Consumer complaint received 2017-08-11
Company: Flagstar Bank, N.A.
State: CA
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Trouble during payment process

Complaint:
I purchased condo ( XXXX XXXX XXXX, XXXX XXXX, XXXX XXXX, CA ) on XXXX XXXX, XXXX and loan was financed initially by XXXX XXXX  then subsequently sold to Flagstar Bank. At the time of purchase, the condo was not in a flood zone so flood insurance was not required. On XXXX XXXX, XXXX I received notice from Flagstar that flood insurance would be required. I contacted the XXXX XXXX HOA representative, XXXX XXXX XXXX, and was told that the HOA had obtained flood insurance coverage. Two flood policies ( attached ) were sent to me from the XXXX XXXX XXXX and these were sent to Flagstar Bank on XXXX XXXX. The first flood policy ( primary flood policy ) that covers all 45 units in the complex was written for {$XXXX} million in coverage ( {$33000.00} per unit ). The second flood policy ( excess flood policy ) was written for {$XXXX} million in coverage ( an additional {$160000.00} per unit ) and both policies provide coverage to all 45 units in the complex in equal amounts. Together these combined policies provide flood insurance well above the additional coverage amount of {$140000.00} required for my unit by Flagstar ( my loan balance of {$170000.00} less the {$33000.00} coverage in the primary policy ) for my condo unit. On Monday, XXXX XXXX I received an email from Flagstar indicating " your excess flood policy is unacceptable. '' It goes on to suggest : " To make your coverage sufficient please increase the coverage amount to {>= $1,000,000} so that it matches the replacement cost or decrease the replacement cost to {>= $1,000,000} to match the coverage amount. Flagstar 's letter perplexed me because their response suggests that I change the HOA primary flood policy which I have no ability to do. So I called Flagstar for an explanation. First, I was told by the Insurance Department that I could not speak to anyone in the Flood Department since they do not communicate to the public, So through an Insurance Department representative who put me on hold while they spoke to the Flood Department, I was told verbally that the reason my " excess flood policy '' is not acceptable is because it was issued a part of a package by a broker involving three carriers. According to the rep, Flagstar does not accept policies issued by multiple carriers. An attached email from XXXX XXXX XXXX XXXX XXXX XXXX ( HOA contracted representative ) states that the HOA attempted to get coverage through a single carrier but was unable to find a carrier willing to issue a flood policy in the combined amount of {>= $1,000,000}. XXXX XXXX also has said to me that I am the only one in the HOA experiencing this problem with my lender. According to her, all other mortgage companies have accepted both the HOA policies for units in the complex.
I have been notified by one of Flagstar 's representatives during a phone conversation yesterday, that Flagstar has offered me a flood policy for my unit and a letter to this effect has been sent to me. I have also been told that this policy will charge me {$1400.00} a year for {$140000.00} in coverage, This is an outrageous amount. As part of this complaint, I am asking that CFPB investigate Flagstar Bank 's policies and practices in not accepting both flood policies issued to the XXXX XXXX XXXX to determine if they violate any federal laws, policies or regulations, and relieve me of this financial hardship,

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation