Consumer complaint received 2023-09-13
Company: Mr. Cooper Group Inc.
State: WI
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Trouble during payment process
Sub-issue: Escrow, taxes, or insurance

Complaint:
XXXX To : Mr. Cooper XXXX XXXX XXXX From : XXXX XXXX via XXXX XXXX XXXX Consumer Credit Examiner Mortgage Banking , Division of Banking Wisconsin Department of Financial Institutions Cell : ( XXXX ) XXXX XXXX Re : Error Resolution Notice under 12 C.F.R. 1024.35 Mortgage Loan Number : XXXX I am writing to request correction of the error ( s ) described below in regard to the mortgage on my property at XXXX XXXX XXXX XXXX. 

From the moment a person files a XXXX  XXXX bankruptcy petition ( Petition Date ), a loan supported by a mortgage must be treated as if it is current. Once a debtors XXXX XXXX plan is confirmed, the debtors regular ongoing mortgage payments should be applied from the Petition Date based on the mortgage contract terms and original loan amortization as if no default exists. All pre-bankruptcy arrearages are paid separately under the XXXX XXXX plan as part of the creditors allowed claim. In essence, the creditors claim is split into two claims the underlying debt and the arrearages ( although a creditor is only required to file one Proof of Claim as discussed below ). This can often be inconvenient for a creditor as it may have to create a separate account within its own system, but it is imperative that the payments be applied correctly to avoid being liable for improperly applying the payments, resulting in the penalty of sanctions. 

Real Estate Settlement Procedures Act ( RESPA ) Escrow Account Protections and Limits ( Section 10 ) Section 10 of the Real Estate Settlement Procedures Act ( RESPA ) provides protections for borrowers with escrow accounts. Specifically, it limits the amount of money that a lender may require the borrower to hold in an escrow account for paying taxes, hazard insurance and other charges related to the property. RESPA also requires the lender to provide initial and annual escrow account statements.

Each month the lender may require a borrower to pay into the escrow account no more than 1/12 of the total of all disbursements payable during the year, plus an amount necessary to pay for any shortage in the account. In addition, the lender may require a cushion, limited to no more than 1/6 of the total disbursements for the year.

Monthly contractual payments that can be identified with their principle to interest ratios in accordance with their payment sequence. In this case there would be 240 total P & I payments after an initial interest only 120 months a total of 360 payments. 
A ) Cooper applied current monthly contractual payments to missing months payment ( s ) that were filled with the court as far back as XXXX. Additionally escrow expense went up over years causing hundreds of dollars monthly in escrow overage and funds held in suspense. Cooper should have applied trustee payments only to filed debt, and current payments to current billing. 

Applying current payments to XXXX XXXX debt caused major problems. 
1. Overpayment allocation to escrow 2. Ongoing unapplied funds in hiatus/partial/unapplied 3. Misallocation created shortages* ( to be filed as supplemental claims ) 4. These issues result in double charges for the same line items This created a monthly ongoing escrow overcollection from XXXX scheduled to XXXX of escrow per RESPA. Missing escrow payments that were filed as XXXX  XXXX debt ended up getting replaced with future escrow billings. 
B ) XXXX of XXXX XXXX XXXX noticed even after XXXX payments for property tax and insurance there was enough funds to pay another ( year XXXX tax and insurance {$5600.00} ) or enough for 2 contractual monthly payments.. XXXX contacted Mr. Cooper and they agreed to apply the escrow surplus to the monthly payments. 

But they did not. As they considered the account delinquent after the call. Therefore they would not credit the overage to monthly payments. 


1 ) Cooper did however continue overcollection annually in excess of RESPA and held at times $ XXXX surplus when annual need was a XXXX. 
2 ) Cooper/Legal knew of this since XX/XX/XXXX but signed and certified demand ( s ) over what was due over and over and over. Cooper actually raised escrow payments XXXX. 

B ) Supplemental claims 1 ) XXXX XXXX the first agreed arrears is filed for {$1500.00}. 
However In XX/XX/XXXX after annual property tax and insurance was paid ( {$5100.00} ) there was a surplus of {$2600.00} this is more than 1/6 annual buffer as per RESPA. 

This indicates the trustee payments and or contractual payments were indeed paid, but misallocated then billed again as agreed arears. Note all of the agreed arrears were paid in full before dismissal save the 3rd and final was not finalized XXXX to XX/XX/XXXX because of ongoing dispute on outstanding balance. These double payments paid months in advance. 

2 ) XX/XX/XXXX after tax and insurance is paid ( year XXXX tax and insurance {$5600.00} ) there is {$6100.00} surplus in XX/XX/XXXX {$10000.00} was filed as the second supplemental agreed arrears. The attorney gets outstanding contractual payments data from cooper. At this time/march XXXX had attempted to apply surplus escrow to contractual payments. At this time COVID conditions allowed for forbearance it took 2 months for this forbearance agreement to be signed, the 4 payments were not made at this time amount then was filed as the 2nd supplemental claim.

