Consumer complaint received 2021-06-24
Product: Mortgage — Conventional home mortgage
Issue: Trouble during payment process — 
Company: FIRST MERCHANTS CORPORATION (IN)

I have serious concerns about First Merchants ' ability to service loans properly and in compliance with federal regulations. I have had a number of worrisome issues since refinancing with them in XXXX of 2021, culminating in an issue this week where a customer service representative gave me a completely fabricated explanation for an issue that, if I had believed, would have cost me thousands of dollars.

I refinanced my mortgage loan with First Merchants Back in XX/XX/2021. I made my first payment in XXXX of 2021. At this time, my loan had still not been set up in the system, so I took a check to a local brach, received a receipt from the teller. Later that month, I started getting calls from First Merchants ' debt collection team saying that I had not paid my mortgage. Apparently, the bank had lost my check. I spent at least an hour on the phone with customer service trying to get this issue straightened out. I had to call back multiple times to get the late fee I had been assessed waived. 

My annual homeowner 's premium is set up to be paid out of my First Merchants escrow account. In early XXXX, I got a call from my insurance agent saying that my annual homeowner 's premium was so far past due that they were going to cancel it. They had apparently contacted First Merchants several times about the overdue payment and had never heard back from anyone. I called First Merchants customer service, was passed around several times to people who had no idea what to do, and eventually was told oops, yes, we missed the payment. One person at First Merchants told me they had contacted my insurance company to ask for a quote and never heard back. I asked for evidence of that and they were unable to provide anything, and my insurance agent has no record of that. First Merchants did not have an explanation for why they never responded to my insurance company 's multiple outreaches. 

The most recent incident is by far the most worrisome. In XXXX of 2021, I changed flood insurance and obtained a much cheaper policy. I asked that First Merchants do a new escrow analysis, and on XX/XX/2021, they sent me an Annual Escrow Account Disclosure Statement ( attached ). According to this statement, I had a surplus in my escrow account of {$2600.00} that they were returning to me via an enclosed check, and my monthly payment starting on XX/XX/2021 was going to be {$1200.00} XXXX down from {$1400.00} ). ( My new flood insurance policy was only about {$1200.00} cheaper than my prior policy, so I also have questions about whether their initial escrow analysis was correct, considering the sizeable refund and $ XXXXmonth lowering of my mortgage payment. ) I set up my account to autopay the {$1200.00} each month. The payment went through without issue for the month of XXXX. 

In mid-XXXX, I started receiving at least a dozen calls per day from a number that showed up on my phone as " spam, '' but turned out to be the credit department at First Merchants. When I realized who was calling, I answered, and the person on the line demanded I give her my date of birth and last four numbers of my social security number. She refused to provide any information as to why she was calling until I provided these two items of information. I declined to do so. 
That same day, I received a letter from XXXX XXXX saying that my monthly payment of {$1400.00} was overdue. The letter noted that I had made a partial payment of {$1200.00} for XXXX, but still owed {$170.00} for the month of XXXX. I called First Merchants customer service and asked why my monthly payment had gone up without any notice. XXXX, the representative, put me on hold to speak to " loan servicing, '' then came back and said, " Did you get a check with your escrow analysis statement? '' I told him that I had. He said, " What did you do with it? '' I told him I had deposited it. He said, " Well, loan servicing says if you wanted your payment to go down, you had to return the check. If you kept the check, your payment would go up. '' I told him that it didn't say that anywhere in the escrow analysis disclosure I received. He said, " They said you got a couple letters about it. '' I told him I had not receieved any letters or any notification at all. He suggested that if I wanted to return the {$2600.00} check, my payment would go down to the {$1200.00} stated in the escrow disclosure. I told him I did not want to do that and asked if he could waive the late fee that had been assessed for XXXX. He told me that he was happy to waive the fee, but couldn't do so until I paid the outstanding {$170.00} that was due. I told him I would pay that and then call him back for help with the late fee. 

I went online to pay the {$170.00} that XXXX and the letter from First Merchants said was due. Despite my First Merchants loan account ( and my Old National checking account ) showing that a partial payment of {$1200.00} had already been paid for the month of XXXX, the First Merchants payment system was showing that I still owed {$1400.00} for the month ( plus a late fee of {$48.00} ). I called customer service, yet again, to see how to mak a partial payment for {$170.00}. The customer service representative sent me to a voicemail box for a loan servicing person whose voicemail said he was on vacation. I called a general number for First Merchants loan servicing and left a voicemail saying I needed help 1 ) figuring out how to make the remaining payment of {$170.00}, 2 ) waiving the late fee that had been assessed, and 3 ) understanding why my monthly payment had gone up without warning and why I had not been told that this would be the consequence of keeping the surplus check I received with my escrow disclosure.

About 30 minutes later, a woman named XXXX with First Merchants loan servicing called back. She said that she had looked into my account and found that " for some reason, the system didn't record your new monthly payment amount after the escrow disclosure - it looks like it recorded it for one month XXXX XX/XX/2021 XXXX, then it went back up. '' ( Note, the payment amount in the system didn't actually go " back '' to what it was XXXX {$1400.00} - it went to a new amount, {$1400.00}. ) XXXX confirmed that I was allowed to keep the surplus check and that my correct monthly payment was {$1200.00}. She said it was just a " system error '' that caused the misunderstanding. 

I understand mistakes happen. However, XXXX specifically told me that loan servicing told me that my options were to keep the {$2600.00} surplus check and have a monthly payment of {$1400.00} or return the check and have my payment go down to {$1200.00}. This was apparently completely made up. When I asked why I had not received any notification of the jump in payment, he specifically told me that I had received " a couple of letters. '' This, too, was apparently a complete fabrication. Had First Merchants ' website been sophisticated enough to allow me to make the partial payment of {$170.00} that I thought I owed, I would have continued to make monthly payments of {$1400.00}, instead of {$1200.00}, indefinitely - an overpayment of {$170.00} each month. There is no indication that First Merchants would have caught this error or otherwise rectified it without my continued questions and follow-up. 

This was a serious error, but most concerning to me is that First Merchants apparently fabricated a justification for the error ( a justification that blamed me, the consumer, for cashing a surplus check and then missing non-existent notifications they claimed to have sent ) instead of looking into the issue and resolving it.