Consumer complaint received 2017-08-12
Product: Mortgage — FHA mortgage
Issue: Trouble during payment process — 
Company: MIDFIRST BANK (GA)

I have several complaints about the manner in which my mortgage has been serviced by Midland Mortgage over the past few years, specifically regarding actions taken during and just after completion of my Chapter XXXX bankruptcy, which ended in XX/XX/XXXX, and a subsequent payment plan arrangement that I completed in XX/XX/XXXX. The separate points of complaint are outlined below. The only remedies I am requesting are : - Refund of a {$920.00} fee ( discussed in Item # 3 ) or a suitable explanation of what the fee was for and why I should have to pay it. I believe it to be a legal fee that was either already paid or one that was improperly or mistakenly applied to the mortgage account. - Correction of payment history reported to credit bureaus based on the fact that one of my monthly payments was applied to fees instead of being treated as a payment ( discussed in Items # 4 and # 5 ). The other points of complaint are included to make Midland Mortgage aware of the issues and to go on record with  regulators. If there are others with similar complaints or data suggesting improper policies or patterns of behavior, perhaps regulators will be motivated to investigate further and hold Midland Mortgage accountable for their actions. Finally, I have documented two other points of concern to make Midland Mortgage aware of serious issues affecting their customers. 1. Questionable and potentially improper procedures and disposition of Motion for Relief in XXXX. In XXXX we fell behind on our mortgage payments during our Chapter XXXX. We went through the procedures to allow direct communication between ourselves and mitigation specialists at the mortgage company. We were pre-approved for a loan modification which had to be approved by the bankruptcy court. However, while this process was underway the mortgage companys legal representatives were pursuing a Motion for Relief of Stay through the bankruptcy court. We understand that this motion in itself should not directly effect the mortgage and that it would not be out of the ordinary for the mortgage company to continue trying to be relieved of the stay of bankruptcy for future proceedings should the plan not be approved. If the outcome of these proceedings were limited to a decision on the stay there would be no harm in them. However, it seems to be common practice for these motions to result in stipulations concerning payments, schedules and consequences directly relating to the loans themselves. That being the case, it would seem to be more in keeping with anti-double-tracking requirements to suspend Motion for Relief proceedings while mortgagors are known to be pursuing mortgage assistance measures rather than put in place stipulations related to the loan in order to satisfy the court and set aside the Motion for Relief before or while mortgagors are establishing a mitigation plan through other channels. In my case, the last paragraph of the notice of the outcome of the hearing ( Attachment # 1 ) states that our future payments ( for unspecified duration ) would be under STRICT COMPLIANCE ORDER, such that if we were XXXX dollar short or one day late we would have 10 days to cure the default or an Order Lifting the Automatic Stay will be issued by the Judge without any further hearing or notice, and your property will be foreclosed upon. This seems to suggest that the outcome of the hearing became broader than simply covering whether or not the stay would remain in place and expanded into the handling of the mortgage itself. It is unclear how this would have been enforced, but given that the loan modification plan has its own schedule, requirements and potential consequences ( not to mention the Dodd-Frank guidelines ), this language seems to be trying to define a separate, potentially shorter, path to foreclosure in the event that payments at some future date were late or to place additional payment schedule requirements on the loan. Obviously once the payments were caught up, making one payment a day late or a dollar short would not meet the Dodd-Frank requirements of being 120-days delinquent before proceeding with foreclosure. In this case, local hired attorneys were trying to ( perhaps over-zealously ) represent the mortgage companys interests separately and without any communication with the companys loan mitigation personnel. This opens up a concern that these Motion for Relief actions ( and perhaps other bankruptcy related filings ) are being used as a defacto form of double-tracking for mortgagors that happen to be in bankruptcy and that the dispositions go beyond just affecting the stay of bankruptcy to affecting the terms of the loan and/or foreclosure conditions. It may be worth investigating the practices of Midland Mortgage and their hired legal representatives to determine whether bankruptcy filings are being used in a manner that violates the letter, or at least the spirit, of the CFPB anti-double-tracking rules for mortgage servicing. 