Consumer complaint received 2023-04-15
Company: NEW YORK COMMUNITY BANCORP INC
State: FL
Product: Mortgage
Sub-product: FHA mortgage
Issue: Trouble during payment process

Complaint:
RESPONDENTS REFUSAL TO HONOR MORTGAGOR/CONSUMERS REQUEST FOR CARES ACT FORBEARANCE CARES Act Forbearance Provisions * On XX/XX/XXXX, the consumer Financial Protection Bureau ( Bureau ) and other Federal agencies recognized the serious impact the Coronavirus Disease ( referred to as COVID-19 ) emergency may have had on consumers and on the operations of mortgage servicers. In response, the Bureau and those other federal agencies issued the Joint Statement on Supervisory and Enforcement Practices Regarding the Mortgage Servicing Rules in Response to the COVID-19 Emergency and the CARES Act. ( Joint Statement ). A copy of the XX/XX/XXXX XXXXoint Statement is attached hereto as Exhibit A. 
* Also in response to the COVID-19 emergency, the Federal Housing Administration ( FHA ) published its CARES Act Forbearance Fact Sheet ( FHA Fact Sheet ) for Servicers ( such as Flagstar Bank ) of FHA Loans . The FHAs Forbearance Fact Sheet is attached hereto as Exhibit B.

