Consumer complaint received 2026-03-26 00:00:00
Product: Mortgage — Conventional home mortgage
Issue: Trouble during payment process — Escrow, taxes, or insurance
Company: SELECT PORTFOLIO SERVICING, INC.
State: FL

Complaint narrative:
* * XXXX : * * XXXX XXXX * * XXXX XXXX. : XXXX XXXX XXXXXXXXXXXX XXXX XXXX Property : XXXX XXXX XXXX XXXX XXXX XXXX, XXXX XXXX, Florida XXXX To Whom It May Concern : This letter is submitted as a renewed and expanded consumer complaint to the Consumer Financial Protection Bureau and as a formal Notice of Error and Request for Information to Select Portfolio Servicing , Inc. under the Real Estate Settlement Procedures Act and Regulation X, including 12 C.F.R. 1024.17, 1024.35, 1024.36, and 1024.37. A servicer must comply with a written notice of error that identifies the borrower, the loan, and the asserted error, and must likewise comply with a written request for information that identifies the borrower, the loan, and the requested information. CFPBs current Regulation X pages state exactly that for notices of error and requests for information. ( [ Consumer Financial Protection Bureau ] [ 1 ] ) SPS has been on notice of these servicing problems since at least XX/XX/XXXX. In the first CFPB complaint, the borrower explained that the loan was transferred to SPS even though the loan documents and closing structure required escrow only for flood insurance, not hazard insurance, and that SPS nevertheless disbursed more than {$21000.00} for homeowners insurance policies that had either already been paid, had been rejected, or were otherwise not authorized to be escrowed. SPS purchased the loan from XXXX XXXX Mortgage which loan documents would indicate escrow for flood only, not hazard. SPS responded on XX/XX/XXXX by admitting that the account was incorrectly transferred to SPS as escrowed for both hazard insurance and flood insurance, that it advanced funds from the escrow account when an insurance policy was received, and that it had updated the account to remove hazard escrow, while still insisting that any duplicate refunds should be obtained by the borrower and then sent back to SPS. That response did not resolve the problem ; it confirmed it. SPS admitted the servicing transfer was wrong, admitted it treated the account as escrowed for hazard and flood when it should not have, admitted it advanced funds because of that error, and then attempted to shift the financial and administrative consequences of its own mistake onto the borrower. The second CFPB complaint, submitted in XX/XX/XXXX, expressly called out that SPS had already admitted making error payments for hazard insurance, had escalated the shortage from roughly {$17000.00} to roughly {$21000.00}, and was still demanding an inflated monthly amount while telling the borrower to chase insurance-company refunds for payments SPS had no authority to make in the first place. SPSs XX/XX/XXXX response again admitted the account was incorrectly transferred as escrowed for hazard and flood, again stated it removed hazard escrow, again asserted that any duplicate insurance refunds should be sent by the borrower to SPS, and again claimed the new monthly payment was accurate. The current records show the problem has not only continued, but worsened. SPSs XX/XX/XXXX statement reflects a regular monthly payment of {$5300.00}, consisting of principal, interest, and escrow, and states that the account is due for XX/XX/XXXX and that {$10000.00} is due by XX/XX/XXXX, effectively double-charging the borrower for a claimed past-due installment. The XX/XX/XXXX statement again lists the regular monthly payment at {$5300.00} and again states that {$10000.00} is due, while showing that SPS received a payment on XX/XX/XXXX, parked it in unapplied funds, and then posted a SHORT PAYMENT entry rather than treating the payment as satisfying the borrowers obligation in the ordinary course. The XX/XX/XXXX statement shows the same pattern. It lists {$4300.00} as unapplied funds, states a total amount due of {$6200.00}, and shows unpaid late charges of {$1300.00}, even though SPS also shows that it received payments and then moved them through suspense and SHORT PAYMENT entries. The XXXX statement is especially revealing. It states on page 1 that Partial payments are treated as unapplied funds until we receive enough for a full principal and interest payment, while at the same time the transaction history shows SPS receiving a payment on XX/XX/XXXX, assessing a late payment charge that same day, and then the next day posting a SHORT PAYMENT entry that applied principal and interest while zeroing out the suspense balance. That is exactly why the current late-fee demand is improper. SPS can not create or preserve a delinquency by its own payment-posting choices and then monetize that servicer-created delinquency through late fees. Regulation Xs error-resolution procedures exist precisely for servicing errors of this sort, and CFPBs mortgage servicing rules also govern escrow administration and force-placed insurance practices. The insurance charges are equally problematic. The XX/XX/XXXX statement shows XXXX separate flood-insurance disbursements in XXXX, XXXX on XX/XX/XXXX for {$2700.00} and XXXX on XX/XX/XXXX for $ XXXX XXXX Form XXXX from SPS separately reports hazard-insurance XXXX of {$22000.00} for XXXX. You have now advised that SPS also made XXXX flood-insurance payments to both XXXX XXXX and XXXX and is trying to make the borrower bear the cost of XXXX flood policies. If that is what occurred, SPS has compounded the same problem it admitted in XXXX : it is paying policies it should not pay, billing the borrower for those disbursements, and then using the resulting