2. Motion for Relief filed in final weeks of bankruptcy, resulting in unnecessary fees, tasks and hearings. Over the course of our six-year bankruptcy Midland Mortgage actually filed three separate Motions for Relief of Stay. The first two were filed when three payments were 30-days past due and a fourth had come due. The final one was filed on XX/XX/XXXX, stating that three payments had been missed. ( In fact, the third payment had been already been sent and was credited on XXXX XXXX. ) The bankruptcy had actually originally been scheduled to end in XXXX, but the trustee was unhappy with the amount of overtime pay I had received for part of the bankruptcy term so it was extended around one year to be a 100 % plan. The hearing for the Relief of Stay was held on XXXX XXXX, the same day as the very last payment of six years worth of payments was credited by the trustee. Notice of Final Cure of Payment was sent on XXXX XXXX, and the bankruptcy was officially discharged on XX/XX/XXXX. When I went in to speak to my attorney about the motion I asked why the mortgage company would file for relief of a stay that was going to end with the discharge in a matter of weeks anyway. I was told that this very common, but the attorney was also surprised that the motion had been filed with the just the three payments due. It seems reasonable to conclude that the motion was filed not in spite of the impending end of the bankruptcy, but rather because of it. I am not sure why a mortgage company would accelerate this process at the end of a bankruptcy, but there must be a reason it is common. Filing the motion came with a large legal fee of {$1000.00}. ( Maybe this is a make-work exercise for underfunded legal departments? ) There was also an apparent attempt to add additional fees to the bankruptcy ( item # 3 below ). This also resulted in additional time away from work to make phone calls and attorney visits, not to mention extra work for the attorneys, staff and additional tasks for the courts. In the end, my attorneys negotiated a six-month payment agreement to pay the missed payments and all the fees, even though the agreement would stand only for the six weeks or so until the end of the bankruptcy, at which point I would be free to work out arrangements directly with Midland Mortgage on the amount remaining. In my case, the trustee payments were a large percentage of my income and no longer having to make them opened up a considerable amount of available extra money I could use to catch up payments. I imagine this is not always the case with many mortgagors coming out of bankruptcy, and these last-minute actions, with the additional fees and unexpected urgency in catching up payments, might be enough to precipitate foreclosures. Or ( as it turned out in my case ) to force borrowers into mitigation programs ( for which there may be government-funded incentives? ). This practice may already be well known to regulators, but if it is not I recommend looking closely at data related to mortgagors coming out of Chapter XXXX to see if there is a pattern of questionable last-minute actions taken against them that may be intended to make them more vulnerable to actions that benefit the lenders. A Chapter XXXX plan is a long, difficult struggle. Its completion should mark a time for moving forward and rebuilding, not a time for creditors to precipitate or exploit weaknesses. 3. Attempt to charge unexplained, possibly duplicate fees to bankruptcy in last days that were carried over to loan when apparently rejected by bankruptcy trustee. As I was nearing the end of my bankruptcy I was carefully watching the posting of payments to my account on the XXXX XXXX XXXX web site. On XX/XX/XXXX I signed in to find that an additional fee of {$920.00} had been added to the total amount due ( Attachment # 3, Claim No. XXXX on line XXXX ). This was not present when I had last signed on to the XXXX site on XXXX XXXX ( Attachment # 2 ). Of course this was frustrating because it would add at least one more bi-monthly payment to the term of the bankruptcy. I called my attorneys to see of they could find out more about the fee. I knew it to be the exact amount of the legal fee charged for the Motion for Relief filed in XXXX. But I knew I had paid this fee in two installments per the XXXX agreement that came out of that hearing. ( Attachment # 5 ). The fee for the XXXX motion was {$100.00} more and was being integrated into the payment plan agreement from that hearing, so I knew that this one should not be added to the bankruptcy. On XXXX XXXX the fee dropped off of the XXXX account ledger ( Attachment # 4 ). I  asked my attorneys why this would have occurred and I was told that maybe the mortgage company had tried to add the fee but that the trustee had rejected it due to the total amount of the bankruptcy being nearly paid off. I wrote it off as a potential mistake that had been corrected. But then that exact amount turned up as a fee charged to the mortgage itself and was included in pre-foreclosure notices received from Midland Mortgage as well as in the paperwork for the payment plan I entered into after the bankruptcy was discharged. I questioned this fee during the application process for the mitigation plan because I knew I had paid or made other arrangements for all of the legal fees associated with all of the Motion for Relief