Factual History [ 1 ] As a result of experiencing a financial hardship due to the COVID-19 National emergency, the consumers XXXX XXXX and XXXX XXXX XXXX the FHA Mortgagors or the Thompsons ), on or before XX/XX/XXXX, requested a CARES Act forbearance from their Servicer at the time, XXXX XXXX XXXX XXXX XXXX XXXX ). The Thompsons XXXX [ XXXX ] XXXX forbearance request was also due to XXXX XXXX advice. 
[ XXXX ] On XX/XX/XXXX, PRMG ( in response to the FHA Mortgagors request ), placed the Thompsons Mortgage into a forbearance plan that, according to XXXX, will continue through XXXX ( the Initial Plan ). A copy of XXXX XX/XX/XXXX letter placing the Thompsons Mortgage in the initial 90-day COVID-19 forbearance plan from XX/XX/XXXX until XX/XX/XXXX, is attached hereto as Exhibit C. 
[ XXXX ] On XX/XX/XXXX, XXXX, per the FHA Mortgagors request, extended the XXXX XX/XX/XXXX Initial Plan by an additional 90 days, that, according to XXXX, will continue through XXXX ( the XXXX XXXX Extension ). A copy of PRMGs XX/XX/XXXX letter extending the XXXX initial forbearance plan by an additional 90 days, i.e., until XX/XX/XXXX, is attached hereto as Exhibit D. 
[ XXXX ] On XX/XX/XXXX, the new Servicer of the XXXX FHA Mortgage, XXXX, by and through its sub-servicer, Flagstar Bank ( collectively, FLAGSTAR ), sent the XXXX a letter entitled Notice of Servicing Transfer informing the FHA Borrowers that the servicing of [ the subject ] loan is being transferred, effective XX/XX/XXXX. Important here, the last paragraph on page 3 of 3 of FLAGSTARs letter provides that if [ the XXXX ] were on a CARES Act forbearance plan with their current servicer [ XXXX ], then [ FLAGSTAR ] would automatically keep your [ the XXXX ] forbearance protection in place at least 90 days beyond the XX/XX/XXXX transfer date. A copy of FLAGSTARs XX/XX/XXXX transfer notice is attached hereto as Exhibit E. 
[ [ XXXX ] ] On XX/XX/XXXX, XXXX, sent the FHA Mortgagors a letter confirming PRMGs XX/XX/XXXX XXXX XXXX extension of the Thompsons XX/XX/XXXX Initial Plan until XX/XX/XXXX. However, its important to note that in its XX/XX/XXXX letter, FLAGSTAR stated that if [ the XXXX ] financial hardship is not resolved by XX/XX/XXXX, [ the XXXX ] may have the option to extend the forbearance plan again. That is, if the extension does not exceed a maximum forbearance period in accordance with investor/insurer guidelines- in this case, the FHA Fact Sheet ( see Exhibit B ). A copy of FLAGSTARs XX/XX/XXXX confirming PRMGs the XX/XX/XXXX XXXX XXXX extension to the Thompsons XX/XX/XXXX Initial Plan, is attached hereto as Exhibit F. 
[ [ XXXX ] ] On XX/XX/XXXX, FLAGSTAR, per the FHA Mortgagors request, extended the XXXX XX/XX/XXXX Initial Plan by an additional 90 days, i.e., until XX/XX/XXXX ( the 2nd 90-Day Extension ). However, in its XX/XX/XXXX extension letter, Flagstar threatened the FHA Borrowers that as of XX/XX/XXXX, you will no longer have forbearance plan protections, at which time, you will be responsible to resolve any loan delinquency ( Emphasis added ). A copy of FLAGSTARs XX/XX/XXXX letter extending the XXXX XX/XX/XXXX Initial Plan until XX/XX/XXXX, and threatening the FHA Borrowers that they would lose their forbearance protection, is attached hereto as Exhibit G. 
[ [ XXXX ] ] On XX/XX/XXXX, XX/XX/XXXX, and again on XX/XX/XXXX, XXXX sent the XXXX the exact same form letter ( just different dates ), repeatedly threatening the FHA Borrowers that their forbearance plan will end on XX/XX/XXXX. Importantly, each of those letters falsely states to the FHA Mortgagors, that you [ the XXXX ] will have reached the maximum allowable forbearance period in accordance with investor/insurer guidelines. ( Emphasis added ). Copies of FLAGSTARs false XX/XX/XXXX, XX/XX/XXXX, and XX/XX/XXXX letters, are attached hereto as Exhibits H, I and J respectively. 
[ [ XXXX ] ] On XX/XX/XXXX, XX/XX/XXXX, and again on XX/XX/XXXX, the FHA Mortgagors contacted FLAGSTAR for an explanation of its maximum allowable determination. Also on XX/XX/XXXX, XX/XX/XXXX and again on XX/XX/XXXX, the XXXX pleaded with FLAGSTAR to honor their request for a third and final 90-day extension of their XX/XX/XXXX Initial Plan ( the Final XXXX Extension ). Shockingly however, on each of those occasions, FLAGSTAR refused to honor the XXXX request for the final 90-day extension of their XX/XX/XXXX initial COVID-19 forbearance plan by erroneously stating that the XXXX has used the maximum amount of [ COVID-19 ] forbearance relief that their entitled to. 
[ [ 9 ] ] In keeping with its threats, FLAGSTAR, on XX/XX/XXXX created a so-called Delinquent Mortgage Statement ( the Statement ) demanding from the Thompsons that XXXX pay an alleged amount of {$14000.00} by XX/XX/XXXX. In addition to demanding the lump sum amount of {$14.00}, XXXX by XX/XX/XXXX from the FHA Mortgagors, FLAGSTAR, through its XX/XX/XXXX Statement, also warned the XXXX that a {$32.00} late fee will be charged after XX/XX/XXXX. 
[ [ XXXX ] ] Under the Delinquency Notice section of its XX/XX/XXXX Statement, FLAGSTAR incorrectly states that the mortgage payments are late., and that the loan became delinquent on XX/XX/XXXX. Damagingly, FLAGSTAR threatens the FHA Mortgagors ( whom are experiencing a COVID-19 financial hardship ), that failure to bring the loan current may result in fees and foreclosure - the loss of the home. 
[ [ XXXX ] ] Additionally, FLAGSTARs XX/XX/XXXX letter stated that as of XX/XX/XXXX the mortgage loan is 153 days delinquent and provide a payment due history chart as illustrated below : Payment due XX/XX/XXXX Unpaid balance of {$1600.00} Payment due XX/XX/XXXX Unpaid balance of {$1600.00} Payment due XX/XX/XXXX Unpaid balance of {$1600.00} Payment due XX/XX/XXXX Unpaid balance of {$2400.00} Payment due XX/XX/XXXX Unpaid balance of {$2400.00} Payment due XX/XX/XXXX Unpaid balance of {$2400.00} [ [ XXXX ] ] A copy of FLAGSTARs XX/XX/XXXX Mortgage Statement demanding a lump sum payment of over XXXX XXXX dollars by XX/XX/XXXX ( or face foreclosure ), is attached hereto as Exhibit K. 
* ARGUMENT FLAGSTARs Violation of the CARE Acts Two Consecutive 180-Day Periods Provision [ [ XXXX ] ] Upon receiving a borrowers request for forbearance, the servicer must provide such forbearance for up to 180 days with no additional documentation required - other than the borrowers attestation to a financial hardship caused by the COVID-19 emergency. The servicer must extend the forbearance for up to an additional 180 days at the request of the borrower, provided that the request for an extension is made during the covered period. Note that the borrower may request that either the initial or extended forbearance period be less than 180 days. See CARES Act, Pub. L. 116-136, section 4022 ( b ) and ( c ) ( 1 ). More specifically, the CARES Act provides protections for borrowers with federally-backed mortgages such as the Thompsons FHA Mortgage .

