Consumer complaint received 2026-01-23 00:00:00
Product: Mortgage — FHA mortgage
Issue: Trouble during payment process — Escrow, taxes, or insurance
Company: Fay Servicing, LLC
State: NY

Complaint narrative:
Company : Fay Servicing , LLC Issue Category : Incorrect loan balance / inaccurate account data COMPLAINT SUMMARY Fay Servicing , LLC is asserting, accruing interest on, and reporting a materially inflated and internally inconsistent mortgage balance that can not be reconciled with the loans original terms, historical amortization, or XXXX own XXXX XXXX. As documented in XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX ), Fay boarded the loan reporting an unpaid principal balance of approximately {$79000.00}. Subsequent servicing records show no lawful principal postings, yet Fay later reported balances escalating to approximately {$93000.00}, then to {$130000.00}, later to {$150000.00}, and ultimately to approximately {$150000.00} without documented new loan proceeds or a complete accounting bridge.

Fay has acknowledged that it relies on figures transmitted by predecessor servicers and does not independently reconstruct historical balances absent proof of error. Nevertheless, Fay used unreconciled figures to calculate loan modifications, capitalize amounts into principal, accrue interest, and furnish consumer credit reporting. These balances remain unsupported by a complete, transaction-level accounting. 
DETAILED DESCRIPTION OF THE ISSUES XXXX. Verified Boarding Principal and Absence of Principal Postings As shown in Exhibit K, Section XXXX, Fay XXXX mortgage statements immediately following servicing transfer report an unpaid principal balance of approximately {$79000.00}. Transaction activity pages reviewed in Exhibit K, Section XXXX reflect {$0.00} principal postings throughout the relevant period. Accordingly, XXXX own records establish the boarded principal balance and confirm that no lawful principal increases occurred through transactional accounting. 
XXXX. First Principal Inflation Through XXXX Loan Modification Prior servicing records reflect a XXXX loan modification that increased principal from approximately {$79000.00} to {$93000.00} through the capitalization of {$13000.00}. No cash proceeds were disbursed, and no itemized amortization analysis was provided tying the increase to lawful interest or borrower advances. 
XXXX. Escrow Advances Improperly Embedded in Asserted Principal Exhibit K, Section XXXX documents escrow advances exceeding {$22000.00} and escrow shortages exceeding {$24000.00} recorded during the bankruptcy period. XXXX escrow disclosures confirm these amounts were treated as escrow activity and were never authorized for capitalization into principal. Nevertheless, these figures later appear embedded within an asserted principal balance without disclosure or transaction-level reconciliation. 
XXXX. Unexplained Principal Escalation to {$150000.00} A subsequent loan modification dated XX/XX/XXXX reflects an unpaid principal balance of {$150000.00}, representing an increase of {$19000.00} added to an unexplained starting balance of {$130000.00}. As documented in Exhibit K, no principal postings or amortization entries support this increase. 
XXXX. Interest Accrual on Unsupported Balances Fay accrued interest and furnished credit reporting data based on asserted balances exceeding {$150000.00} despite the absence of any lawful accounting trail. Conditional interest disclosures contained in prior payoff statements do not authorize capitalization, compounding, or conversion of interest into principal. 
XXXX. Inaccurate Credit Reporting Fay is furnishing to consumer reporting agencies an amount owed of approximately {$150000.00}. This figure is irreconcilable with the original loan amount of {$110000.00}, the verified amortized balance of approximately {$79000.00}, and XXXX own transaction-level accounting.

Company response to consumer: Closed with explanation