proceedings. I was never offered any explanation for what the fee was or why it had been added. I still have seen no documentation of this fee and believe it to be a mistake. I am requesting that Midland Mortgage credit this amount back to my account or provide sufficient documentation to justify it. 4. Improper application of payment towards legal fees, leaving loan an additional payment behind, forcing us to seek relief again to avoid foreclosure. According to our repayment agreement defined in the XX/XX/XXXX Motion for Relief of Stay hearing and documented on XX/XX/XXXX ( Attachment # 1 ) we were to pay one of the payments of {$1000.00} immediately and begin making regular timely payments of {$1000.00} beginning XXXX XXXX. On XXXX XXXX we sent certified funds by overnight mail of {$1000.00}. This was credited to our mortgage account as our XX/XX/XXXX payment on XX/XX/XXXX as shown in the transaction log on the web site. ( Attachment # 6 ) We mailed in the payment due for XXXX XXXX. On XXXX XXXX the payment was credited to the log, but was not applied as a payment, despite the fact that it was sent with a payment stub and was for the exact payment amount of {$1000.00}, which included principal, interest and escrow for the XX/XX/XXXX periodic payment. It should have been credited as the XX/XX/XXXX payment. Instead it was allocated to Unapplied funds. On XXXX XXXX a fee of {$1000.00} was applied to the account ( the legal fees for the XX/XX/XXXXRelief of Stay filing, separate from the {$920.00} discussed in Item # 3 above ). On XXXX XXXX the {$1000.00} was removed from unapplied funds and used to pay a {$100.00} fee, and a {$920.00} fee ( totaling to the {$1000.00} amount of legal fees for the Motion for Relief ). I called several times to point out the issue and was told by customer service staff that there was no error. Applying this payment towards fees instead of treating it as my XXXX monthly payment seems to directly contradict the guidelines for mortgage servicing ( 12 CFR 1026.36 ( c ) ( 1 ) ( i ) ) as well as the terms of the repayment agreement. Further, in mid-XXXX I made the first of the mid-month additional half-payments scheduled in my payment plan from the Motion for Relief hearing in XXXX, and at the end of XXXX I made a full payment due for XXXX XXXX according to the plan. However, there are apparently administrative delays in transferring accounts internally at Midland Mortgage ( from bankruptcy to regular accounts ) and the XXXX XXXX payment was not credited until XXXX XXXX. The half-payment remained in unapplied funds ( appropriately ). Meanwhile, on XXXX XXXX Midland sent a letter ( Attachment # 6 ) indicating that I was more than four full payments behind ( despite the fact that they had misapplied one payment and already had another in their hands ). I was also contacted by staff at Midland Mortgage involved in handling foreclosures to discuss the situation. By XXXX, I had made what should have been counted as my XXXX payment ( which was applied as fees XXXX. I had made a full payment ( credited late ) that should have been counted as my XXXX payment. I had made one half of my XXXX payment that was waiting in unapplied funds. And I had the second half of my XXXX payment ready to send. If this additional half payment were sent and posted it would have meant that I was actually under 30 days late on regular mortgage payments. But by now my bankruptcy was ended, my payment plan was invalid, the stay was no longer in place and the mortgage company was threatening foreclosure based on the assumption that I was four payments behind, plus extensive fees ( including the questionable {$920.00} from Item 3 above ). Not wanting to risk proceeding to foreclosure I contacted the delinquency assistance department at Midland and began the process of setting up a payment plan to catch everything up. They advised me not to send anything else while the account was in the foreclosure status and we were working on an assistance plan, so I held onto the second half-payment and waited to get the payment plan established. On XXXX XXXX I was sent a conflicting Your Account Status letter that more accurately reflected the amounts paid, but still showed three payments behind. I understand that, with the exception of the contested {$920.00}, the same number of dollars needed to be paid to fully catch up the account ( once all paid amounts had been properly credited ), however the XXXX XXXX payment was applied. But there is a big difference between being a month or so behind and informally paying extra amounts when possible to catch up fees and being compelled to enter into a formal mortgage assistance plan to avoid foreclosure. Nothing I experienced throughout this process leads me to believe that this was a simple error related to just my own account. Instead I believe this issue to be a product of policy. I think it is likely that my experience is commonplace and that Midland Mortgage has adopted these practices not just to prioritize collection of fees, but also compel customers to catch up payments and enter into formal plans and assistance programs, some of which may offer publicly funded incentives. It may also help accelerate foreclosures for problem accounts.
