Consumer complaint received 2018-05-16
Product: Mortgage — FHA mortgage
Issue: Trouble during payment process — 
Company: Seterus, Inc. (CA)

An audit of the escrow account discovered that the outside tax processing vendor Seterus contracted with for monitoring, processing, and maintain the requirements of the escrow and failed to meet its contractual obligation to maintain an escrow account within compliance of RESPA for escrow accounts. BetweenXX/XX/XXXX andXX/XX/XXXX Seterus outside tax processing vendor failed to pay the correct tax payment resulting in XXXX tax default noticed placed on the property. In addition, Seterus outside tax processing vendor failed to monitor and update the financial requirements for county taxes resulting in negative escrow balance of $ XXXX. In addition, the escrow analysis that was conduct in XX/XX/XXXX, Seterus outside tax processing vendor stated it had paid the property to County of XXXX on XX/XX/XXXX for the amount of {$2300.00}. However, that payment was never made resulting in the borrower having to pay the property taxes in order to prevent a tax default for the third time. This discrepancy was brought to Seterus attention which resulted in refund to escrow account. This refund caused a significant overage in the escrow account. As a result of the borrower now paying the property tax and insurance, the significant overage in the escrow account that existed inXX/XX/XXXX, the prior tax defaults, and escrow deficiencies due to poor management by Seterus outside tax processing vendor, the borrower requested control of paying the property taxes and insurance going forward. The borrower worked with customer service manager XXXX XXXX who would work with the departments and resources required to close the escrow account. XXXX XXXX instructed the borrower to make the contractual loan payment for principle and interest in the amount of {$1200.00} thus omitting the escrow payment and going forward and pay the property tax. The borrower abided by these temporary terms. Between XX/XX/XXXX and XX/XX/XXXX XXXX XXXX worked diligently to close the escrow account, however the tasks that were entered into Seterus system to close the escrow account were not completed or deleted on several occasions. Because of this, the account fell into a deep default in XX/XX/XXXXdue to the automated payment processing system Seterus utilizes was continuing to fund the escrow account and was shorting the contractual principle and interest payment. This resulted in an escrow account that had substantial overage, but a defaulted account. Since XXXX XXXX had exhausted all her efforts to close the escrow account and corrected the default, XXXX XXXX assumed the effort. In XX/XX/XXXX XXXX XXXX discussed the option of correcting the default by paying the escrow payments that were omitted for the prior months and that Seterus would roll the payments back toXX/XX/XXXX and correct the payment history and bring the account current up toXX/XX/XXXX. The borrower agreed and on XX/XX/XXXX the borrower issued a payment to Seterus for {$2300.00}. Once payment was received, Just XXXX gave specific instruction in a task for account to complete the transaction correction. However, an error occurred and the accounting department to did not complete the task correctly. XXXX XXXX discussed the error with the borrower and because the grace period for XX/XX/XXXX had passed, an additional payment of {$1000.00} was needed to have enough funds available for the accounting department to run the payment correction again. However, the accounting department failed to process the correction correctly. In XX/XX/XXXX, another attempt was made and the borrower issued another payment in the amount of {$1000.00} issued. Once again accounting failed to complete the payment correction. It was determined that the payment system was continuing to acknowledge that an escrow account existed and was continuing to fund that account. As XX/XX/XXXX, the escrow overage had increased to {$6800.00}. Another attempt was made inXX/XX/XXXX to correct the account and required the borrower to provide another {$380.00} which was issued by the borrower onXX/XX/XXXX. Again the effort to correct the account failed. In XX/XX/XXXXthe option of using the escrow surplus to correct the default was discussed. The borrower made the contractual payment of {$1200.00} in order to meet his obligation to the loan. After internal discussion at Seterus, the borrower would need to submit a request to authorize the use of escrow funds to correct the default on the account. That is where this request stems from. The request was to be submitted in XXXX, however an accidental payment for homeowners insurance was issued in the amount of {$890.00}. The borrower needed to wait until the payment was refunded before submitting the request. The refund was credited back to the escrow account on or about XX/XX/XXXX. On XX/XX/XXXX, the borrower made another contractual payment to Seterus for {$1200.00} to keep the account current on contractual payments.