balance distortion to justify an inflated monthly payment and continuing late charges. The prior SPS position that the insurance XXXX would have sent you a refund check directly, which could be sent to SPS is not a valid answer. SPS made the disbursements. SPS created the escrow shortage. SPS controls the servicing ledger. SPS is the party with the servicing obligation under federal law. Removing hazard escrow without fully unwinding the consequences of SPSs own improper disbursements does not remediate the error. It simply freezes the borrower inside a distorted ledger and then forces the borrower to act as SPSs collection agent against third-party insurers. That is not correction. It is cost shifting. XXXX anticipated defenses fail on both the facts and the law. SPS will likely repeat that the account was transferred in incorrectly, that it later removed hazard escrow, and that any duplicate refunds must come from the insurers. But that admission actually establishes the borrowers core point : SPS knows the original escrow classification was wrong and knows it paid insurance based on that wrong classification. Once SPS admitted the servicing input error, its duty was not merely to stop making XXXX category of future disbursement. Its duty was to restore the account to the position it would have occupied absent SPSs own error, correct the shortage it manufactured, remove related late fees and delinquency treatment, and cease collection of amounts caused by its own misadministration. XXXX XXXX escrow rules govern how servicers maintain and analyze escrow accounts, and CFPB guidance makes clear that escrow collections are tied to amounts the servicer reasonably anticipates paying from the account. An escrow shortage built on unauthorized or erroneous disbursements is not reasonably anticipated in the ordinary sense ; it is servicer-caused. SPS XXXX also argue, as it did before, that late fees were assessed according to the note and that reporting was accurate. That answer ignores the threshold error. If the servicer misapplies payments, holds funds in suspense, inflates the amount due through improper insurance charges, and manufactures an escrow shortage by paying policies it should not have paid, then the servicer can not rely on the notes late-charge language as if the borrower independently failed to perform. The current record shows that SPS received payments, carried unapplied funds, and still assessed or preserved late fees totaling {$1300.00}. On these facts, the borrowers position is not that SPS miscalculated a late fee by a few dollars. The position is that SPS created the conditions under which it claimed a late fee at all. SPS XXXX further argue that it only escrowed flood after XX/XX/XXXX and that its current flood premium is merely a pass-through amount set by the XXXX. That defense also fails if SPS is indeed carrying XXXX flood policies or paying XXXX flood carriers for overlapping periods. Even if XXXX XXXX sets the premium, SPS remains responsible for determining whether it is properly disbursing escrow funds, whether coverage is duplicative, whether the borrower already has acceptable coverage, and whether the borrower is being charged for a servicer-caused duplication. CFPBs force-placed insurance rule governs hazard insurance specifically, but the broader Regulation X framework still requires accurate servicing, proper escrow administration, and timely correction of servicing errors. This letter therefore identifies the following servicing errors and requests corresponding information. First, SPS has erred by failing to fully correct the consequences of the improper hazard-escrow transfer that it admitted in XXXX. Second, SPS has erred by assessing, maintaining, or attempting to collect late fees, including the current {$1300.00} late-fee balance, where the alleged delinquency is tied to SPSs own misapplication of payments and insurance-related account distortion. XXXX, SPS has erred by placing funds into unapplied status and then using that treatment to roll forward past-due amounts and generate inflated monthly demands. XXXX, SPS has erred by disbursing insurance premiums in a manner that appears duplicative, including XXXX flood-insurance payments to more than XXXX XXXX, and then requiring the borrower to pay for SPSs own XXXX or to recover SPSs money from the insurers. XXXX, SPS has erred by failing to provide a true remediation after admitting the account was transferred and serviced under an incorrect escrow structure. XXXX, SPS has erred to the extent it has furnished adverse account status or maintained delinquency metrics that arise from those servicing errors. UPDATED : ( Please note that to date, in XXXX, SPS has made payment, improperly, to XXXX flood insurance companies : XXXX XXXX and XXXX XXXX for the same property. SPS must obtain, on its own, a refund for XXXX XXXX as this policy had been cancelled. Please also note that SPS has overpaid Selective Insurance company, sending a check in the amount of over {$2000.00} for a policy with a premium of only {$1800.00}. Such remediation is required at the expense of SPS not the borrower. This ongoing bad faith and improper disbursement of money is the servicers to remediate not the borrower. ) Please see the attached XX/XX/XXXX letter from SPS. SPSs XX/XX/XXXX correspondence further confirms the servicing errors at issue rather than resolving them. SPS continues to withhold substantial funds in suspense, fail to apply them in a reasonable manner and then claim a possible delinquency and added late fees to a problem THEY HAVE CREATED. SPS claims the borrower is short {$920.00} but that amount is derived from : improper escrow charges, improper