Common Payment Application Errors

Under RESPA, servicers must apply payments according to the loan contract and credit payments on the date received. Common violations: payments held in suspense/unapplied accounts without justification, partial payments improperly returned, payments applied to fees before principal/interest, trial modification payments not properly credited, and payments to old servicer during transfer not forwarded. Each error creates a genuine dispute over the amount owed. Use a QWR to demand full payment history and accounting. Payment misapplication can reduce claimed balances and defeat summary judgment. See: Servicing Errors Guide.