Consumer complaint received 2020-12-29
Company: Flagstar Bank, N.A.
State: CA
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Trouble during payment process

Complaint:
XX/XX/2020 : I was in the process of a refinance through XXXX XXXX. Everything was ready except that there was no proof that my taxes had been paid by Flagstar Bank, who held my mortgage. I looked at my account online and could not find the payment, which was due XXXX, then delinquent after XXXX. I called Flagstar Bank. " XXXX  '', in the escrow dept, explained that the taxes were not paid because they had sent a payoff to XXXX XXXX for XX/XX/XXXX-XX/XX/XXXX and on the 2nd page of their docs explained that Flagstar put a stop on my escrow during the period that the payoff covered. An updated payoff was ordered on XXXX as well, so Flagstar continued to freeze my escrow account. I called XXXX XXXX  and was informed that Flagstar was obligated to pay my taxes so we agreed to do a conference call the next day.

XX/XX/2020( Friday ) : Conferenced with " XXXX '', a supervisor in escrow at Flagstar. She again explained the " escrow disbursement stop '' policy. We explained that no one told the borrower, me, that this occured and that the taxes had not been paid and were now delinquent. We requested that the taxes be paid that same day, including the penalties. XXXX  informed us that it had to go to another dept and would take until at least the XX/XX/XXXXor XX/XX/XXXX( Monday, Tuesday, respectively ) and that I would receive an email.

XX/XX/2020 ( Monday ) : I did not receive an email. I spoke to " XXXX  '' in customer service 1st, who told me that there was no resolution, and transferred me to XXXX, in the escrow dept. XXXX  said that the money was dispersed, it was being sent by XXXX  XXXX  today, and a tracking number would be available tomorrow. I asked for an email confirming that in writing. XX/XX/2020 ( Tuesday ) : I only received an email that the issue had been resolved. No specifics on even what the issue was, no tracking number, no information. I called again and was told it was dispersed yesterday, but no specific information, which I needed for my refi. I was transferred to " XXXX  '' in the tax dept, who said the tax dispersement would take 3-5 days, which is not what I was told earlier. She was rude and impatient, promptly transferring me to a team leader. I waited over an hour on hold for a team leader to become available. " XXXX  '', the team leader, explained that taxes are paid by a 3rd party and that people who do the work do not take the phone calls. She would ask " XXXX  '' to put my case at the top of his list. There was no tracking number available to her anywhere, which was something that had changed. This phone call took 2 solid hours.XX/XX/2020 ( Monday ) : The amount paid for taxes was higher than the amount due. Amount due if on time ( 1XXXX-XXXX ) = {$3600.00}. Amount due if delinquent ( after XXXX ) = {$3900.00}. Flagstar took the entire amount from my escrow account, although it was Flagstar who did not pay my taxes on time, although they had ample time to pay within the allotted window. I wanted Flagstar to pay the delinquency penalty so I called Flagstar again, speaking first to " XXXX  ''. After I explained the concerns she transferred me to the payoff dept, although I told her it was an escrow issue. In payoff I explained everything again to XXXX, who told me I needed to talk to an escrow agent. Instead I agreed to talk to a supervisor, " XXXX  ''. After hearing the concerns he reiterated Flagstar 's policy of freezing the escrow accounts during refi 's. I asked him why they would do that, what was the goal, to not pay a customer 's bills that they were obligated to pay. Furthermore, not to even tell the customer. He said it was so they would not have to change their payout paperwork, " so escrows don't change ''. I requested the Flagstar refund me the amount of the delinquency, {$360.00}. He declined, reiterating that it is their policy to freeze the escrow account.

On every phone call ( 2-3 employees for each call ) I told each Flagstar employee that I had no idea that my taxes were not paid. They had ample time to pay my taxes, despite the refi process. They were obligated to pay my bills, they had my money for that purpose. I should have been informed ( I was told they do not have enough staff to call every customer who is doing a refi. ) I believe that when there are bills due the customer MUST be called. It is my name, my credit, that is being impacted. What if had been my homeowner 's insurance and there was a fire, earthquake etc? I might have lost everything.

On at least 2 calls I was told that they were documenting my complaints against their policy. No one has contacted me to discuss my concerns. It is not in the customer 's best interest for Flagstar to decide not to pay escrow bills that they are obligated to pay. I spent almost 10 hours on the phone trying to get my taxes paid. My last call was for reimbursement of the money that they took out of my escrow to pay delinquency penalties because they did not pay my taxes. They did not inform me that they were using my money to pay for their deliberate decision to let my taxes become delinquent. My name and good credit may have been compromised. Flagstar refused.

That is all that I am asking for myself, the {$360.00} that they took from my account. For other Flagstar customers and other companies that may have this self-serving, ludicrous policy, I would ask that stopping/freezing escrow accounts not be a legal process. No one should have to go through all of this stress to have their taxes paid on time. There is no reason for this policy other than saving them time and effort. I assumed Flagstar was doing their job, and they were not.

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