Consumer complaint received 2020-05-08
Company: Flagstar Bank, N.A.
State: CA
Product: Mortgage
Sub-product: VA mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage

Complaint:
I was working through XXXX XXXX ( a mortgage broker ) to get a VA mortgage on my home. I started the process in late XX/XX/2019 and locked into a rate. Under normal circumstances, a mortgage would close within 30 days. In my case, my business owned the home ( I buy, renovate, and sell homes for my business, but in this case, we decided to move into it for our retirement home ) and wanted to sell it to me and my wife for the purchase price - and change the name on the title from my business to myself in the process. At the end of XXXX I told the broker to go with a different bank since the underwriter from Flagstar Bank was ridiculously unreasonable and kept delaying the process by requesting more and more conditions. At that point, the loan was " approved '' but had more conditions. My broker switched to another bank, but they had inaccurate information concerning the VA and even when presented with the correct information from my broker, they didn't want to move forward. So we went back with the original bank ( flagstar ) since the package was approved at the end of XXXX. ( lost a month due to switching lenders ) But since the package was " approved '' it should have sailed through. But the underwriter had more conditions and documentation requests - updated statements, a new credit report ( which affects my credit standing ) plus more. At the end of XXXX, the rate lock had expired despite a courtesy extension having been previously provided. They now wanted to charge me a 1/4 point increase in interest rate over the life of the loan to extend the lock date for 10 days to ( hypothetically ) get us to closing. Because a 30 day close taking longer than 4 months ( 3 months in their hands ) and them wanting a interest rate hike for 10 days, I provided them my terms - take responsibility for the unnecessary delays caused by the underwriter ( who was new ), honor the original interest rate, or there's no deal. When they declined to the conditions, I stopped the process and opted to fund the transaction from my own assets at that point. Several days later after having lost the loan, they agreed to my conditions but at that point it was too late. Reading between the lines, Flagstar Bank was counting on that I NEEDED the loan, not that I WANTED the loan and wanted to put the screws to me. They never accepted responsibility of the excessive conditions that their underwriter put on this loan ( I'm a well qualified borrower ) that caused a 30 day transaction to stretch to more than 3 months. Then they wanted to jack up my interest rate for the life of the loan - not a 1-time fee - to extend the expired rate lock. I put this into the buckets of gross incompetence and predatory practices. Thankfully, I had the financial resources to do this on my own, but my concern is to others who don't and fall into these unethical practices from Flagstar Bank.

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