Consumer complaint received 2023-10-04
Company: VIRGINIA HOUSING DEVELOPMENT AUTHORITY
State: VA
Product: Mortgage
Sub-product: USDA mortgage
Issue: Struggling to pay mortgage
Sub-issue: Trying to communicate with the company to fix an issue related to modification, forbearance, short sale, deed-in-lieu, bankruptcy, or foreclosure

Complaint:
1. HIGH AFFORDABILITY PERCENTAGE : AT CLOSING, MY SALARY WAS LESS THAN {$50000.00}, YET THE LOAN 'S AFFORDABILITY PERCENTAGE IS AT A STAGGERING XXXX XXXX. THIS RAISES SERIOUS CONCERNS ABOUT THE LOAN 'S AFFORDABILITY.

2. FRAUD AND LACK OF CLOSURE : THERE WAS NO FULL CLOSURE PROVIDED AT CLOSING. I FELT URGED TO SIMPLY SIGN AGREEMENTS WITHOUT ADEQUATE EXPLANATION.

3. BUDGET MISALIGNMENT : I WAS MADE TO CREATE A BUDGET THAT DIDN'T ALIGN WITH THE ACTUAL COST OF THE HOME AND MONTHLY PAYMENTS, LEADING TO FINANCIAL STRAIN.

4. COERCIVE INSURANCE POLICIES : I WAS FORCED INTO INSURANCE POLICIES THAT DID NOT SERVE MY BEST INTERESTS.

5. UNDISCLOSED TRUST ARRANGEMENT : A TRUST WAS CREATED WITHOUT FULL DISCLOSURE, WITH XXXX XXXX XXXX AND XXXX XXXX AS TRUSTEES OF THE LOAN. THIS WAS NOT EXPLAINED PROPERLY. 
6. NOTICE OF ACCELERATION CLAUSE : I WAS NOT MADE AWARE OF THE NOTICE OF ACCELERATION CLAUSE, WHICH IS A CRITICAL PART OF THE LOAN AGREEMENT.

7. FALSE INFORMATION ON DOCUMENTS : THE WORKSHEET FOR DOCUMENTING ELIGIBLE HOUSEHOLD AND REPAYMENT INCOME CONTAINS FALSE INFORMATION FILLED OUT BY ANOTHER PARTY, CONTRIBUTING TO MISREPRESENTATION AND PREDATORY LENDING PRACTICES. 
Mortgage Loan Number : XXXX - Numbers Audit ( Part 1 : Mathematical Analysis ) This audit is dedicated to a meticulous examination of the numerical aspects that underlie Mortgage Loan Number XXXX. A comprehensive grasp of these figures is instrumental in comprehending the intricate financial dynamics and consequences entailed by this particular loan. 
Principal Loan Amount : At the inception of this financial agreement, the borrower received a loan amounting to {$170000.00}. This initial sum served as the foundation upon which various financial components, such as interest and supplementary costs, were calculated. 
Annual Interest Rate : The interest rate associated with this loan was set at XXXX XXXX on an annual basis. When expressed as a decimal, this rate equates to XXXX. This annual interest rate played a pivotal role in determining the yearly interest charges applied to the loan. 
Monthly Taxes : On a monthly basis, the borrower was responsible for taxes amounting to {$180.00}. These taxes primarily comprised property taxes linked to the property that was financed through this loan. 
Total of Payments ( After Interest, Principal, Mortgage Insurance, and Loan Costs ) : The total cost of this loan, which encompasses the principal loan amount, interest charges, taxes, mortgage insurance, and various loan-related expenses, amounted to {$270000.00} over the life of the loan. 
Finance Charge : The finance charge is a significant metric that encapsulates the total cost incurred as a result of borrowing. In the context of this specific loan, the finance charge reached {$100000.00}, encompassing the sum of interest paid over the loan 's duration.

Amount Financed : This figure represents the effective amount borrowed, taking into account any upfront fees or costs. In this instance, the borrower effectively borrowed {$160000.00} to finance their housing endeavor.

Annual Percentage Rate ( APR ) : The APR is a crucial financial parameter, reflecting the effective interest rate considering both the nominal interest rate and any associated fees or costs. For this particular loan, the APR was calculated at XXXX XXXX or XXXX as a decimal. 
Total Interest Percentage : This percentage serves as a clear indicator of the portion of total payments allocated towards interest expenses. For this loan, this percentage amounted to XXXX XXXX, signifying that a substantial portion of the borrower 's payments contributed to servicing interest charges. 
Annual Salary : The borrower 's annual income is reported as {$46000.00}, representing their yearly earnings.

Loan Term : This loan extended over a 30-year term, defining the duration during which the borrower would fulfill their financial obligations.

Monthly Payment Calculation : The monthly payment, inclusive of principal, interest, taxes, and ancillary expenses, was calculated at approximately {$710.00}.

Total Interest Paid Over the Loan Term : Across the entire 30-year loan term, the cumulative interest payment reached approximately {$80000.00}. This figure encapsulates the total interest expenditure over the entirety of the loan 's existence.

Affordability Percentage Calculation : The affordability percentage serves as a critical metric for illustrating the proportion of the borrower 's annual salary designated to service the loan. In this particular case, this percentage was calculated at approximately XXXX XXXX, indicating that a significant portion of the borrower 's income was dedicated to covering loan-related costs. 
Implications of the Affordability Percentage : A heightened affordability percentage signifies that a substantial share of the borrower 's income is allocated to fulfilling loan obligations. This scenario carries potential consequences, including financial strain, an escalated risk of default, and sustained financial ramifications that may restrict the borrower 's ability to save or invest for future financial aspirations.

