Consumer complaint received 2020-01-12
Product: Mortgage — VA mortgage
Issue: Trouble during payment process — 
Company: U.S. BANCORP (MI)

Immediately following the closing on my VA loan with a local bank, the loan was sold without my consent to another servicer, US Bank. 

The first mortgage servicer ( seller ) contacted me via US mail and told me that for 60 days during the transition to US Bank all payments due could not be charged a late fee according to Federal Law, and not to send any payments whatsoever to the first mortgage servicer that had originally closed the note. There was no mention made of credit reporting. In fact I never paid them a single payment. 

US Bank ( the buyer ) contacted me via US mail in a separate letter and told me that any payments made to the first mortgage servicer during the 60 day transition could not by Federal Law be charged late fees. There was no mention made of credit reporting. 

Given that the letters did not agree clearly on who to pay, but agreed clearly on the 60 day time horizon for them to clear up their transaction and that a late fee could not be charged during that period, I concluded Federal Law allowed 60 days for the transaction between buyer and seller of the mortgage servicing to clear, and that I would pay my payments due at the end of the 60 day period to US Bank so as not to cause further confusion ( ie if the payments arrived prior to completion of the transaction I didn't want it to be lost ). Even so I paid one payment to US Bank and held off on one payment, waiting for them to complete the transaction. 

At the end of the 60 day period, around XX/XX/2019 I called US Bank to confirm when the payment balance needed to be paid to avoid late fees, and was told by the end of the current month. I paid the payment balance by mail within ten days of the phone call - weeks before month end. 

If the phone assistant had told me it was due immediately I could have paid it via credit card or EFT easily. Following this action I placed my mortgage payment on an automatic payment, overpaying on the principal in the future by several hundred dollars each month as I'd planned from the beginning. 

US Bank did not charge me a late fee, confirming my understanding that all was well, and that the payment was not late according to Federal Law.

However US Bank did : - Report my Federally determined on time payment as late to all credit agencies, damaging my credit score to which I was notified by my primary bank via their credit reporting function.

- Sent multiple documents by US Post telling me they were going to foreclose on my home despite being in the 60 day transition. 

- Denied my direct appeal to their credit reporting with no explanation regarding the Federally mandated 60 day closing period or the disparity between not charging a late fee but reporting the same payment as late to all the credit agencies, while simply denying that their phone servicer told me I had till the end of the month - which does not follow from the fact that they did not charge a late fee. 

There seems to be a lot of confusion in this transaction. The two letters from the two banks did not agree, the terms of payment were not clear, and even US Bank 's actions of not charging a late fee, but reporting the payment as late are contradictory. In the end however, it doesn't seem fair that my credit score should suffer, when their documentation and correspondence regarding the buying and selling of a note in which I had no involvement was so very confusing. Finally USBank 's aggressive mailings on foreclosure and consequences for VA buyers seems to reflect a lack of internal coordination between the part of the bank that buys these loans with the people following up on late payments and doing credit reporting. People I spoke with at USBank seemed confused or completely unaware of the 60 day transition period, and also often were surprised to learn that this was a brand new loan - I guess the loan number assigned made it look like an older loan at US Bank? I don't know. Everyone was very nice and helpful, but again the end result doesn't seem fair.