Product: Mortgage

Subject : Complaint Regarding Escrow Calculation Practices for FHA Loans To Whom It May Concern at the Consumer Financial Protection Bureau ( CFPB ), I am writing to formally file a complaint regarding a systemic issue with escrow calculation practices for FHA loans. This issue affects not only my personal mortgage but also poses a significant financial risk to first-time homebuyers across the country. It relates to the way mortgage servicers, such as NewRez LLC/Shellpoint Mortgage Servicing , calculate initial escrow payments based on outdated property tax rates, despite knowing that property taxes will unlock and increase after the sale of a home. This practice guarantees escrow shortages, leading to sudden, unaffordable increases in borrowers monthly mortgage payments. 

Background on My Personal Experience I purchased my home in XX/XX/XXXX with an FHA loan serviced by NewRez LLC/Shellpoint Mortgage Servicing . At the time of purchase, the mortgage servicer used the previous homeowners property tax rate of {$1700.00} from XXXX XXXX to calculate my escrow payments. However, NewRez knew or should have known that the property taxes would unlock and increase significantly after reassessment. 

As expected, my property taxes increased drastically in the following years : - XXXX XXXX ( at closing ) : {$1700.00} - XXXX Taxes : {$5600.00} ( {$3900.00} ) - XXXX Taxes : {$6300.00} ( {$640.00} ) - XXXX Taxes : {$6300.00} ( {$45.00} ) Despite knowing that my property taxes would increase by over 220 % in XXXX, NewRez failed to account for this change when establishing my escrow account. Instead, they used the outdated tax rate from the previous homeowner, resulting in an inevitable escrow shortage and forcing me to cover an unexpected increase in my monthly mortgage payment. 

Compounding the issue, my homeowners insurance also increased : - XXXX : {$1300.00} - XXXX : {$1300.00} - XXXX : {$2000.00} These cumulative increases created a financial burden that was entirely preventable had my escrow account been properly funded from the beginning. 

Evidence of Misconduct : Deliberate Escrow Underfunding at Closing Upon reviewing my mortgage documents, I discovered clear evidence that NewRez initially planned to account for the tax increase but then deliberately underfunded my escrow at closing. 

- XX/XX/XXXX : My initial Closing Disclosure estimated my closing costs at {$3300.00}, which correctly anticipated the unlocked tax rate. 
- XX/XX/XXXX : My final Closing Disclosure reduced my cash-to-close to {$1000.00}, significantly underfunding my escrow account. 

By reducing the escrow funding at closing, NewRez made my mortgage appear more affordable than it actually was, while knowing that a drastic escrow shortage was inevitable. This practice created an artificial sense of affordability at closing but set me up for financial distress later when the tax increase took effect. 

The Core Issue : Deceptive and Unfair Escrow Calculations This practice is both deceptive and predatory because : - Mortgage servicers know that property taxes will increase for new homebuyers but fail to account for it when setting up escrow accounts. 
- They deliberately use outdated tax rates from the previous homeowner instead of forecasting the reassessed rate, guaranteeing an escrow shortage. 
- They fail to properly disclose this to homebuyers, misleading them into thinking their mortgage payments will remain stable when they will, in fact, increase significantly. 

This practice results in avoidable financial hardship, unexpected payment increases, and potential foreclosure risksall of which could be prevented if mortgage servicers accurately calculated escrow deposits using real-time property tax data. 

Request for CFPB Action I am requesting that the CFPB investigate and take the following actions to prevent this harmful practice : XXXX ) Investigate Mortgage Servicer Practices- Review how servicers like NewRez calculate initial escrow payments for FHA loans. 
- Determine if the use of outdated tax rates at closing constitutes unfair or deceptive practices under consumer protection laws. 

XXXX ) Issue Guidance or Rulemaking - Require mortgage servicers to use the actual and expected property tax rates when calculating escrow payments. 
- If servicers are aware that property taxes will unlock, they should be required to account for the increase in the initial escrow deposit. 

XXXX ) Require Remediation for Homeowners - Provide financial relief for FHA loan borrowers impacted by escrow shortages due to these practices. 
- Homeowners should not be financially penalized for mortgage servicers ' failure to account for foreseeable tax increases. 

XXXX ) Enhance Disclosures at Closing - Require that borrowers receive a clear, written warning that property tax increases are expected due to reassessment or unlocking. 
- This disclosure should include an estimate of future mortgage payments to prevent financial shock. 

Impact on Homeowners This practice disproportionately harms first-time homebuyers, particularly those using FHA loans , who may not be aware of how property tax reassessments work. The financial consequences include : - Payment shock, as borrowers face sudden and drastic mortgage increases. 
- Escrow shortages, forcing homeowners to make unexpected lump-sum payments or deal with higher monthly payments. 
- Risk of foreclosure, as these unexpected financial burdens become unsustainable. 

FHA loans are designed to make homeownership affordable, but this escrow mismanagement undermines that goal by misleading borrowers about their true housing costs. 

Requested Resolution I am seeking : 1 ) Financial relief for the escrow shortages I have experienced.

2 ) A CFPB investigation into NewRez LLC/Shellpoint Mortgage Servicings escrow handling. 
XXXX ) Stronger FHA guidelines to ensure borrowers are protected from deceptive escrow practices. 

Thank you for your time and attention. I am happy to provide supporting documentation, including : My initial and final Closing Disclosures showing the deliberate underfunding of my escrow account. 

XXXX ) My correspondence with HUD, confirming that NewRez followed FHA guidelines but failing to address the deceptive nature of their escrow calculations. 
XXXX ) My escrow analyses from NewRez, showing how my property taxes and homeowners insurance increased each year, leading to an unavoidable financial burden. 

I urge the CFPB to take swift action to prevent mortgage servicers from misleading borrowers and creating financial instability through improper escrow calculations. 

Sincerely, XXXX XXXX XXXX