insurance disbursements, and their own admitted servicing errors. SPS logic amounts to " you did not pay the full amount we incorrectly calculated, and therefore you are delinquent and owe us late fees. '' This is not legally sustainable and unjust to the borrower. This is not a legitimate deficiency in payment but rather the result of SPS ' inflated monthly obligation. SPS continues to weaponize suspense accounting. SPS receives money, holds it in suspense and refuses to apply it. Then assess late fees, inflate the amount due, and threaten credit reporting. This is a violation of RESPA. SPS to their benefit completely ignore that they created the escrow imbalance, they made unauthorized insurance payments and made duplicate coverage payments for both hazard and flood in XXXX and XXXX. They shift the burden to the borrower and demands the borrower catches up. SPS can not now rely on those same improper charges to claim that the borrower has failed to make full contractual payment. XXXX suggestion that the borrower must resolve the escrow issue by paying the inflated amount or seeking assistance options is inappropriate. The borrower is not in default ; SPS has created a distorted account balance through improper insurance payments and escrow handling. SPSnot the borrowermust correct those errors. In short, SPS is attempting to require the borrower to cure a deficiency that SPS itself created. That is not permitted under federal servicing standards. The borrower reiterates that SPS must immediately apply all unapplied funds, remove all late charges, reverse all improper escrow and insurance-related charges, and restore the account to the position it would have been in had SPS not XXXX disbursed insurance funds or misapplied payments. SPS is treating the loan as delinquent solely because the borrower has not paid amounts that SPS improperly added to the account as a result of its own escrow and insurance errors. SPS can not create a servicing error and then penalize the borrower for not curing that error. To cure these errors, SPS must do more than simply now acknowledge the proper escrow and loan documents and remove hazard escrow in name only. SPS must reverse every late fee that was assessed or carried forward because of the servicer-created delinquency, including the currently stated {$1300.00}. SPS must immediately apply all borrower payments correctly and reconstruct the account history month by month as if SPS had not improperly advanced hazard-insurance funds and as if SPS had not posted duplicative insurance disbursements. SPS must identify every insurance disbursement made since servicing transfer, including each hazard and flood payment, the date, payee, policy number, coverage period, reason for payment, and the specific authority SPS contends permitted the disbursement. SPS must identify all XXXX flood-insurance payments, including the payments reflected on the XXXX statement, and explain whether XXXX XXXX and XXXX were XXXX paid, why both were paid, and for what coverage periods. SPS must then pursue reimbursement directly from the carriers to the extent SPS made duplicate, unauthorized, or unnecessary payments. SPS is the party that made the disbursements. The borrower is not required to underwrite SPSs remediation by fronting inflated monthly payments or by acting as SPSs recovery department. SPS must also produce all escrow analyses, escrow-closing notices, disbursement histories, servicing-transfer boarding records, insurance notices, XXXX communications, coverage-verification documents, payment-posting histories, suspense-account histories, fee histories, and all records relating to any force-placement, lender-placement, duplicate payment, or overlapping flood coverage. SPS must explain how it calculated the current monthly amount due, how it carried forward past-due amounts, and why it considered the borrower late while also holding unapplied funds. CFPBs current Regulation X pages confirm the borrowers right to seek both error correction and information related to mortgage servicing. The borrowers position is straightforward. SPS admitted the account was transferred and serviced under the wrong escrow assumption. SPS then failed to unwind the damage from that admitted error. Instead, SPS preserved the account distortion, charged the borrower as though SPSs mistake were the borrowers obligation, kept or assessed late fees, and is now apparently duplicating flood-insurance disbursements while insisting that the borrower either pay the inflated balance or recover SPSs money from insurers. That is not remediation, and it is not compliant servicing. Accordingly, the borrower demands that SPS, within the timelines required by federal law, acknowledge this Complaint, Notice of Error and XXXX for XXXX, conduct a full investigation, remove the late charges it itself has created by improper servicing errors, correct the payment application history, eliminate all account balances caused by unauthorized or duplicative insurance disbursements, cease collection of any amount tied to those disbursements, correct any inaccurate credit reporting, and provide the complete servicing and insurance records described above. If SPS contends no error occurred, then SPS must identify with specificity the contractual and regulatory basis for each disputed disbursement, each late charge, each suspense posting, and each claimed monthly amount due. Please treat this submission as both a formal CFPB complaint supplement and a formal Notice of Error / Request for Information under Regulation X. The borrower expressly reserves all rights, claims, damages, and remedies. Sincerely, XXXX XXXX.

Company response to consumer: Closed with explanation