Consumer complaint received 2025-01-10 00:00:00
Product: Mortgage — Conventional home mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage — Changes in loan terms during the application process
Company: BANCO POPULAR DE PUERTO RICO
State: TX

Complaint narrative:
Review of Mortgage Loan Modification with Banco Popular XXXX XXXX after Temporary Hardship on XX/XX/XXXX. 

In early XX/XX/XXXX, we approached the XXXX XXXX XXXX XXXX Banco Popular XXXX XXXX to discuss a temporary financial hardship caused by the loss of employment, which was officially announced for XX/XX/XXXX. 

On XX/XX/XXXX, Banco Popular approved a three-month temporary waiver to help us navigate this hardship. The waiver authorized the suspension of mortgage payments for XXXX months, including the pending payment for XX/XX/XXXX. The waiver period started on XX/XX/XXXX, and ended on XX/XX/XXXX. While the waiver allowed for partial payments, it also warned that failing to make any payments would result in the unpaid amounts being reported to credit agencies. Unfortunately, Banco Popular reported these unpaid amounts as XXXX XXXX for 120 days, totaling {$10000.00}. 

The waiver letter further stated that if any unpaid amounts remained at the end of the moratorium, we would need to communicate with the bank to explore eligibility for a loan modification. On XX/XX/XXXX, we applied for a loan modification, providing evidence of improved financial status, including proof of employment, a contract, and payroll stubs. 

The loan modification application process began in XX/XX/XXXX, and by XX/XX/XXXX, a formal financial disclosure was issued. The total amount due to be capitalized into the loan modification was {$7200.00}, and we were required to make an immediate cash payment of {$1200.00}. During this process, Banco Popular informed us that the loan modification plan was funded under the Making Home Affordable program from the U.S. Department of the Treasury. 

In XX/XX/XXXX, we had signed a mortgage loan with XXXX XXXX XXXX for {$380000.00}, with a 2.99 % interest rate for the first 60 months and a 6 % rate for the remaining 300 months. However, the loan modification signed on XX/XX/XXXX, introduced new terms. The modified principal balance became {$390000.00}, reflecting the capitalization of unpaid amounts ( {$7200.00} ) added to the remaining balance of {$380000.00} as of XX/XX/XXXX. 

The modification also introduced a step-rate interest structure, starting at 2.99 % and gradually increasing to 6 % over a XXXX period. Over the loans life, the total interest paid would exceed {$500000.00}, far surpassing the original loans terms. This modification effectively added 10 years to the loan term, resulting in more than {$190000.00} in additional interest payments over the first 12 years. During this period, we reduced the principal by only {$53000.00}, underscoring the financial burden of the new terms. 

The loan modification agreement was not favorable to us as borrowers. The lenders actions seemed to contradict the principles of the Truth in Lending Act ( TILA ) and the Real Estate Settlement Procedures Act ( RESPA ), which aim to make housing more affordable. Instead, the terms felt predatorymore akin to a shark loan than a solution aligned with the Making Home Affordable programs intent. 

Additionally, Banco Populars decision to report the unpaid amounts as delinquent or late payments to credit agencies, with a maximum delay of 120 days, had a severe and lasting impact on our financial lives. This negative credit reporting resulted in over XXXX denials for credit, affecting everything from credit cards to purchasing furniture, cars, and even renting or buying a home. Over the next XXXX years, I struggled to find a lender willing to support my efforts, as traditional lenders consistently rejected my applications. 

The impact of these credit denials was compounded by higher costs for credit transactions. I frequently had to pay double the normal interest rates for purchases made on credit. Moreover, the constant rejections damaged my credit score, which remained stuck at XXXX for XXXX years ( XXXX ). The negative credit history also affected my wife, who was co-signed on the loan and suffered similar financial setbacks. 

Despite our efforts, we were unable to have this inaccurate and unfair credit report removed. Banco Populars decision to report these payments as delinquent seems unreasonable, as the unpaid amounts were ultimately capitalized into the principal of the modified loan. This decision, in our view, violates the principles of the Fair Credit Reporting Act ( FCRA ), which aims to ensure accurate and fair reporting of credit information. 

Key Summary Principal Loan : Account Number XXXX * OriginalTerms : Loan amount of $ XXXX a XXXX term. 
Default : XX/XX/XXXX. 
Refinancing : XXXX refinanced to 480 months in XX/XX/XXXX for a higher value due capitalized unpaid months Concerns : 1. XXXX in XXXX : Despite notifying Banco Popular in XX/XX/XXXX about my re-employment, refinancing was not offered until XX/XX/XXXX. Why was there a delay of XXXX months in offering assistance, particularly during a time of financial hardship? 
2. Credit Report Impact : The default was reported as Bankruptcy/Foreclosure or Delinquent for more than 120 Days for US {$10000.00} XXXX XXXX to XXXX, negatively affecting my credit for XXXX years, despite my diligent payments since the refinancing in XX/XX/XXXX. Why was this adverse notation not removed once payments were resumed? 
3. XXXX XXXX Stagnation : Despite no late payments or unpaid bills since XX/XX/XXXX, my XXXX XXXX never surpassed XXXX during this period. Please clarify why this occurred and whether Banco Popular failed to properly update my credit history. 

Specific Questions for Response 1. Why was my request for refinancing delayed, and why was I offered unfavorable terms ( XXXX shark loan ) after only XXXX months of default? 
2. Why was the bankruptcy notation on my credit report not promptly removed after refinancing, and why was my credit score not appropriately restored despite consistent payments?

1. Why did neither Banco Popular nor the Credit Report XXXX XXXX take responsibility for reporting errors or delays in providing legally required documentation? 

Financial and Emotional Impact The mismanagement of this loans has caused : An financial XXXX of over {$200000.00} due to the refinancing of the principal loan from XXXX to XXXX  years. 
Long-term damage to my creditworthiness, affecting my ability to secure loans for vehicles, appliances, furniture, rentals, and home purchases in both XXXX XXXX and XXXX United States XXXX

Company response to consumer: Closed with explanation