Consumer complaint received 2018-04-16
Company: GUARANTEED RATE INC.
State: KY
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Trouble during payment process

Complaint:
My husband and myself purchased our home in XX/XX/XXXX and had an escrow account for our property taxes set up. Come XX/XX/XXXXwe had absolute STICKER SHOCK! Our issue with the situation is that we felt deceived after receiving documents showing an increase monthly mortgage payment as a result of a shortage in our escrow account. When given our " estimated '' monthly mortgage payment ( including escrow- property taxs, home owners insurance etc.. in XX/XX/XXXX) we were given a drastically smaller number. We had no idea that the number presented to us included an outdated estimate of the property taxes we would be paying. The tax estimate was based off the purchase price from what the previous owner paid for the home in XX/XX/XXXX. A " Good Faith Estimate '' was not presented to us which is a federal law they must abide by. When we purchased the home in XX/XX/XXXX we paid almost double the purchase price of what the previous owner paid 15 years earlier. Obviously the increase in the property value would logically increase the property tax however we were NOT made aware they were accounting for HALF of what we would be owing in property tax for the XX/XX/XXXX year. My question is, why did we pay for an appraisal on the property for the lender when that figure wasn't even factored in when estimating the amount of money to include in the escrow account for property tax? Is it not the lender or title company 's responsibility to factor in the NEW estimated property taxes? They had all the tools to give us a " good faith estimate '' and they chose to use the old tax information to make it appear as though we would be paying a lot less. Basically they did not account for a minimum of {$110000.00} more we'd be paying in property tax over the life of the loan. This has caused an increase of {$800.00} MORE PER MONTH for our home mortgage. This has put my husband and myself in EXTREME financial distress and both the title company and lender have denied any wrong doing. 

Our approximate mortgage payment was presented to us as $ XXXX/month by the lender back in XX/XX/XXXX before purchasing the home. We ultimately decided to purchase the home with a fixed rate mortgage because the price range was within our budget. Fast track to XX/XX/XXXX when our loan is sold to XXXX XXXX  and we receive notification that our escrow is in shortage of {$4300.00} ( approximately ). We are now back-paying that amount in addition to our increased monthly mortgage payment to cover what we actually pay in taxes per year. This has shot our monthly mortgage payment to OVER $ XXXX/month. After covering the remainder of last years shortage our monthly payment will be somewhere around $ XXXX. Bottom line, had my husband and I known this house would push us in that range we would have decided to purchase a different home. We have a FIXED budget and we were deceived into thinking we'd be paying one price for our home. While we have been making the inflated monthly price without defaulting on our loan, every dollar we have to now pay towards the lender and title agent 's error in calculating our property tax we will lose THOUSANDS in interest that could be paid towards student loans. This type of poor business practice could send any family into default. 

The lender failed to 1. Make a good faith disclosure of the real estate taxes which would be part of our financial obligations in purchasing the property and repaying the loan. 
2.Properly create a new escrow account by failing to estimate disbursement amounts using reasonable judgment based on information reasonably available or known to it. The amount of real estate taxes which we, as purchasers and borrowers, would be obligated to pay upon closing was a readily known amount. The tax could have been easily determined at the time of the initial loan disclosure and certainly by the time of closing/settlement by a simple check of the public record by the settlement agent or the lender. The amount is determined by multiplying the sale price of the home ( which was known by Lender ) by the applicable tax rate, which is public record. Under Kentucky law and based upon information readily available in the public records of XXXX County, Kentucky, the real estate taxes which should have been disclosed to us totaled {$8500.00} ( approximately ) but the settlement agent and the lender reported the taxes as only {$4100.00} ( approximately ). They simply stated the taxes paid by the PRIOR owner, which under Kentucky tax law is not a justifiable, reasonable, or good faith statement of the taxes which we would be paying or in compliance with federal regulations [ Regulation X 1024.17 ( 7 ) and Regulation Z 1026.39 ( g ) ( 3 ) ] The Lender and the settlement agents negligence or failure to comply with federal regulations resulted in a drastic shortage in the escrow account and has caused us a great deal of financial hardship.Had we been informed by the initial disclosure of what the taxes would be and therefore the escrow amount, we could have shopped around more and perhaps found a lender with a lower rate or lower closing costs. 

The closing agent failed to accurately disclose the taxes that we would be paying and which would be used to calculate your escrow account.

Company response to consumer: Closed with explanation