Consumer complaint received 2019-12-30
Company: LoanCare, LLC
State: GA
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Trouble during payment process

Complaint:
XXXX XXXX, XXXX XX/XX/XXXX XXXX XXXX  XXXX XXXX XXXX, SD XXXX XXXX : XX/XX/XXXX XX/XX/XXXXAcct # XXXXXX ; XXXX Acct # XXXX, Claim # XXXXXX ; LoanCare # XXXX Property Address : XXX XXXX XXXX, XXXX, GA XXXX Background A devastating fire destroyed the house located on borrowers propertyXX/XX/2015. XXXX, the insurer, paid XXXX XXXX, XXXX ( XXXX ),  loan servicer for XX/XX/XXXXXX/XX/XXXX, the mortgage payoff amount of {$250000.00} ( Exhibit 1 ). XXXX placed funds into an escrow account to fund home construction. 

Borrower demolished remains of the home, removed all debris from property, and put new home construction out for bid and hired a general contractor the following year. Builder prepared the lot for construction ( e.g., obtained building permit, graded lot ) and poured concrete foundation walls. However, contractor failed to build according to specifications, violated important contract provisions, and borrower terminated the agreement. 

Basis for Notice of Error No insurable structure exists on property. Nevertheless, XXXX and subsequent loan servicer LoanCare LLC ( LoanCare ) assessed, calculated, and collected monthly payments that included charges for hazard insurance. 

Furthermore, Borrower asserts the {$250000.00} mortgage payoff in XX/XX/XXXXeliminated XXXX XXXX economic and insurable interest in the property, with all other mutual contractual obligations remaining in place between the parties. The mortgage payoff amount eliminated all potential risk of loss from XXXX XXXX issuance of borrowers mortgage. Insurable interest is defined as, means any substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction, or pecuniary damage or impairment O.C.G.A. 33-24-4. 

Earth could swallow the property whole making it disappear completely and XX/XX/XXXXXX/XX/XXXXwould be no worse off. 

Georgia law states, No insurance contract on property or of any interest therein or arising therefrom shall be enforceable except for the benefit of persons having, at the time of loss, an insurable interest in the things insured O.C.G.A. 33-24-4 ( b ). 
Therefore, purchase of hazard insurance subsequent to destruction of the house on XX/XX/XXXX, is senseless, unjustified, goes against Georgia law must be reimbursed to borrower : No insurable structure is present on the property. Any contractual obligation to carry homeowners insurance while mortgage funds outstanding expired in XX/XX/XXXX. Its not possible to purchase insurance on a structure that does not exist. 
XXXX XXXX or its agent placed mortgage payoff funds from borrower into an escrow account, thereby eliminating the companys insurable interest. Georgia law refuses to enforce insurance contracts that benefit those without, an insurable interest in the things insured. amount thereby and wholly unjustifiable because Fannie Mae lacks an insurable interest in the property. 

Basis for Information Request Disturbingly, hazard insurance estimates found in XXXX Escrow Account Analysis is radically different from LoanCares over the same period with no change in the property ( e.g., no additional construction occurred ). Specifically, XXXX estimated {$1700.00} for Combined Property Insurance cost on its Annual Escrow Account Disclosure Statement dated XX/XX/XXXX : On the other hand, LoanCares Annual Escrow Account Disclosure Statement dated XX/XX/XXXX, arrives at an estimated Hazard Insurance Disbursement drastically higher than Ditechs at {$7400.00} in XX/XX/XXXX. 

It strains credulity two loan servicers allegedly acting in good faith could arrive at hazard insurance estimates {$5700.00} apart a mere 122 days from one another. 

Separately, a closer review of XX/XX/XXXXAnnual Escrow Account Disclosure Statement dated XX/XX/XXXX, reveals additional suspicious entries made to the mortgage escrow account. 

