Consumer complaint received 2020-04-13
Company: BROKER SOLUTIONS, INC.
State: GA
Product: Mortgage
Sub-product: VA mortgage
Issue: Trouble during payment process

Complaint:
Annually, New American Funding evaluates your escrow account and makes adjustments to your payment to account for any estimated increases due to property taxes going up, or home insurance premiums increasing. Similarly, I imagine that they would do the same to decrease your payment if it was estimated that your property taxes would be lower, etc. 

Unfortunately, New American Funding uses a process and calculation to estimate your escrow balance which assumes that you will have skipped a monthly payment for the upcoming year, and doesn't factor in that amount towards your escrow balance. This then leads to your escrow balance appearing to have a greater shortfall than would actually be the case. 

For example, let 's say your escrow balance for the previous year was {$1200.00} ( for estimated property taxes ), so your monthly mortgage payment included {$100.00} in addition to whatever your normal principal and interest was to go towards that escrow account. 

Now, let 's say that your estimated taxes increased by double, for some reason, and your estimated escrow balance to pay your taxes the following year now would need to be {$2400.00} at the time of payment, you would assume that your monthly mortgage payment would go up an additional {$100.00} to {$200.00} total. 

This isn't how NAF calculates that though, instead, they choose to just calculate it based on the month with your greatest amount of " shortfall '', and choose to take a month of the 12 that they calculate everything for, and not factor in any payment from you for that month. 

This then leads to your estimated shortfall being an extra whole month 's payment towards escrow ( now {$200.00} in this example ) greater than what it actually would be. 

So, because of this, they end up asking to spread out that additional monthly escrow payment over the course of 12 months ( so {$12.00} in this example ) in addition to what it would normally be ( just an extra {$100.00} a month ). 

For this example, it may not seem like much, but if your property taxes are in the thousands and your escrow payment is greater, this can then lead to an unexpected payment being required at the start if you wanted to just pay the difference at the front of the year. 

I've tried several times to explain this to their customer support team and escrow calculation teams, however, the customer support team has been totally useless in helping thus far. One of their escrow agents finally understood what I was saying, but indicated that as this was done by a computer to calculate everything, there was nothing that they could do to resolve the situation. 

I've uploaded documents to show where this occurs, as their Account Projections Total Balance/Beginning Balance is based off an incorrect amount ( calculated from Table 2 / Escrow Activity History ) where an estimated payment is not made in the " previous '' year. Interestingly, they do estimate that one of the months payment will actually occur, with an E next to the payments actual, but for some reason do not do it for ALL of the current/future months that occur within the escrow activity history table.

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