Of all of my complaints this one seems like the clearest violation of mortgage servicing guidelines. I would recommend that regulators look into whether Midland Mortgage routinely took and continues to take this harmful action against other mortgagors. 5. Reporting of loan as 90+ days past due ( due to item 4 above ) to credit bureau, damaging credit history. Once our payment plan was complete Midland Mortgage reported the payment history to the credit bureaus as they had it in their own records, indicating that we were 90+ days late for several months during the course of the payment plan when this should not have been the case. This is especially damaging to the credit records of people emerging from lengthy Chapter XXXX cases because it represents a large part of the very limited credit history left when most past accounts have dropped off. We understood and accepted that credit reporting would continue throughout the payment plan and that it would reflect the status of our payments. However, due to the misapplication of a payment towards fees Midland Mortgages records were in error and this erroneous information is what is reflected in our credit reports. We were at least 30 days behind at the time of the bankruptcy discharge, and we might have been counted as 60 days late, depending on reporting dates and the lag in crediting payments. However, applying one of our payments to fees instead of counting it as a payment accounts for a full 30 days worth of late reporting. In addition, had everything been handled promptly and properly there should not have been a strong reason to enter into a mitigation plan at all, which came with additional payment schedule delays and extended by at least one the number of months for which payments were reported as late. I am requesting that Midland Mortgage correct their credit bureau reporting to accurately reflect our account status, counting the misapplied payment as a regular monthly payment and allowing for the delays driven by its own actions. At minimum this should mean reducing the time in arrears by 30 days for each month reported from XXXX through XXXX of XXXX. In addition to the formal complaints above, the following informal observations are included to highlight serious customer service failings that could and probably do contribute to very negative outcomes for Midland Mortgage customers. A. Confusing and contradictory mailings sent throughout payment plan term, as well as low level of support from representatives by phone. After making a payment plan arrangement to catch up my mortgage payments and fees I continued to receive multiple regular pieces of mail from Midland Mortgage concerning my account. The information in these letters seemed contradictory and some of them did not seem to reflect the terms of the plan. I assume that Midland Mortgages automated systems and procedures trigger these mailing under particular conditions and that some of the processes are not aware that mitigation arrangements are in place. - Can we help? mailings ( Attachment # 8 ) At the begging of each month I received a letter bearing the title Can we help?, which provided a list of the months for which payments had not been received, a total due on the loan, and the message, This is a very serious matter that requires your attention. The package included forms and documents needed to apply for a mortgage assistance program. Receiving these mailings can be alarming when you are already in such a program. It makes you think something has gone wrong and your existing assistance program is no longer in effect. - Mortgage Statement ( Attachment # 9 ) In the middle of each month a regular mortgage statement came in the mail. This document showed an Amount Due block at the top with the total amount ( all missing payments and outstanding fees added together ) and a payment due date if the first of the next month. Just looking at the top of this document it appears that you are expected to pay this full amount and not the amount scheduled in your payment plan. You have to look at the payment coupon attached to the bottom of the document to see the actual payment amount and scheduled date from your payment plan. This is very confusing. There are different amounts and dates showing on the very same piece of paper.
- Late Charge Letters ( Attachment # 10 ) Also around the middle of the month I received a letter saying that my payment for a particular month had not been received on time and that I should add the amount of the late charge to the payment. These letters showed the amount of the regular payment, late charge and regular payment date ( not the agreed upon payment amount and date from the payment plan ). - Your Account Status letters ( Attachment # 11 ) Around the third week of each month I received a letter titled Your Account Status. This letter referenced the payment plan and the presented data seemed to reflect the actual status of the payment plan more accurately than any of the other documents. I am sure that all of these documents make perfect sense to Midland Mortgage staff ( or maybe not ), but to customers, especially taken all together, they are very confusing. Customers must think, Is my plan still in place? Am I supposed to pay this amount by this date? If I dont, will my home be foreclosed? It doesnt seem like it should be that hard for Midland Mortgage to send out a single statement each month reflecting the terms and status of the customers mitigation plan and including the expected payment and due date according to the plan. Other statements and offers of help should be suspended for the duration of the plan. This makes me very concerned for mortgagors trying to go through mitigation plans who might be elderly, less-educated or otherwise less able to keep up with plan schedules and requirements. These multiple and conflicting notices must create a great deal of undue stress and confusion. It is not hard to imagine that this could lead to people losing their homes over missed deadlines, improper payments or simply by throwing up their hands and giving up. I know a lady in my neighborhood that was facing foreclosure ( I do not know with what mortgage company ) and just started ignoring everything about her situation until officers came to her house and put all of her stuff out on the lawn. She was a foreign national and non-native English speaker. Was she overwhelmed and confused by multiple, conflicting statements like these? B. Slow reporting of positive status to credit bureaus, resulting in unnecessarily long waits with apparent but not actual negative credit history. I completed my payment plan in XX/XX/XXXX. However, my credit reports reflected that I was still in a payment plan until XX/XX/XXXX when current status of the account was finally changed to on time. Midland Mortgage has reported the account as on time regularly every month since then. I understand that there may be somewhat of a delay in transitioning accounts from payment plans to current status, but it should not take three months after completion of a payment plan for Midland Mortgage to begin reporting an account as current to credit bureaus. Mortgage account status is one of the most significant factors affecting peoples credit scores, and Midland Mortgage surely knows this. If this delay in updating the reported status of accounts is purely internal inefficiencies, then Midland Mortgage should address this for the benefit of their customers. However, it may also be worth also investigating whether this delay is a deliberate policy. There must be advantages to temporarily suppressing customer credit scores in certain situations, such as reducing loan risk by preventing customers from adding other credit obligations and perhaps preventing or delaying mortgage refinancing with other lenders. Perhaps Midland Mortgage intentionally waits to the end of the period within which they are obligated to report a change to positive credit status, which may be perfectly legal but is unethical and damaging to borrowers.