3 ) 3rd and final supplemental this represents the forbearance time. XXXX sold a building to free up equity to pay of the XXXX XXXX bankruptcy summer XXXX. Coopers legal, trustee, all parties agree to this sale with the condition funds pay off the XXXX XXXX and clear all debt. However at this time cooper changes the outstanding balance drastically by tens of thousands of dollars. The proceeds of the sale are no longer ample to pay the outstanding forbearance amount or balance of XXXX  XXXX. From XXXX to XX/XX/XXXX XXXX argues to his legal, and his legal to coopers that the amount ( s ) to be filed are too high. Cooper files to abandon stay, XXXX advised to agree to final supplemental filing until such time he can find proof in any of errors. XXXX if filed for months XXXX to XXXX 15 months total. 
4 ) Not enough time left in 5 year plan filed XXXX even with COVID extension to pay errant amount ( s ) in XXXX plan, not enough sales proceeds to pay off XXXX  XXXX. XXXX breaks court order to make payments in full nearly gets case dismissed begs judge to allow time for proof of errors. 
5 ) XXXX fights with his legal until they quit cooper legal unwavering. XXXX represents himself trys to convert to XXXX XXXX, trys to prove outstanding amount is wrong. XXXX XXXX case is dismissed attached document outlines all 3 supplemental claims, abandon stay, and varication of balance 3 date stamps. All nonsecure debts were paid off by trustee with sales proceeds as the3rd/ final claim amount was unsettled. While 100 % of XXXX XXXX debts at filing were paid and trustee returned funds. 



D ) Case dismissed no benefit of discharge on 100 % paid unsecured debt 1 ) other creditors pursuing XXXX now and he lost the ability to convert to 7 or receive discharge do to cooper error. 
2 ) credit suffers* Refi unable to buy or refi 4 years vs 2 because if dismiss vs discharge. Cooper invited XXXX via email to refi then stated XXXX will not qualify because of recent foreclose action and dismissal XXXX. Despite credit score, income, and equity coopers errors prevent XXXX from saving $ XXXX a month even now. 
E ) HAF program as per COVID offers up to {$40000.00} for people that were in forbearance etc. 
1 ) coopers errant balance too high to pay off per HAF guidelines 2 ) cooper wont allow payments XXXX without errant reinstatement, BPO is done foreclosure process is beginning 3 ) legal action, and their gratis attorney cant fix anything state of Wisconsin also tries to assist 12 months later HAF denied because balance still too high. At this time XX/XX/XXXX {$29000.00} was found by cooper while HAF fund were recived acceptance requires payback if the home is sold for 12 months cooper delays limit Jasons access to equity. 
4 ) Trustee paid XXXX XXXX. Mr. Cooper had no record of payments even though records were on the monthly statement. Cooper required canceled check copies and dialogue from the trustee to confirm payments were made, but even then they insisted the amounts were applied. Cooper was able to verify all outstanding supplemental had been paid except the final supplemental. Of the final {$6400.00} was paid leaving {$28000.00} per supplemental claim outstanding. *** But that total was wrong and it got worse. 
F ) {$40000.00} HAF funds are added to {$230.00} that had not been applied and {$3800.00} an advance that would not have to be paid back per cooper. This amount per conference phone call was enough to reinstate the mortgage and be current. However for the next 60 months the escrow was to be repaid as it was stripped from payments to be able to receive HAF funds and reinstatement despite their being a escrow surplus of {$4900.00} on the XXXX conference call. 
1 ) {$9000.00} to be paid back over 60 months with larger payments starting XXXX. This is excessive and errant. 
Attached final resolution/statement from XXXX 3 ) As of statement due XXXX {$51000.00} per cooper statement. 
4 ) Without reinstatement trying to prove error ( s ) no payments are not accepted XXXX, XXXX, XXXX, XXXX XXXX XXXX, XXXX, XXXX, XXXX reinstatement, ( XXXX paid XXXX, XXXX ) XXXX 10 months. If these months were paid P & I only ( per cooper ), so that escrow would be outstanding. {$200000.00} as per cooper reinstatement arrangement and two payments. 
5 ) As per monthly statement and XXXX letter XXXX {$19000.00} principle paid year to date, {$42000.00} in interest, and XXXX in escrow a total of {$65000.00} paid. 
6 ) {$71000.00} would have been needed for XXXX P & I months and {$51000.00} XXXX statement HAF & Reinstatement payment with {$29000.00} XX/XX/XXXX credits equal XXXX in payments/credits. 

Where are these missing credits/payments? Unapplied for XXXX or uncredited for XXXX after w2 taxforms? 

What will you do to fix these errors? 


*Anomalies : due to eviction and unpaid water bill property tax XXXX higher than usually DELINQ SEWER XXXX DELINQ WATER XXXX XXXX tried to switch bundle from XXXX to XXXX. However cooper refused to allow this causing nearly 3 cancelations, During the times of the unbundled policy caused increase in cost where saving was sought. It was only after Cooper demanded insurance that they paid for the insurance before 3rd cancelation. This is why escrow went down recently. 




Sincerely, XXXX XXXX

Company response to consumer: Closed with explanation