Consumer complaint received 2019-04-23
Company: KEYCORP
State: PA
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Trouble during payment process

Complaint:
On XX/XX/19 I placed a phone call to Key Bank customer contact center to inquire on the best way for my parents to make an extra payment to the principal only of my mortgage. I was advised to simply mail a check and make a notation to apply to the principal only. No further instructions or steps were advised. On XX/XX/19 a check for {$15000.00} was mailed to Key Bank 's mortgage payment center to be applied to my existing mortgage. A memo was written on the check specifying " extra principal only payment ''. Concerned that an individual processing the check may show a lack of attention to detail, a letter was also enclosed with the check. The letter explicitly outlined that the full amount was to be applied to the principal of the loan only. This directive was even typed in bold print. The letter also referenced the involved loan number and the most recent statement was enclosed to ensure it was applied correctly. Finally, both my phone number as well as the payee 's were provided in the letter should there be any questions. 

Upon receiving the subsequent mortgage statement in the mail, I was frustrated to discover the overly detailed and redundant instructions were not followed. The {$15000.00} payment was broken down as follows : {$10000.00} - Principal {$280.00} -- -- -- Interest {$270.00} -- -- -- Escrow {$4200.00} -- - Partial Payment ( unapplied ) On XX/XX/19 I called Key Bank customer service and spoke with XXXX ( employee XXXX ). I explained to XXXX that there has been a severe mishandling of a major payment. Unfortunately, I recall her initial response to be wow as opposed to sorry. After a 43 minute phone call, including multiple holds she advised me the issue would be corrected. XXXX provided an explanation for the mishap, stating that any payments received after a statement has been generated will automatically be applied to interest and escrow corresponding to the next months schedule. She further advised me if I want to make extra principal payments in the future, Im required to submit the payment in between a regularly scheduled payment and the time in which a statement is generated. Its needless to say, the process of making extra principal payments is about as clear as mud. As XXXX was giving me this explanation it was clear she was working for the bank, not the customer. Its simply unfair to expect customers to bear the burden of getting the issue corrected. XXXX also failed to explain what the partial payment was and why it was unapplied. 

I wholeheartedly believe the root cause of this issue isnt a simple process flaw - but an ethics flaw. The employee who processed the payment clearly acted unethically. After speaking with XXXX it also seems clear Key Bank leadership is also culpable for allowing such a mismanaged process to exist. Is this process by design to collect more interest on loans? It is with much regret this incident has made me lose faith in Key Bank. Its sad that customers are all but obligated to vigilantly double check transactions to ensure we are not taken advantage of.

Company response to consumer: Closed with explanation