[ [ 14 ] ] Page one of the FHA Fact Sheet ( Exhibit B ) provides that if the borrower requests a forbearance, a servicer must give them the forbearance requested. The FHA XXXXact Sheet also provides that under the CARES Act, borrowers are entitled to request an initial forbearance of their monthly mortgage payments for up to 180 days, and may request up to an additional 180 days ( Emphasis added ), and that Servicers must approve the forbearance for the amount and time that the borrower requests. 
[ [ XXXX ] ] Under the CARES Act, Forbearance is done at the borrowers request and for as long as they request, up to 360 days in total ( initially up to 180 days and then up to another 180 days, if requested ). ( See the FHA Fact Sheet, Ex. B, pg. 1 ).

[ [ 16 ] ] Relevant here, Servicers may discuss shorter initial forbearances with the borrower, such as 3 months ( 90-days ) for example, and work up or down depending on the needs and wants of the borrower. ( See the FHA Fact Sheet, Ex. B, pg. 1 ).

[ [ 17 ] ] However, Servicers such as FLAGSTAR are not allowed to determine that a borrower does not need a CARES Act forbearance and limit the amount of forbearance given? In fact, pursuant to FHA Fact Sheet, servicer must grant forbearance to any requesting borrower with a federally backed mortgage loan attesting to a COVID-19 related hardship regardless of delinquency status. ( See the FHA Fact Sheet, Ex. B, pg. 3 ) [ [ 18 ] ] Here, it is abundantly clear that FLAGSTAR is attempting to steer the Mortgagors XXXX and XXXX XXXX away from their rights to a final 90-day COVID-19 forbearance extension by erroneously advising them that their payments are past due and that they have reached the maximum allowable forbearance period. Instead, FLAGSTAR was required by the CARES Act and by the FHA Fact Sheet to honor the Thompsons XX/XX/XXXX, XX/XX/XXXX, and their XX/XX/XXXX repeated requests for a final forbearance extension in violation of both those authorities. 
[ [ XXXX ] ] Moreover, under the FHA CARES Act, borrowers are entitled to request an initial forbearance of their monthly mortgage payments for up to 180 days, and may request up to an additional 180 days. ( Emphasis added ). In fact, Servicers such as FLAGSTAR must approve the forbearance for the amount and time that the borrower requests. Under the FHA CARES Act, this is done at the borrowers request and for as long as they request, up to 360 days in total ( initial up to 180 days and then up to another 180 days, if requested ) [ [ XXXX ] ] Indeed, FLAGSTAR, on XX/XX/XXXX, XX/XX/XXXX, and again on XX/XX/XXXX, recklessly deprived the XXXX of approximately 90 days of their 360 days of XXXX forbearance protections protections that the FHA Mortgagors are entitled to under the CARES Act, and the FHA guidelines XXXX 
[ [ XXXX ] ] Additionally, FHA does not require lump sum repayments at the end of the forbearance as FLAGSTAR is demanding from the XXXX. In fact, FHA has developed the COVID-19 Standalone Partial Claim to assist with such repayment. If borrowers were current or less than 30 days delinquent as of XX/XX/XXXX ( as the XXXX were ), they may be entitled to this option. 
[ [ XXXX ] ] In its XX/XX/XXXX statement, FLAGSTAR is clearly and unequivocally demanding that the XXXX pay a lump sum amount of {$14000.00}, and to do so by XX/XX/XXXX. Nowhere in its XX/XX/XXXX mortgage statement does FLAGSTAR inform or notify the XXXX of the FHAs Standalone Partial Claim program to assist them with that alleged repayment amount. 
* CONCLUSION [ [ 23 ] ] As a direct result of receiving FLAGSTARs repeated false letters between XX/XX/XXXX and XX/XX/XXXX, Here, the XXXX were already suffering emotional distress, anxiety, inconvenience, frustration, annoyance, fear, confusion, and loss of sleep as a direct result of receiving FLAGSTARs repeated false letters between XX/XX/XXXX and XX/XX/XXXX. However, after receiving FLAGSTARs XX/XX/XXXX Mortgage statement demanding {$14000.00} by XX/XX/XXXX, or face foreclosure and the loss of their ( despite being entitled to forbearance ), exacerbated their emotional distress, anxiety, inconvenience, frustration, annoyance, fear, confusion, and loss of sleep.

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