Consumer complaint received 2026-02-12 00:00:00
Product: Mortgage — Other type of mortgage
Issue: Trouble during payment process — Payment process
Company: SELECT PORTFOLIO SERVICING, INC.
State: MA

Complaint narrative:
EXECUTIVE SUMMARY : SPS has asserted a default by redefining amounts due using categories that do not appear in the Business Promissory Note or Mortgage. This resulted in the apparent misapplication of payments, continued assessment of default-rate interest after cure, and the creation of default-rate payment figures that do not correspond to any provision in the loan documents. SPS is demanding more than {$19000.00} in amounts that I can not reconcile to the Note or Mortgage and has issued a Notice of Default based on these figures. My XX/XX/XXXX payment exceeded all amounts then due under the Note, yet the account continued to be treated as in default. I am requesting regulatory review and correction of the account. 
ANALYSIS : 1. SPS redefined amounts due using categories not contained in the Note, leading to an asserted default.

The Note defines the monthly amount due as the principal-and-interest installment and the applicable late fee. SPS increased the amount due by including escrow items, shortages, advances, default-rate principal and interest, and other categories that are not identified in the Note as amounts due and payable under the Note.

This redefinition of amount due appears to be the upstream issue that resulted in the asserted default and the downstream payment application errors.

2. SPS applied my XX/XX/XXXX payment to non-Note items even though the payment exceeded the amount then due under the Note. 
On XX/XX/XXXX, I paid {$4000.00}. At that time, the amounts due under the Note consisted of the XXXX principal-and-interest installment and the applicable late fee. The payment exceeded those amounts. 
Section D of the Note permits discretionary application only when a payment is less than all amounts due and payable under the Note. Because my payment exceeded the amount then due under the Note, Section D was not triggered by its terms. 
Despite this, SPS appears to have applied funds to escrow, advances, default interest, suspense, or other non-Note items rather than fully satisfying the XXXX installment and late fee. This application resulted in the account continuing to be treated as in default even though the Note-defined obligations had been satisfied. 
3. Default-rate treatment continued after the XXXX installment was cured. 
Section H.1 of the Note addresses default-rate interest when a monthly installment remains unpaid for 30 days or more. Once the XXXX installment and late fee were paid on XX/XX/XXXX, any basis for continuing default-rate treatment tied to that installment ceased. 
However, the account reflects continued default-rate treatment after XX/XX/XXXX. I have not been provided with contractual authority supporting this continued assessment. 
4. SPS demanded payment figures that do not correspond to any provision in the Note or Mortgage.

SPS demanded {$9800.00} and {$19000.00} as payments due as according to their letters dated XX/XX/XXXX and XXXX, respectively. I have been unable to identify any provision in the Note or Mortgage that authorizes : A redefined or default-rate principal-and-interest installment, Capitalization or rolling forward of unpaid amounts into a new installment amount, or Creation of lump-sum payment figures not derived from the contractual installment structure.

Section H.2 applies only after maturity or valid acceleration, neither of which had occurred at the time of the demand. The demanded figures do not correspond to the installment amounts defined in the Note.

5. Notice of Default based on amounts not derived from the loan documents. 
The XX/XX/XXXX Notice of Default demands a lump-sum figure that does not correspond to the installment amounts defined in the Note and includes categories that I can not reconcile to any provision in the loan documents.

Because the asserted default appears to be based on non-Note categories and payment application decisions described above, there is a risk of wrongful acceleration if the account is not corrected.

* * a PDF version of this complaint is attached to facilitate readability * *

Company response to consumer: Closed with explanation