Consumer complaint received 2023-10-25
Company: GUARANTEED RATE INC.
State: CA
Product: Mortgage
Sub-product: VA mortgage
Issue: Trouble during payment process
Sub-issue: Loan sold or transferred to another company

Complaint:
1. On XX/XX/XXXX, my mortgage and escrow servicing were sold to XXXX XXXX XXXX XXXX XXXX. I was never notified of this transfer from Guaranteed Rate and my automatically recurring monthly mortgage payments never transferred to XXXXXXXX XXXX I was unaware that any changes on my loan had taken place until I received notification from the Veterans Affairs that my VA Loan was entering foreclosure proceedings. I scrambled to send an immediate payment for the original unpaid balance, however I could not afford the late penalties and foreclosure-related fees that had been assessed and added to the unpaid balance. It took me months to save enough to bring the loan current. XXXX has assessed {$6400.00} of delinquent fees and foreclosure charges ( att. 1 ) on my account as a direct result of this lack of notification. 
12 C.F.R. 1024.33 ( Regulation X ), paragraph ( b ) ( 1 ) states, transferor servicer of any mortgage loan shall provide to the borrower a notice of transfer for any assignment, sale, or transfer of the servicing of the mortgage loan. Paragraph ( b ) ( 3 ) ( i ) states, the transferor servicer shall provide the notice of transfer to the borrower not less than 15 days before the effective date of the transfer of the servicing of the mortgage loan. Also see Cal. Civ. Code 2937, paragraph ( b ) which further governs the mortgage contract terms under Applicable Law. 
I recently asked Guaranteed Rate to show me that they sent me a notice of transfer. They were only able to send me a draft of a Notice of Transfer. The servicing department was not able to provide a certificate of mailing, postmark, or any documentation proving that the notice was sent. 
2. During the period when payment of my escrow items fell under Guaranteed Rate 's servicing responsibility, the flood insurance policy escrow item was closed due to nonpayment of premium. A large reason why I bought and opened the policy in XXXX is because it was the last year to be grandfathered into the NFIPs cheaper legacy rating system before my {$1700.00} annual premium would have more than doubled under the new XXXX XXXX XXXX rating system. XXXX, the carrier for my XXXXXXXX XXXX flood insurance policy, sent Guaranteed Rate a renewal notice and invoice of {$1800.00} on XX/XX/XXXX ( att. 2 ) that went unpaid. On the policy expiration date of XX/XX/XXXX ( att. 3 ), XXXX sent Guaranteed Rate a final notice allowing them to keep the policy open by making the premium renewal payment before XX/XX/XXXX. This notice also went unpaid and the policy was closed. 
XXXXXXXX XXXX flood insurance policies opened at this time were charged the full risk premium of the new rating system which calculated a {$3600.00} annual premium ( att. 4 ) for my home. If Guaranteed Rate had not let the policy expire, the premium renewal increases would have been limited to no more than 18 % per year until the full risk premium of {$3600.00} is reached. The loss of this annual premium increase protection totals {$5100.00} in premium discounts, amortized over five years as a result of the policy expiration due to nonpayment of premium. The chart attached shows what my premiums for each year would have been had the policy never lapsed, compared to the full risk premium that is assessed with a lapse in policy coverage. 
The mortgage contract defers to RESPA for timely escrow item disbursements, which is found in 12 C.F.R. 1024.17 ( Regulation X ), paragraph ( k ) ( 1 ) and states, If the terms of any federally related mortgage loan require the borrower to make payments to an escrow account, the servicer must pay the disbursements in a timely manner, that is, on or before the deadline to avoid a penalty, as long as the borrowers payment is not more than 30 days overdue. 
Cal. Civ. Code 2954.1 further asserts on the mortgage contract as Applicable Law that, No Lender or any agent of such lender who maintains an impound, trust, or other type of account for the payment of taxes and assessments on real property, insurance premiums, or other purposes relating to such property shall ( c ) Make payments from the account in a manner so as to cause any policy of insurance to be canceled or so as to cause property taxes or other similar payments to become delinquent. Any person harmed by a violation of this section shall be entitled to sue to recover his or her damages or for injunctive relief ; but such violation shall not otherwise affect the validity of the loan or sale. 
XXXX. When the transfer of escrow account servicing took place on XXXX the proper and sufficient amount of information and authorizations were not given to the new servicer, XXXXXXXX XXXX, in order for them to maintain all escrow item disbursements. As a result of Guaranteed Rates failure to properly board the new servicer with XXXX as the mortgagee, XXXXXXXX XXXX was unable to notice when an increase in annual premium occurred for my homeowners insurance policy carried by XXXX. The policy was assessed with a delinquent premium amount of {$310.00} and was charged additional late fees totaling {$30.00} ( att. 5 ) before the policy was canceled by XXXX for nonpayment of premium. 
12 C.F.R. 1024.38 ( Regulation X ), paragraph ( b ) ( 4 ) instructs, The policies and procedures required by paragraph ( a ) of this section shall be reasonably designed to ensure that the servicer can : ( i ) As a transferor servicer, timely transfer all information and documents in the possession and control of the servicer relating to a transferred mortgage loan to a transferee servicer in a form and manner that enables a transferee servicer to comply with the terms of the transferee servicers obligations to the owner or assignee of the mortgage loan and applicable law ; The official interpretation of this paragraph examples, a transferor servicer must have policies and procedures reasonably designed to ensure that data can be properly and promptly boarded by a transferee servicers electronic systems and that all necessary documents and information are available to, and can be appropriately identified by, a transferee servicer. 
Cal. Civ. Code 2937, paragraph ( d ) states, Any person transferring the servicing of indebtedness as provided in subdivision ( a ) to a different servicing agent shall provide to the new servicing agent all existing insurance policy information that the person is responsible for maintaining, including, but not limited to, flood and hazard insurance policy information. 
If the full amount of the premium renewal for my homeowners insurance policy had been communicated to and paid by XXXXXXXX XXXX in a timely manner, XXXX would have been able to keep my {$1900.00} annual premium amount ( att. 6 ). Theyve since quoted me a higher premium of {$2000.00} ( att. 7 ) for a new policy with equal coverage. The higher annual cost to me, amortized over the remainder of the 30-year loan period, is {$4200.00} with damages for this error totaling {$4200.00} after adding the canceled policys {$30.00} late fee thats still outstanding.

Company response to consumer: Closed with explanation