Consumer complaint received 2017-09-25
Company: LoanCare, LLC
State: IL
Product: Mortgage
Sub-product: VA mortgage
Issue: Trouble during payment process

Complaint:
My client is a XXXX veteran. On XX/XX/XXXX, he closed a VA loan for {$130000.00} through XXXX XXXX XXXX XXXX, XXXX. The loan is now serviced by LoanCare LLC.
As part of his monthly payments, my client pays escrow ( approximately {$500.00} ), which includes over {$430.00} per month for property taxes. However, my client has been deemed by the VA as service-connected XXXX percent XXXX. As a result, under Illinois law, my client is fully exempt from paying real estate taxes his home. The Illinois Property Tax Code expressly states that if the veteran has a service connected XXXX of 70 % or more, as certified by the United States Department of Veterans Affairs, then the property is exempt from taxation under this Code. 35 ILCS 200/15-169 ( b-3 ) ( 3 ). My client completed the required property tax exemption form in Illinois ( XXXX  XXXX ) and has a letter from the county assessment office that he WILL NOT have any tax liability for XX/XX/XXXX payable in XX/XX/XXXX. 

My client has requested NUMEROUS times that LoanCare cease collecting escrow amounts for property taxes that he is not actually liable for. In XX/XX/XXXX, my client even sent a correspondence to LoanCare with the assistance of the VA, including copies of his XXXX determination and the assessment office 's letter confirming he has a " zero tax bill. '' However, LoanCare has not responded. Instead, LoanCare has, to date, collected at least {$5300.00} for property taxes that are allocated for XX/XX/XXXX ( payable XX/XX/XXXX ) despite the fact that my client will not be liable for any such taxes. 

LoanCare only tells my client that he must wait for the next escrow analysis and will be given a refund of any escrow surplus. LoanCare also told my client that he can not change his escrow payment until he sends a XX/XX/XXXX tax bill ; however, those tax bills are not available until mid-XX/XX/XXXX. Moreover, my client has submitted adequate information from by the VA and the tax assessor office already. LoanCare is truly setting my client up for failure. Because he is service-related XXXX, my client receives VA benefits ; however, the amount of his VA benefits is low and he risks default if he is required to continue paying the mortgage including the escrow amounts as demanded by LoanCare through the end of the year or until a new escrow analysis is conducted. 

The Real Estate Settlement Procedures Act ( RESPA ) states that a lender may not require a borrower to deposit in any escrow account an aggregate sum in excess of a sum that will be sufficient to pay the escrow items. 12 U.S.C. 2609 ( a ). Regulation X, promulgated under RESPA, similarly states that the servicer may charge the borrower only a monthly sum equal to one-twelfth ( 1/12 ) of the total annual escrow payments. While an escrow analysis is required only once per year, this requirement sets a minimum and does not allow LoanCare to knowingly continue collecting excessive escrow amounts. Moreover, given the exceptions for refunding escrow surplus ( i.e. 30 day delinquency, etc. ), my client fears he will lose the surplus if he is not able to continue the payments. 

Reassessing the escrow will save my client over {$430.00} per month and will entitle him to a surplus refund of over {$5300.00}.

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