Consumer complaint received 2020-06-15
Company: LoanCare, LLC
State: WA
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Trouble during payment process

Complaint:
My mortgage was sold to XXXX, subserviced by Loancare LLC, earlier this year. My previous lender provided complete documentation during the transfer. However, XXXX/Loancare sent me a letter indicating that they believed I had a lapse in " hazard insurance '' and that they would be purchasing " hazard insurance '' on my behalf if I did not remedy the issue. I called my insurance provider and confirmed that I had no lapse in insurance and that my home had been insured since the day I bought it. Regardless, I had my insurance company consult with XXXX/Loancare to resolve the issue. 

I have since received a second letter dated XX/XX/XXXX ( but delivered after XX/XX/XXXX ) which claims that they were " unable to verify coverage between XX/XX/XXXX and XX/XX/XXXX '' and that I would therefore be charged {$86.00} unless I provided further proof of coverage. 

I called XXXX/Loancare today, XX/XX/XXXX, at the number indicated in the letter ( XXXX ) and observed the following issues : 1. There was no option in the phone tree to speak with an agent, only to retrieve prerecorded information. I had to spam '0 ', an unlisted option, to speak with an agent. 
2. I only provided the last four digits of my social security number on the phone tree, which is not fully private information. The agent did not ask for further verification, and in fact read my loan account number and personal phone number back to me without being prompted. This is a serious security flaw.

3. Only after I pointed out that XXXX/Loancare is a party on the policy, and therefore should be perfectly capable of verifying the information themselves, did the agent agree to initiate contact with my insurer. The agent claimed that their call center is divided into " inbound only '' and " outbound only '' and therefore she would have to initiate a special request in order to have the outbound call center make contact with my insurance company to verify coverage. 

Here are my issues : 1. " Hazard insurance, '' the term used in all written communication from XXXX/Loancare, is a confusing term that does not return useful results on XXXX. I believe this is intentional in order to confuse low-literacy or XXXX homeowners and make it more likely for them to experience a lapse in insurance via this tactic. 
2. I have very strong reason to believe that they received adequate proof of insurance from my original lender and from my insurance company, and are pretending they did not receive it or did not record it in order to claim these false " lapses '' occurred in order to profit off force-placed insurance policies. My partner, whose separate loan was also sold at the same time, received identical communication from them and also had to go through the same steps to " prove '' he did not have a lapse. 
3. The agent indicated that there was a " three letter cycle '' ( verbatim terminology ) for this communication. This indicates to me that this is either an annual mailing, or a mailing that is issued on loan transfer regardless of the documentation received, and is a process designed to obtain excessive coverage and charge homeowners regardless of whether they actually have coverage. 
4. The lack of phone tree options meant that a customer following the verbal instructions would have no means of reaching an agent.

5. As indicated by my communications with the agent, XXXX/Loancare is perfectly capable of obtaining proof of insurance by themselves. There is no need for homeowners to have to spend multiple hours on the phone providing verification for information that has already been provided ; the process is designed to catch people out and accrue fraudulent profits for XXXX/Loancare. 
6. The amount of information I was able to access with just the last four digits of my social security number is enough to perform identify theft, their security practices are completely inadequate. 

There is already an existing class action settlement " XXXX v. XXXX XXXX, XXXX XXXX. XXXX, in the U.S. District Court for the XXXX District of Florida '' regarding XXXX 's predatory use of force-placed insurance. After witnessing predatory practices from XXXX/Loancare on mine and my partner 's mortgages, I have reason to believe they are continuing these same practices with slight modifications. This places a higher burden than necessary on homeowners and is a process designed to maximize fraudulent profits. Please investigate and put a stop to this practice. 

Thank you, XXXX XXXX

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