Consumer complaint received 2020-06-01
Company: Rocket Mortgage, LLC
State: NC
Product: Mortgage
Sub-product: FHA mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage

Complaint:
Quicken Loans - Inconsistent Underwriting Practices Tied to FHA Loans A complaint is being submitted to challenge Quicken Loans/Rocket Mortgage FHA underwriting practices. Quicken Loans failed to notify us and our realtor in a timely manner of their mandatory requirement to validate remaining balances tied to a tax payment agreement. As a result, we stand to lose our Earnest Money deposit. The requirement to validate payment agreement balances is an additional requirement that Quicken Loans has imposed above and beyond FHA HUD underwriting standards. Current balance data is something that can generally only be obtained via a tax transcript from the IRS and per standard industry practice, it is the responsibility of the mortgage originator to obtain this data. However, Quicken Loans has failed to independently secure or validate this IRS data, and is instead holding us as the applicants responsible for their failure. 

During the course of our mortgage application process, we submitted all documentation as required by applicants to fulfill FHA mortgage requirements. 
However, Quicken Loans has has requested additional information tied to a re-occurring monthly payment and line item found by underwriters through electronic access to our bank account. Requests for this data go above and beyond the standard FHA Income Requirements used to assess credit risk and ATR  as documented in Reg Z and FHA HUD underwriting requirements. 

Initially we were told that Quicken loans would secure all required data from the IRS and validate the info similar to all of the other wage income documents. We completed an IRS Transcript form 4506-T and submitted it with the loan application. Next we were informed that due to IRS COVID-19 closures, we as loan applicants were now responsible for obtaining the data, and would need provide evidence of our payment agreement and current balance through tax transcripts. 

Early in the loan process, we informed Quicken Loans on numerous occasions that the IRS was also closed to consumers due to the COVID-19 crisis and that additional transcripts were not available to us online. We suggested that the usual requirements for banks and mortgage lenders is to verify customer info through 3rd party IRS options ( to avoid non-repudiation ). Multiple folks at Quicken Loans acknowledged that they were aware of the IRS closure, but refused any other options or documentation to move forward. 

As late as XX/XX/2020, loans officers refused to further dimension how or why tax payment agreements are factored into credit risk and ATR ( ability to repay ) rationale and threatened to close our file because the tax payment agreement details were not received and stated that they could not continue and suggested that our file be closed which in turn DELETES all data and statuses on customer files ( from their system ) as confirmed on XX/XX/2020. No one was willing to send us ( email or mail ) written info on the overall origination status or historical approval statuses for cleared underwriting requirements. 

As of now .... the only remaining requirement was proof of the remaining balance tied to our tax payment agreement. 

Not only did Quicken Loans not deliver any closing documents or communicate options within the required three days prior closing ( as agreed by the seller, lawyer and realtors ), they jeopardized our ability to receive a refund of our earnest money and have caused a lot of stress and sleepless nights during the entire month of XXXX due to the impossible tax documentation standards during a time when the IRS  was closed. 

The seller, lawyer, and realtors were never told of the delay and why Quicken loans could not finally approve our loan based on other income factors. 

As a buyer, Quicken Loans actions to date feel unethical, invasive, prejudicial and can not be substantiated based on comments and feedback from numerous people at the IRS, HUD, and our realtor. Information found in Reg Z, HUD, and through the CPFB, clearly indicates the bias and thematic risk surrounding Quicken Loans loan origination process. Moreover, Quicken Loans was keenly aware that the IRS  was closed as of mid XXXX and would not be providing transcript data and they chose not to acknowledge the constraints early in the process and help avoid financial losses to buyers when deals fall through after the close of contract dates. 

Even with the help of an IRS agent we had IRS leave a voice message for our loan manager including the agents name, customer service ID, our current tax balance remaining on the payment agreement ; reoccurring installment payment amount, and a final note that Quicken Loans can call the IRS  directly to validate any details. 

As of XX/XX/2020, we are in fear of being unfairly disqualified, losing thousands of dollars in Earnest Money, losing our locked interest rates, inspection and realtor costs, most importantly losing a house that was hard to find in a competitive real estate market. 

Loan Originators should be able to secure any and all information directly from the IRS through 3rd part access and avoid known financial service and info security risks related to non-repudiation. From a XXXX, XXXX, and privacy standpoint, there appear to be a lot of risks related to how customer information is managed and shared. Forcing customers to provide proof of balances that are only related to line items pulled during electronic access to bank accounts information creates additional bias and scrutiny around customer credit risk ( ATR ). All tax info should require lenders to validate information directly with the IRS. Tax agreements and payments should not be considered if there is not a tax lien or garnishment. In both cases, Loan originators should not hold applicants account to secure documents from the IRS and then upload or mail copies. The IRS  has indicated that there is a lot of fraud and ID theft related to tax transcript info. Reg Z and HUD should stipulate the appropriate weight around any associated credit risk that lenders desire to factor in to underwriting requirements. My loan approve has been held hostage by IRS  document that Quicken Loans knew was not easily available since XX/XX/2020. Still hoping to close on my new house. OCC should take a close look at this. Loss of my new house at this point would be devastating.

Company response to consumer: Closed with explanation