Consumer complaint received 2016-07-06
Company: Guild Mortgage Company LLC
State: CA
Product: Mortgage
Sub-product: FHA mortgage
Issue: Loan modification,collection,foreclosure

Complaint:
Recently, I applied for Keep Your Home California ( KYC ) mortgage assistance. Oddly, I was denied based on Guild 's refusal to participate with KYC Principal Reduction Program ( PRP ) loan modification or recast. I was informed that Guild only participates in principal curtailments. 

Last year, I was also denied to participate in KYC 's PRP due to Guild 's refusal to approve in what I was told a request for re-cast. Guild informed me that a re-cast only applies to the Mortgage Re-instatement Program assistance and does not reduce principal or bring payments to a level that is affordable. However, a re-cast is not a Mortgage reinstatement but rather a process to recast your mortgage in order to lower monthly payments by making a lump sum payment to reduce the outstanding balance. With a recast the monthly mortgage payments are then recalculated based on the new, lower outstanding balance, hence lowering monthly payments. According to KYC the Mortgage Re-instatement program is separate program aside from the PRP and the two are not in conjunction with one another. ( see below ) : KYC Principal Reduction Program " The servicer will reduce the qualifying principal balance in conjunction with a loan recast or loan modification in the amount needed ( up to the maximum per household assistance ) to help the homeowner establish an appropriate level of affordability and mortgage debt per CalHFA XXXX guidelines. '' " PRP may work in conjunction with a HAMP modification to help eligible homeowners achieve desired income ratios, payment affordability and establish an appropriate level of mortgage debt. PRP may be used to reduce or eliminate an existing non-interest bearing forbearance balance from a previous HAMP loan modification as described in the MHA Handbook. '' " PRP may also be combined or used in conjunction with the HAMP Principal Reduction Alternative ( PRA ). '' I was approved and qualified for KYC PRP. In other words, Guild provided me with inaccurate information in order to deny KYC 's contingent approval of the PRP. The KYC processer, XXXX XXXX, stated that the servicer, Guild Mortgage, only participates and approves principal curtailments. However, this is inaccurate. Last year, Guild 's loan counseling department informed me that an approval of KYC funds would be granted if KYC applied the PRP assistance to reduce my property 's principal by way of loan modification. I was also informed that Guild approves KYC funds to reduce or eliminate the non-interest-bearing forbearance amount that resulted from my prior loss mitigation agreement. 

Ironically, Guild stated to me that a request for a re-cast only re-instates the mortgage to a positive balance foregoing any reduction in monthly payments. Again, this is an inaccurate statement. Why is Guild denying KYC 's request for approval of the PRP mortgage assistance a 2nd time around? 

Guild 's refusal to participate in a " re-cast '' modification, combined with inaccurate statements regarding the program descriptions coupled with the servicer 's lack of official explanation for the denial is a violation of my homeowner 's rights. 

While waiting for a response from your department and/or Guild Mortgage Company, please accept this letter as my official request to apply and be considered for one of Guild 's loss mitigation loan workouts. Additionally please provide me with a detailed letter of explanation for the denial of KYC 's request of a loan recast, provided by XXXX federally funded programs, which would have assisted me with affordable payments today and when originally requested.

Company response to consumer: Closed with explanation