Consumer complaint received 2023-04-12
Product: Mortgage — Home equity loan or line of credit (HELOC)
Issue: Trouble during payment process — 
Company: FIFTH THIRD FINANCIAL CORPORATION (FL)

I have a HELOC with Fifth Third Bank. It is my understanding, plus I have been told by both a branch XXXX and a loan XXXX that on XXXX loans all the interest is to be paid off first ever month, and what is left over from your payment goes to the principal. My loan has two portions of money. One portion which was the initial loan is locking in at a lower interest rate. The second portion, which was taken out during the last year is at a much higher ( more than double ) interest rate. So when I make a payment ( and all my payments are made automatically by the bank ), my understanding is that all the interest for both portions of the loan is to be paid off in full each month. This is not what they are doing. Every month they are taking my payment and paying all the interest on the lower intrest rate portion, but they are not paying all the interest on the higher interest rate portion of the loan. So every month the total balance of the load goes down, but the balance of the higher interest rate portion goes up each month. After one year of having the higher interest rate portion, the balance of that portion has gone up about {$600.00}. If this continues over the life of the loan it will cost me a ton of money. 

Now, in conversations I have had with the branch XXXX, he has agreed that all the interest should be paid off every month, he told me it is probably a glitch in their system, but offered no remedies. He made it sound like I would have to just live with it. We have also discussed how I could make an extra payment to bring down the higher interest rate portion. He told me that if I made a principal only payment on line it would be applied to the higher interest rate balance. Last month I did this, and they applied the money to the lower interest rate portion pricipal. So he as since admitted to me that I have no way to make a payment that will be applied to the higher interest rate portion ( interest or principal ). He has suggested that I come into the bank and make an extra payment, and that they may be able to force it to be applied to the higher interest rate portion principal. This does nothing to solve the original problem that the interest for the higher rate portion is not being paid off every month. So this will still cost me more money unless I pay the full balance of the higher rate portion off. 

There are many questions that I have asked about this, but they have not answered any of them. Here are a couple. 
1. They are paying some of the interest on the higher rate portion each month, how do they determine how much of that interest is paid off?

2. Also, when I make a regular payment, they pay the interest first, then are taking all the extra money and applying it to only the lower rate portion principal, shouldn't some of that extra money be applied to the higher rate portion principal, so that the higher rate principal balance is also decreased by a small amount every month? 

I feel that this is illegal. They are probably doing this to tens of thousands of their customers. This has been happening to me for a long time before I finally looked close enough at a monthly statement to realize what was happening.