XX/XX/XXXXtotal We Expected to Pay Out estimates from XXXX through XX/XX/XXXXof {$5300.00} surpass the We Actually Paid Out amount of {$2100.00} by {$3200.00}. An estimated future payment of {$1700.00} for annual hazard insurance in XXXX and another {$1700.00} payment in XX/XX/XXXX XXXX for annual hazard insurance conveniently turned the significant surplus into a deficit. 

LoanCares Escrow Account Disclosure Statement reveals the company issued no hazard insurance payments in XXXX, XXXX, or XX/XX/XXXX, further supporting the appearance of impropriety by eliminating an escrow surplus with two consecutive {$1700.00} annual insurance-related payments lacking any reasonable basis. 

Request for Information Please provide requested information on all insurance-related escrow account activities associated with loan servicing for the periodXX/XX/XXXX, throughXX/XX/XXXX, ( review period ) in addition to explaining the fundamental assumptions used in and process for calculation of the Anticipated Annual Disbursement for hazard insurance payments. 
For purposes of this document, insurance-related includes but is not limited to : Homeowners, hazard, builders risk, or any other insurance products : ( a ) Policies purchased by LoanCare and XXXX in the ordinary course of business servicing the loan using existing or expected funds from borrowers escrow account during the review period ; and ( b ) Any and all force-placed insurance policies purchased by LoanCare or XXXX on behalf of the borrower during the review period ; Escrow account activities includes but is not limited to : Accounting for all insurance-related debit and credit entries made to the escrow account during the review period. Please provide the dates, plain-English descriptions, and dollar amounts for insurance-related journal entries made by LoanCare and XX/XX/XXXXto the mortgage escrow account for each major category ( e.g., Projected Amount or What We Expected to Pay Out ) including any correcting and/or reversing account entries, fees, along with the assumptions ( e.g., CPI, property value ) used determining these amounts during the review period ; Receipt, processing and payment of invoices from insurance-related providers during the requested period. Please provide copies of all insurance invoices received, logs or records of requests to insurance companies for invoices ( if none, please so indicate ) and cancelled checks substantiating payment by XX/XX/XXXXand LoanCare for insurance-related services during the review period ; LoanCare and XX/XX/XXXXproviding proof notice consistent with 12 C.F.R. 1024.37 prior to purchase of force-placed insurance policies. Please provide proof of delivery notices and related information as required by 12 C.F.R. 1024.37 along with all correspondence specifically related to force-placed insurance during the review period. Additionally, please provide complete copies of insurance policies purchased, including named beneficiary, coverage amounts, policy benefits, and exclusions. 

Loan servicers customarily make one annual insurance payment and the review period is six years ; as such, this request straightforward and reasonable. Furthermore, receiving all requested information from each servicer is critically important to understanding the servicing of the account clearly never professionally reviewed or audited as the dollar amounts are substantial and the estimates from each servicer vary widely. 

Notice of Error All insurance-related payments made from borrowers escrow account subsequent to XX/XX/XXXX,  for the reasons explained in detail above, are in error and must be reimbursed immediately. Receipt of Please provide a complete explanation, a copy of documents relied on in reaching your conclusion, and the name and phone number of the person ultimately responsible for the decision should XXXX or LoanCare arrive at a different conclusion. 

I can be reached at ( XXXX ) XXX-XXXX or XXXXXXXX if you need to contact me for additional information. Consider this an Error Resolution Notice under 12 C.F.R. 1024.35 and Request for Information under 12 C.F.R. 1024.36. 
Sincerely, XXXX XXXX cc : XX/XX/XXXXXX/XX/XXXX XXXX Mr. XXXX XXXX XXXX, LoanCare XX/XX/XXXX XXXX XXXX, XX/XX/XXXXXXXX XXXX XXXX XXXX, Office of the Comptroller of the Currency ( OCC  ), Federal Housing Finance Agency ( FHFA ), Consumer Financial Protection Bureau ( CFPB ), Housing and Urban Development ( HUD ) Office of Inspector General, HUD Office of HUD, Georgia Department of Banking and Finance, Georgia Office of Attorney General, and Georgia Department of Insurance.

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