Consumer complaint received 2020-01-03
Company: Freedom Mortgage Company
State: OR
Product: Mortgage
Sub-product: VA mortgage
Issue: Trouble during payment process

Complaint:
Good Day : In XX/XX/XXXX we refinanced our VA loan with Freedom Mortgage. We signed the documents on XX/XX/XXXX, and the rescission period was complete on XX/XX/XXXX. The previous loan was an in-house and they paid off their old loan and replaced it with a new Freedom Mortgage loan through a VA rate reduction refinance with a first payment due of XX/XX/XXXX. 

On XX/XX/XXXX, we received a late notice for the old paid off loan for the XX/XX/XXXX payment. The next day, we received a loan statement saying we were due for the XX/XX/XXXX and XX/XX/XXXX payments on the old paid off loan. I called the customer service line and input the old loan number, and the IVR system said I still owed the XX/XX/XXXX payment for the paid off loan. I called the IVR system and input my new loan number, and it stated that my new loan payment was due XX/XX/XXXX. I figured there was some sort of internal computer error, so decided to wait 45 minutes on hold and talk to a representative. I spoke with a XXXX, who told me the following : 1. Our IVR has always worked this way. Maybe management doesn't know it. And that the billings " crossed in the mail '' with my refinance. ( the print dates on the documents were XX/XX/XXXX and XX/XX/XXXX, respectively ... my loan closed XX/XX/XXXX ) 2. She said my loan did not pay off until XX/XX/XXXX, which is why you got a late notice for XX/XX/XXXX and a statement for XX/XX/XXXX/XX/XX/XXXX payments ( I told her this was an internal problem with them ... .it should have paid off on XX/XX/XXXX as the interest for the XX/XX/XXXX payment was collected up to that date in the closing process ) 3. She confirmed that we didn't owe anything, but we had a negative escrow balance on the old loan we would have to pay. I told her we owed nothing on the old loan, that the old loan was paid off and the escrow was transferred to the new loan. ( there was actually an overage in the escrow account at the time we paid off the old loan ) 4. I told XXXX I wanted to file a complaint. She said she couldn't help me with that, and I would have to file it at XXXX. I told her I would not accept that, and she needed to escalate my complaint to a supervisor. She got XXXX on the phone. 
5. XXXX told me despite when my documents were signed and when the rescission period was up the loan was not paid off on Freedom Mortgage 's system until XX/XX/XXXX, and there was a negative balance in the escrow because my homeowner 's insurance bill came in and they paid it from the old loan!!!!! 
6. I told XXXX that was not my fault, and they needed to correct the error internally as the insurance should have been paid from the escrow on the new loan, where the escrow funds were transferred. She told me I would have to talk with my loan officer, as she could not resolve the situation for me, and she further told me I owed $ 600+ to them for the negative escrow balance, and they wouldn't close out the old loan until I paid it!!!!!! She told me that the " payoff '' came in late, and they used my escrow account to " net out '' the additional interest owed when the loan did not pay off promplty on the XX/XX/XXXX!!!!!!! That is purely illegal! The loan should have been closed on XX/XX/XXXX. They should not be charging me interest on the old loan after XX/XX/XXXX and using my escrow account to cover interest I didn't even owe!

7. I told XXXX I would not be a go between between the servicing and origination departments at Freedom Mortgage. I told her this was their internal error in not paying off the loan on XX/XX/XXXX, and they needed to correct it. She insisted I had to resolve the situation on my own. I told her I would not hang up, and that we needed to have a three way call with the origination department to get the situation straightened out. She transferred me to a man named XXXX, who is the first person who understood the issue, and offered to help. 
8. XXXX stated that some sort of internal error occurred, as the loan should have been paid off XX/XX/XXXX. He didn't know why the loan was left active until XX/XX/XXXX, which apparently caused the error when the bill came in for the insurance, and for it to be paid from the wrong account. He could not figure out what they did ... but it looked like they treated the payoff as a " short payoff '' and netted funds out of escrow to pay additional interest I did not owe. XXXX said he would look into it further, and get back to me.

I am filing this complaint to make you aware of the illegal lending practices at Freedom Mortgage. If I was not a savvy financial services executive, and instead someone who did not understand lending and escrow accounts, I would be cheated out of interest not owed, and be sending them a check for a negative escrow balance! The first two representatives at the company did not want to help me. They wanted me to go away. If I had not insisted on staying on the phone for an hour and arguing with them, I would never have gotten to XXXX, who does seem to understand that Freedom Mortgage made some very big mistakes related to charging me excess interest and paying my insurance from the wrong escrow account ( from a loan that was supposed to be paid off ). 

XXXX says he will call me back ... I have not heard from him yet, but I want to escalate this complaint promptly as we can not allow mortgage companies to get away with this sort of illegal and unethical behavior. I consider this a UDAAP issue, and it needs to be promptly addressed. At this point, I do not have any resolution from Freedom Mortgage. 

Regards, XXXX XXXX

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