In Summary ( Part 1 ) : This initial segment of the audit has delved into the mathematical intricacies of Mortgage Loan Number XXXX. These numerical values form the core of the borrower 's financial commitment and warrant thorough examination within the context of the borrower 's financial situation. 
Now, let 's proceed with Part 2 to provide a more detailed explanation of these numerical aspects. 
Mortgage Loan Number : XXXX - Numbers Audit ( Part 2 : Detailed Explanation ) In Part 2 of the Numbers Audit for Mortgage Loan Number XXXX, we will provide a comprehensive and detailed explanation of the numerical aspects outlined in Part 1. This in-depth analysis will shed light on the financial intricacies and implications of this loan. 
Principal Loan Amount : The principal loan amount of {$170000.00} represents the initial sum borrowed by the borrower to finance their housing endeavor. It serves as the baseline upon which all other financial calculations are built. 
Annual Interest Rate : The annual interest rate of XXXX XXXX ( XXXX as a decimal ) determines the cost of borrowing over a year. This rate is applied to the outstanding loan balance to calculate the interest charged annually. 
Monthly Taxes : The monthly tax obligation of {$180.00} is an additional cost borne by the borrower. These taxes are typically property taxes associated with the financed property, which the borrower is responsible for paying. 
Total of Payments : The total cost of the loan over its life is {$270000.00}, encompassing not only the principal loan amount and interest but also taxes, mortgage insurance, and various loan-related expenses. This is the sum total that the borrower will pay over the course of the loan. 
Finance Charge : The finance charge of {$100000.00} represents the total cost of borrowing. It includes the interest paid on the loan and provides a comprehensive view of the financial impact of the loan on the borrower. 
Amount Financed : The amount financed, {$160000.00}, reflects the actual amount borrowed by the borrower after accounting for any upfront fees or costs. It's the amount the borrower effectively received to fund their housing purchase. 
Annual Percentage Rate ( APR ) : The APR of XXXX XXXX ( XXXX as a decimal ) is the effective interest rate that considers both the nominal interest rate and any associated fees or costs. It provides a standardized way to compare loan offers. 
Total Interest Percentage : This percentage, at XXXX XXXX, indicates that nearly half of the total payments made by the borrower go toward paying interest. It highlights the substantial interest cost associated with this loan. 
Annual Salary : The borrower 's annual salary of {$46000.00} represents their yearly income, which is a crucial factor in determining the affordability of the loan.

Loan Term : With a term of 30 years, this loan extends over three decades, defining the period during which the borrower is obligated to make payments. 
Monthly Payment Calculation : The monthly payment, approximately {$710.00}, is the regular installment that the borrower must pay to cover the principal loan amount, interest, taxes, and other associated expenses. 
Total Interest Paid Over the Loan Term : Over the 30-year term of the loan, the borrower will pay approximately {$80000.00} in interest alone. This signifies the substantial cost of financing this loan. 
Affordability Percentage : The affordability percentage, calculated at approximately XXXX XXXX, indicates that a significant portion of the borrower 's annual salary is allocated to servicing the loan. This raises concerns about the financial strain it imposes. 
In summary, these numerical aspects provide a comprehensive view of Mortgage Loan Number XXXX. They reveal the financial commitments, costs, and implications associated with this loan, all of which are crucial considerations for the borrower. 

Report 1 : Mortgage Affordability Analysis Mortgage Loan Number : XXXX Principal Loan Amount : {$170000.00} Annual Interest Rate : XXXX XXXX ( XXXX as a decimal ) Monthly Taxes : {$180.00} Total of Payments ( After Interest, Principal, Mortgage Insurance, and Loan Costs ) : {$270000.00} Finance Charge : {$100000.00} Amount Financed : {$160000.00} Annual Percentage Rate ( APR ) : XXXX XXXX ( XXXX as a decimal ) Total Interest Percentage : XXXX XXXX Annual Salary : {$46000.00} Loan Term : 30 years Affordability Percentage Calculation : The affordability percentage is a crucial indicator of a borrower 's ability to manage mortgage payments. In this case, the affordability percentage is approximately XXXX XXXX. This high percentage signifies that a substantial portion of the borrower 's annual salary will be allocated to servicing this loan. 
Implications of the High Affordability Percentage : A high affordability percentage, specifically XXXX XXXX, carries significant implications : 1. Financial Strain : The borrower will face financial strain as a substantial portion of their income is dedicated to mortgage payments. 
2. Risk of Default : Elevated mortgage payments compared to income increase the risk of payment difficulties, including delinquency or foreclosure.

3. Long-Term Financial Impact : The substantial total loan cost, driven by a significant portion allocated to interest payments, will have long-lasting financial consequences, potentially limiting the borrower 's capacity to save or invest for future financial goals.

Report 2 : Legal Considerations and Affordability The high affordability percentage of 585.07 % raises concerns about the loan 's affordability. It's important to consider the legal aspects of this situation : Legal Considerations : 1. Predatory Lending Practices : The terms of the loan, including the high interest rate and hidden fees, may be considered predatory. Such practices can violate consumer protection laws.

2. Undisclosed Disclosures : Hidden clauses and undisclosed disclosures in the loan agreement might be against the law, as transparency in lending is legally required.

3. Truth in Lending Act ( TILA ) : Violations of the Truth in Lending Act ( TILA ) might be present due to undisclosed disclosures and potentially predatory lending practices.

4. Tax Implications : Issuing a 1099-A form without proper justification could lead to tax-related complications, potentially violating tax laws. 
Conclusion : In conclusion, the affordability percentage of XXXX XXXX indicates that the loan is not realistically affordable for the borrower. Additionally, there are legal concerns, including potential violations of consumer protection laws, Truth in Lending Act, and tax-related issues. Further evaluation and potential adjustments to the loan terms are necessary to ensure fairness, legality, and affordability for the borrower.

Company response to consumer: Closed with explanation