Consumer complaint received 2018-01-01
Company: AMA Advisors, LLC.
State: PA
Product: Mortgage
Sub-product: FHA mortgage
Issue: Trouble during payment process

Complaint:
Our Mortgage company is in violation of the HUD FHA Single Family handbook and of their contractual obligation with us. They have also violated RESPA by not responding to a notice received of this error. 

We have an FHA 203 ( k ) loan. It requires the mortgage company to maintain an escrow account to pay for repair costs. Th Single family handbook stipulates how those funds are to be handled. Additionally we have serval signed agreements with Hombrige that dictate the requirement that need to be met before funds are released. 

It is required by both the Single Family Housing Policy Handbook 4000.1 and out contract with Homebrige that they make sure that all permits are in place before releasing any funds from our escrow account. 

Single Family Housing Policy Handbook 4000.1 states that The Mortgagee that is the custodian of the repair escrow funds is responsible for ensuring all funds from the escrow account are properly distributed. 

It further states that The Mortgagee may release funds only when repairs and improvements per the draw request, whether made by the contractor or Borrower, meet all federal, state, and local laws, codes and ordinances, including any required permits and inspections. 

Both of those quotes can be found in the section governing 203 ( k ) loans. 

Given those two statements is it obvious that the Mortgage company has to make sure there are permits in place before the release any funds. Additionally, the mortgage company put this requirement in writing and we have three signed agreements with them stating the same thing. 

First we have a document titled Permits and/or Certifications Required it states that copies of permits MUST BE ATTACHED to the first draw request for the renovation funds to be disbursed Next we have our HUD borrowers acknowledgement that states I understand no draws on the escrow account can be made until all permits have been issued by the local or state building departments, where required. 

Finally we have out rehabilitation loan agreement which states : Mortgagee shall release Rehabilitation Escrow Account funds by check, payable to the Borrower and/or the contractor, upon satisfactory completion of the rehabilitation in accordance with the Work Write-Up or Work Plan, as evidenced by a compliance inspection or other authorized method, and when the repairs and improvements meet all federal, state and local laws, codes and ordinances, including required permits and inspections. 

Thats a total of three time that the mortgage company gave us documents to sign that stipulated that they cant or wont release funds without permits. 

The mortgage company has admitted that it has disbursed three draws from our escrow account. There have been no permits pulled at our property. The mortgage company reply is that they processed the draws they received. We agree. But they did not carry out there obligation between receiving the draw requests and processing the draws. 

We had a independent HUD consultant of Homebridges choosing inspect the property and take note of any deficiencies of the draw process. He stated that there needed to be permits in place and that no funds should have been released. 

That means we have three times that Homebridge stated that they wo n't or ca n't process draw requests until all permits are in place. We have the HUD handbook stating that the mortgage company needs to have permits in place before releasing funds, and we have a neutral third party that was chosen by the mortgage company stating that no funds should have been released because permits are required first. 

The mortgage company at no time informed us that there were permits in place. When we discovered this fact we contacted them and informed them of the error in writing. They have not acknowledged this letter. 

The mortgage company did not provide me with an address to submit a QWR to Our closing documents only mentions an address to send mortgage payments to. We have not received a notice transferring the servicing right to another company. Therefore the mortgage company should has to treat any notice they receive as QWR provided they meet the guidelines of REPSA.

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation