Consumer complaint received 2021-05-27
Company: Flagstar Bank, N.A.
State: VA
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Trouble during payment process

Complaint:
I have a mortgage with Flagstar Bank located in XXXX, Michigan. It is a conventional, 15-year mortgage with escrow required for taxes and insurance. The real estate tax payments are required twice a year with the most recent tax payment of {$7300.00} due on XX/XX/XXXX. 

On XX/XX/XXXX, I got a notice of a delinquent real estate tax bill from the County. Included in the amount due were penalties and interest of {$370.00}. Needless to say, I believe Flagstar is responsible for the penalties and interest because those charges were directly related to Flagstars failure to pay the taxes when due. In fact, I wasnt even aware that the taxes hadnt been paid until I was notified by the County on XX/XX/XXXX, after the charges had been incurred. 

I immediately called Flagstar Bank on XX/XX/XXXX and talked to an individual who informed me that the tax payment wasnt made because Flagstar had received a request for a payoff and their system doesnt allow for payments once a payoff request is received. [ Note : In mid to late XXXX, I was considering a refinance of this mortgage and apparently that lender had sent a payoff request to Flagstar at some time in XXXX or XXXX. However, I decided not to proceed with the refinance and withdrew my application the week of XX/XX/XXXX. END NOTE ] I pressed for additional information as to why the payment was never made but got nowhere. I then asked if I could assume the responsibility for the payment of taxes and insurance as I could not rely on Flagstar. He said that he would send me a form to fill out requesting a waiver of escrow. We ended the call and I waited for receipt of the form. Upon receiving the form, I realized that Flagstar wanted to charge me {$1100.00} to do this. [ NOTE : The waiver escrow fee was 0.25 % of the balance of the loan, which was approximately {$460000.00} at that time. Fee of {$1100.00} = {$460000.00} x .25 %. END NOTE ] So, at this point, I am being charged {$370.00} for Flagstars failure to pay my taxes to the County, the funds for which I had already paid Flagstar and were sitting in an escrow account at Flagstar. Further, they wanted to charge me an additional {$1100.00} to let me pay my taxes directly, which I believed was necessary to ensure my taxes got paid on time prospectively. 

Later that same day ( XX/XX/XXXX ), I called Flagstar again as I realized that the individual I talked to earlier never indicated whether Flagstar intended to pay the delinquent tax bill. On this call, I talked to a woman in the Tax Department and explained the situation with the delinquent tax bill as well as the penalties and interest. I requested that Flagstar promptly pay the delinquent tax bill and also requested that Flagstar reimburse me for the {$370.00} in penalties and interest. This person indicated that they would pay the taxes now and put in a request for the reimbursement of penalties and interest. 

On XX/XX/XXXX, I called Flagstar again to follow-up on my earlier requests. I spoke to a supervisor in the Tax Department who indicated that she didnt have any information relating to my previous request for reimbursement of the penalties and interest. However, based on her research, she did not understand why the taxes were not paid until XX/XX/XXXX as the hold on the account from the payoff request had been lifted on XX/XX/XXXX. She sympathized with my situation and told me that she would put in a request for reimbursement of the penalties and interest. As I had heard that before, I asked if I could just speak directly to whomever she was making that request. However, she told me that was not possible and that I would just have to wait for their response. 

On XX/XX/XXXX, I called Flagstar again as I never got a response to my XX/XX/XXXX call. I asked to speak to the same individual I spoke to on XX/XX/XXXX but was told that was not possible. So, I spoke to another individual in the Tax Department who indicated that she found my case and that it had been resolved. She asked to put me on hold so she could get up to speed. It took about 20 minutes but she eventually got back and explained that my case had been referred to their third-party servicer who denied the request. However, this individual ( who also seemed very sympathetic ) said she would request the refund from Flagstar because the hold was taken off on XX/XX/XXXX, the taxes were not due until XX/XX/XXXX and the penalties and interest would not accrue until after the grace period ending on XX/XX/XXXX. In other words, Flagstar had 33 days in which to pay the taxes before the penalties and interest would accrue. She said the case would be reviewed within 5 days. I requested that someone at Flagstar call me with the resolution. I also explained my frustration at not being able to speak directly to anyone with decision-making responsibility.

Well, it didnt surprise me that I never got a call regarding resolution of this dispute. So, I again called Flagstar on XX/XX/XXXX. I spoke to yet another individual in the Tax Department who related to me that the case had been closed and that Flagstar was denying the reimbursement because of the payoff request. Although I pressed on how Flagstar could deny responsibility when the hold on the account had been lifted on XX/XX/XXXX and the taxes could have been paid up to XX/XX/XXXX without penalty, I got nowhere. I then realized that dealing with this institution was futile.

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