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  1. #1
    Join Date
    Jul 2014
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    Default Mortage Company is Not Applying Extra Payments to Principal Balance

    My question involves a mortgage in the state of: Colorado
    My mortgage was sold to Green Tree and it's been a pain in the butt since. I'm trying to pay extra principal, but every month, for several months, they've put that money into "unapplied funds." This month, I apparently owe the full mortgage payment, despite the fact that the "unapplied funds" would pay a good portion of that mortgage payment. I would gladly pay the full payment if I knew the "unapplied funds" would go to extra principal. The payment form has a place for extra principal, but that amount keeps getting "unapplied." Is there anyone else with this kind of problem with Green Tree and what can I do legally to keep them from playing this game? Some searches have shown that there are a huge number of unhappy Green Tree customers- and some class action suits- I would hope the courts could force a take-over of this company. I've seen nothing good about how they do business. Thank you for your help.

  2. #2
    Join Date
    Mar 2013
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    18,152

    Default Re: Mortage Company is Not Applying Extra Payments to Principal Balance

    Paying extra to reduce principle DOES NOT reduce the next payment.

    You still have to make the full payment.

    When you called up and ask why the additional payments haven't been applied to the principle, what did they say?

  3. #3
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    Jul 2014
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    Default Re: Mortage Company is Not Applying Extra Payments to Principal Balance

    Quote Quoting adjusterjack
    View Post
    Paying extra to reduce principle DOES NOT reduce the next payment.

    You still have to make the full payment.

    When you called up and ask why the additional payments haven't been applied to the principle, what did they say?
    I understand that. What's got me angry is that I make an additional payment which then sits in an unapplied funds account. Sometimes it has sat there and they said my next payment was reduced by so and so or, more recently, it sits there and they say I need to pay the full amount. My problem is that it sits there. They have possession of it and it does nothing. I want to reduce my principal more quickly, but they set it aside instead of apply it to principal as requested.

    As for calling them, I don't think I could talk to these people in a civil manner.

  4. #4
    Join Date
    Nov 2007
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    Officially across the country from where I've been all my life
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    4,494

    Default Re: Mortage Company is Not Applying Extra Payments to Principal Balance

    Our mortgage servicer also uses the unapplied funds stuff.....

    Send a mortgage payment with the difference from your mortgage payment and the unapplied funds. They'll then apply the funds. After that happens, make an additional whole payment if that's what you'd like to do

  5. #5
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    Jul 2014
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    Default Re: Mortage Company is Not Applying Extra Payments to Principal Balance

    I'll try that, but I'm betting that in a month when I want to pay additional principal, I'll be back in the same boat. The payment form has a spot for additional principal. If I earmark additional money as additional principal, are they obligated to apply it that way? This is my problem with them- they are doing what they want, not what they are supposed to. I've never had this problem with the previous mortgage servicers.

  6. #6
    Join Date
    Nov 2013
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    Default Re: Mortage Company is Not Applying Extra Payments to Principal Balance

    The way additional principal is applied to a loan or mortgage will depend on the type of loan it is, ARM, conventional, or equity.

    An additional payment (assuming that the full monthly principal and interest is paid) on an equity loan will reduce the next month's payment on interest based on the new principal balance. You should always pay at least the interest amount every month because that is applied to the account first. What is left over is applied to principal with or without addition money.

    The additional payment on an ARM may or may not reduce the principal balance until the annual reset date at which time the loan will be recalculated. That depends on the bank the loan is with. In OP's case, they may be holding the additional payments until the reset date and then apply it to the principal.

    The addition payment for a conventional mortgage will come off the back end of the mortgage principal and the monthly payment will be the same until the principal is paid off. With each additional payment, the amount paid to interest goes down and the amount paid to principal goes up.

    The best way to pay off a conventional mortgage or even a car loan in half the time is by using the amortization schedule of the loan. You make the regular payment and then add the principal amount for the next month. You will have saved the interest amount for that next month and skip to the following month.

    Let's put this in perspective for the OP. How much is the regular P&I payment and how much more are you paying on the principal? If it doesn't meet the bank's threshold for an additional payment, they may not credit the account until the threshold amount is in the unapplied funds account.

    A phone call to GreenTree may solve the problem.

    If we receive a payment larger than the amount due, we apply the additional amount first to any outstanding fees and then to your principal balance.
    Seems pretty clear.

  7. #7
    Join Date
    Jul 2014
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    26

    Default Re: Mortage Company is Not Applying Extra Payments to Principal Balance

    The regular payment is about $760 of which about 400 is principal due (this coming month) and I have $450 in unapplied funds. I am trying to do this "You will have saved the interest amount for that next month and skip to the following month." as often as I can. I do not have any outstanding fees. It is an ARM, by the way. The reason I'm upset with them and am writing to the forum is that by not applying my extra payments, they are not letting me pay off my mortgage more quickly and I see no reasonable reason on their part for not applying my extra payments to principal. I'm believing what I've seen of other complaints of Green Tree- that they try to squeeze every cent they can out of a mortgage and by not letting me pay down the principal more quickly, I will end up paying more interest.

  8. #8
    Join Date
    Nov 2013
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    6,994

    Default Re: Mortage Company is Not Applying Extra Payments to Principal Balance

    The terms of an ARM can vary from bank to bank. Your loan was sold according to your OP. I would read your loan agreement to see what it says about additional principal payments and how they get applied before you determine that they are not being applied correctly. Then check with GreenTree to see if the same terms apply.

  9. #9
    Join Date
    Jul 2014
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    26

    Default Re: Mortage Company is Not Applying Extra Payments to Principal Balance

    The section "Borrower's Right to Prepay" states:

    "I have the right to make payments of Principal at any time before they are due. A payment of Principal only is known as a "Prepayment." When I make a Prepayment, I will tell the Note Holder in writing that I am doing so. I may not designate a payment as a Prepayment if I have not made all the monthly payments due under this Note.

    I may make a full Prepayment of partial Prepayments without paying any Prepayment charge. The Note Holder will use my Prepayments to reduce the amount of Principal that I owe under this Note...."


    I have met all of the conditions of this clause, the Note Holder has not. I think Green Tree is the 4th servicer to hold this Note and the only ones to not accept any of my prepayments. I can't see how Green Tree or any other Note Holder can change the terms of my Note. Only the Note Holder can change, not the terms of the loan. As far as I can tell, Green Tree is violating the terms of the note and I want to know how to go after them.

    I just googled Green Tree again (the first page of google brings up their website and most of the rest of the links are about Green Tree consumer complaints) and the 1/9/2015 review from this link: http://www.yelp.com/biz/green-tree-s...c-saint-paul-2 is exactly reflecting my complaints. Green Tree does not do fair business practices and they need to sued. Please guide me as to how to get that ball rolling.

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