Consumer complaint received 2022-08-30
Company: WELLS FARGO & COMPANY
State: NY
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Trouble during payment process

Complaint:
I have a standard Home Mortgage with Wells Fargo and since XXXX have had excess payments applied incorrectly to the Mortgage Loan Interest instead of applying the full amount of the excess payments to the Loan Principal. Initially the excess loan payments were applied correctly where the full amount was applied to the Loan Principal however subsequent excess payments were applied to the Loan Interest and not the Loan Principal. 
On the monthly Wells Fargo Loan coupon for the Loan repayment, the current payment amount due is clearly indicated. I began making excess payments over the current amount due for the month of XX/XX/XXXX and the excess payment was applied correctly to the Loan Principal. This was also correctly applied for the next 2 consecutive months in XXXX and XX/XX/XXXX and then it stopped. I continued to send excess payments in addition to the Loan Payment amount due each month, however the excess payments were applied to the Interest and not applied fully to the Loan Principal. This practice continued until the payment in XX/XX/XXXX wherein the excess payment above the Loan amount was again applied correctly to the Principal. 
I had assumed the payments were being applied correctly as they were initially and hadnt taken notice. As the Loan amount did not appear correct, I contacted Wells Fargo on XX/XX/XXXX, and was told by the Service Representative that my account was on a Pre-Paid Plan and there was a pre-paid MPL code on my account which is why the additional payments were not being applied fully to the Principal. I was told that this Pre-Paid Plan could only have been requested by me and it was removed by the Service Representative during our phone conversation. I had never contacted Wells Fargo Home Mortgage regarding my Loan until that day ( XX/XX/XXXX ), nor have I ever requested anything related to a Pre-Paid Plan, to which Wells Fargo has provided no proof of any request made by me regarding this plan. Further I was told by the Service Representative that only the past 3 months payments ( 90 days ) could be corrected. 

I have a case opened with Wells Fargo Home Mortgage, Case # xxxxxxxx, Inquiry on Loan # xxxxxxxxxxx, however upon their investigation they had re-stated they can only credit back 3 months. In total they have applied {$31000.00} towards the Loan Interest which should have been applied to the Loan Principal. The feedback I have received from Wells Fargo Home Mortgage is that they believe the account was handled properly and no corrections are needed because no error occurred and stated that payments made more than 90 calendar days can not be reversed and reapplied unless there was an issue caused by Wells Fargo. 

Upon continued escalation, Wells Fargo performed additional investigation to which I have received the following response on XX/XX/XXXX, We are denying your request to reverse payments prior to XX/XX/XXXX, due policy, time frame, and the tax implications. 

On the Wells Fargo payment coupon, it states the following : If you would like to make an extra payment toward the loan principal, please indicate with the payment that it is intended for pre-payment of principal, and we will evaluate whether the payment is eligible for a principal pre-payment based on the account status. If we receive funds in excess of the total amount due without instructions, those excess funds may be applied to future contractual payments, fees, costs, escrow shortages or principal, depending upon the specifics of the accounts and the amount of the funds received. Each monthly Loan payment sent was double the Loan amount due. 

Wells Fargo has : 1 ) Acted unethically in applying the excess payments to the Loan Interest versus the Loan Principal.

2 ) Not provided any valid reason for why those previous payments were applied correctly and why there were stopped.

3 ) Not provided a reason why my account was marked as being on a pre-paid plan to not apply excess payments to the Loan Principal until contacted on XXXX XXXX to understand the discrepancies.

4 ) Not provided any proof showing there was any request made to put the Loan on a pre-paid plan.

5 ) Not provided any policy to contradict their Loan payment coupon documentation regarding excess payments that would preclude them from not being applied to the Loan Principal.

6 ) Not provided the issue related to the time frame.

7 ) Not provided what are the tax implications.

Wells Fargo is culpable in how the excess payments were mishandled and need to rectify by re-applying the excess payments towards the Loan Principal. 

I also work within the Financial industry and Im aware of a major new regulation called Consumer Duty ( soon to come into effect ) which will require firms to : Support and empower customers to make good financial decisions Avoid foreseeable harm at every stage of the customer relationship

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