Complaint Review: Gmac Mortgage DBA DITECH - Fort Washington Pennsylvania

In January 2008, I made a principal curtailment against my mortgage in the amount of $10,000.  On the face of the check, at the top, I wrote, "TO BE APPLIED TO PRINCIPAL ONLY".  GMAC Mortgage applied the payment to multiple monthly payments of principal and interest, and indicated that my next automatic payment would not be collected until the following June.  At the time of the curtailment, my principal balance was $198,000, and the curtailment should have reduced it to $188,000.  At a balance of $198,000, the typical distribution of the fixed monthly payment of $2070 would apply $1261.01 to principal and $809.54 to interest.  The distribution of the same payment toward a balance of $188,000 would apply $1311.90 to principal and $758.65 to interest.  Furthermore, if no further payments are collected until 6 months later, the whole point of shortening the life of the loan is subverted.

I immediately called and demanded that the multiple payment be reversed and that the full $10,000 be applied against my principal balance.  They eventually complied, by the end of January, and the February intered was properly calculated against the corrected balance.

On February 5, 2010, I made another principal curtailment in the amound of $20,000, and on the check I wrote, "TO BE APPLIED TO PRINCIPAL ONLY", and AGAIN, they applied the payment to multiple payments of principal and interest, and again indicate that my next payment will not be drafted from my account until December.  I sent them a stern email, and I wrote a complaint about this practice to the Federal Trade Commission, but I want people to check and be sure that principal payments that they make to their mortgage lender are being applied as they were intended.

Consider, that if I let them apply the payment as they would choose to do, the total interest charged from now until December would be $5491.39, but if the principal reduces my current balance by $20,000 and I continue to make payments each month, then the total interest that I will pay from now to December will be $4663.87, a difference of $827.52!  Furthermore, the total life of my loan is shortened from its end date of November 2016 to September of 2015!  The way that GMAC would apply my payment and then not take any further payments until December costs me MORE interest, and does not shorten the end date of the loan.  Multiply this by however many customers get suckered by this, and imagine how much they are ripping off! 

It takes a lot of discipline and scrimping and saving to put together several thousand dollars to make principal payments of this magnitude.  Our television is 15 years old.  Our cars are 10 years old.  We watch what we spend and we save as much as we can with coupons, discounts, specials, and the like.  We are not "rich", nor do we live extravagantly.  Our desire is to pay down this loan and eventually to own our home free and clear.  GMAC engages in predatory practices to prolong home loans and to cheat customers out of their hard-earned and hard-saved money.