Consumer complaint received 2019-09-05
Company: Flagstar Bank, N.A.
State: DC
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Trouble during payment process

Complaint:
Flag Star Bank- as loan servicer in NJ On XX/XX/19 after reviewing the terms of my loan, and verifying that I qualify to cancel my escrow account, I reached out to the servicer to cancel. The representative ( rep ) verified that I was eligible to cancel the account, and proceeded to inform me that, an " escrow waiver cancellation fee '' of 0.25 % would apply to the outstanding principal balance. When I asked about the reason for this fee, the rep informed that I had agreed to this upon closing, and the information would be under my deed. I went to review my loan documents and could not locate anything referencing this fee. 

XX/XX/19 I reached out a second time ( through chat ) to obtain clarification and be guided to the specific paragraph referring to this item. After the rep did his research, he said, '' The fee for the escrow waiver is not explicitly stated on any of your closing documents. The fee itself is a Flagstar fee and can not be waived under any circumstances for the process of escrow waiver. '' Naturally, I questioned this answer, as it still gives no validation to the legal standing of the servicer, to charge such a hefty fee, to cancel an account which is supposed to be held for my benefit. 

After this, I asked to speak with a supervisor who was better acquainted with these transactions and could help me further. The rep kindly informed that he had no supervisor on chat, and referred me to call the customer service number. 

Shortly after, I reached out to customer service and explained the situation. Immediately, I tried to speak with a supervisor but the rep refused. 
I gave her a chance to help and the following happened : The rep gave me complete contrary information regarding escrow cancelation. She argued that I did not qualify, and was essentially misrepresenting the qualifying guidelines posted on Flag Star 's website to cancel escrow, by inverting the terms. For example : one of the conditions is that the loan can not be an FHA loan. The rep stated " because you have a conventional loan and not FHA you DO NOT qualify to cancel escrow. '' among a few other similar contradictions. I proceeded to quote the ACTUAL qualifying guidelines, and the rep seemed flustered. Again, I asked to speak with a supervisor and she finally conceded. 

The supervisor affirmed what the first rep mentioned on XX/XX/19 that I had agreed to this fee upon closing. I clarified that I had not closed or obtained a loan through Flag Star, but rather my loan was sold and Flag Star was the servicer. She insisted that the fee was applicable, emailed me a copy of the mortgage deed ( security instrument ) and referred me to clause 4. 

After reviewing the document with the supervisor on the phone, I explained that this clause is pertaining to Charges ; Liens IF, a borrower DEFAULTS on payments for property taxes and insurance. Nowhere on the clause or the document is there any reference, agreement, or covenant stating the borrower ( me ) agrees to such fee. 

Flag Star is manipulating ONE sentence, bending it out of context to their advantage to charge an exuberant fee if a client wants to cancel escrow. They willfully and knowingly LIE and misrepresent their own policy 's to discourage cancelling escrow. This is unfair, deceptive, and abusive to say the least ; and I hope that even if I can not obtain a resolution, this agency will monitor and reprimand the institution for its actions. 

The fee would be approximately {$560.00} based on my outstating principal balance of {$220000.00} ( as of XX/XX/19 per Flag Star )

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