment direct to principal, and not a partial payment. With the intention of switching to bi-monthly payments to save on interest over the lifetime of my loan and making payments easier to budget for, I made payments on their website using the " Partial Payment '' option. These payments that I made were sent directly to principal, and at the end of each month I was surprised to discover I owed another full months mortgage payment in addition to my previous payment in the month, with that payment not being applied to my mortgage payment. 
When I called in to review this with them they indicated that the website handles both " Partial Payments '' and " Payment to Principal '' identically, which begs the question as to why they would label them differently? It is clear that this labelling results in an increased collection of debt through deception of the consumer, and that there is no other reasonable purpose to having these labelled in this fashion other than to deceive the customer into making unintentional payments direct to principal and thusly having to pay more that month. When asked about this via their phone support, the agent on the phone stated that they were able to " change a setting '' on the account that would make the partial payment function as a partial payment, instead of as a principal payment. It is clear that they are aware of this disconnect in how they represent the payment application, and how they process it. They are even aware of this misrepresentation to the point that they have a standard process for making the action behave correctly when requested. 

Regarding how they process " partial '' payments In my call with them to discuss partial payments, they indicated that they could change a setting on my account to make partial payments function as partial payments, instead of principal payments. Upon further questioning, it became clear that this still was not truly a partial payment, and is structured in a way that ensures that interest continues to accrue at the pre payment account balance and not the post payment account balance. Any partial payment they receive on the phone or through their website, presuming that you have requested that they alter your account to be truthfully represented on the website, is not applied to the balance of your account and is instead placed in a holding account until a full monthly payment is available. This means that if you pay a partial payment to them, you will continue to accrue interest on your loan as though you had not made a payment. So while this is advertised as a partial payment it is in fact a 0 interest loan given to MrCooper by the customer, while MrCooper continues to charge them interest on their account that has not had this payment applied to it. 

In summary MrCooper is engaging in payment practices in bad faith. 
1 ) They are misrepresenting partial payments, resulting in additional collections from the consumer in any given billing cycle beyond the intention of the consumer. They have demonstrated they are aware of this, and are able to routinely make this function act as advertised, but leave the default behavior to be deceptive. 
2 ) They are not processing payments posted to an account to that account directly in some cases. They do this in a way that increases the amount of interest that they collect from consumers arbitrarily.

Company response to consumer: Closed with explanation