Consumer complaint received 2022-07-07
Company: Flagstar Bank, N.A.
State: CT
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Trouble during payment process

Complaint:
I continue to be harrassed by Flagstar Bank over its insistence that I carry Flood Insurance in excess of the " full insurable value of the property '' ( a.k.a. the Replacement Cost Value ( RCV ) ). [ See Complaints # XXXX and # XXXX. ] Flagstar insists that the RCV I have provided to them is not sufficient because it is not referred to in the Endorsements of the policy XXXX page of my flood insurance. [ Flood insurers do NOT estimate RCVs ; I used the one the homeowner 's insurer calculated to set my homeowner 's benefit limit. Flagstar ignored the legitimate RCV because it does not comply with their bureaucratic requirements. ] Flagstar Bank also continues to make mistakes in applying you own requirements which I concede now require me to have {$250000.00} as the benefit limit. 
However, as shown in the accompanying spreadsheet ( Exhibit A ), Flagstar has made a hash of the calculations. Let me explain to you where Flagstar has erred in calculating what I should pay. 
Please refer to the attached spreadsheet ( Exhibit A ). Please note that since XX/XX/XXXX, I have been in compliance with Flagstars flood-gap requirements. In the previous two periods where Flagstar charged me for flood-gap, the charges were excessiveby {$260.00}. This is figured as follows : First, what I should pay by Flagstars requirements : I purchased {$180000.00} of flood insurance from XXXX for one year on XX/XX/XXXX ( Exhibit B ). 
Then I bought a new policy and paid additional to XXXX on XX/XX/XXXX to bring the benefit limit up to {$210000.00} ( Exhibit XXXX ). Then I paid additional to XXXX on XX/XX/XXXX to bring the benefit limit up to $ XXXX required benefit coverage ( Exhibit D ). [ The original flood insurance I purchased from XXXX was for a {$170000.00} benefit limit obtained for settlement on the property. ] Second, it is a straightforward matter to calculate how much Flagstar should have assessed me for shortfalls in flood gap coverageusing the rates Flagstar actually used to calculate what I owed ( see Exhibit A ( the spreadsheet ), and, Third, below ). For the period XX/XX/XXXX to XX/XX/XXXX, Flagstar should have only charged me {$64.00} for flood-gap for that period. For the period XX/XX/XXXX to XX/XX/XXXX, Flagstar should have only charged me {$43.00} for flood-gap for that period. The total I should have been charged is thus {$100.00}. ( See Line H in Exhibit A. ) Third, XXXX calculated what I owed, it found the flood-gap shortfall to be {$370.00} -- {$170.00} for one years coverage ( of XX/XX/XXXX to XX/XX/XXXX ) for {$170000.00} (?! ) ( See Exhibit I ) plus {$200.00} for one years coverage ( of XX/XX/XXXX to XX/XX/XXXX ) for {$40000.00} ( See Exhibit J ). 
Flagstar thus overcharged me for flood-gap by {$260.00} ( {$370.00} less {$100.00} ) which should be refunded to my escrow account. 
Let me draw your attention ( Exhibit I ) to the fact that your flood-gap placement of {$170000.00} for the period XX/XX/XXXX to XX/XX/XXXX makes no sense. Where does the need for {$170000.00} in flood insurance come from? I had paid for coverage of {$180000.00} in flood insurance for the 12 months starting on XX/XX/XXXX and the flood-gap, by your requirements and calculation, was only {$64000.00} ( $ XXXX {$180000.00} ) NOT {$170000.00}. Moreover, the premium of {$170.00} for {$170000.00} in coverage is an extremely LOW premium ( {$1.00} per {$1000.00} ) in coverage. 
In contrast to your low-balling the premium I should pay, Exhibit J shows that you paid an extremely excessive premium for the {$40000.00} in flood-gap insurance for the period XX/XX/XXXX to XX/XX/XXXX. The premium you paid was {$200.00}, or {$200.00} per {$1000.00} in flood coverage. How can you possibly justify that. 
Moreover, Flagstars letter of XX/XX/XXXX ( Exhibit AA ) complains : The lender-placed policy should not have been cancelled since we do not have an updated copy of your insurance policy for the property ( XXXX XXXX XXXX, XXXX XXXX XXXX MA XXXX XXXX. Clearly, your Insurance Department does not communicate well with the Escrow Department which, on XX/XX/XXXX, calculated at new monthly payment amount based onwait for itthe updated copy of my insurance policy ( meeting your requirements ) that I had provided to the XXXXsurance Department. ( See Exhibit K. ) I object to this misapplication of Flagstars own requirements. I provided an up-to-date Replacement Cost Value ( RCV ) of the property backing the mortgage. It is {$200000.00}, and is the basis for my homeowners benefit limit. ( See Exhibit N. ) I provided a copy of that RCV to Flagstar, which ignored it because it was not referenced on the flood insurance policy XXXX page. Flood insurers refuse to put RCVs on their policy XXXX page. Perhaps they are getting kickbacks for the fraudulent scheme as well as is Flagstar.

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