Consumer complaint received 2020-04-25
Product: Mortgage — Conventional home mortgage
Issue: Trouble during payment process — 
Company: RUSHMORE LOAN MANAGEMENT SERVICES LLC (MI)

I consummated a mortgage that was purchased by XXXX XXXX  prior to making my first payment. During the tenure of this loan being owned and serviced by XXXX, subsequent to my wife losing her job during the economic downturn of XXXX, we struggled mightily to make payments on this loan. XXXX refused to work with us with the only accommodation offered being a deferral of interest that was accruing on the loan ( while still continuing to assess late fees ). Subsequently, this loan was sold to XXXX XXXX XXXX which included an accrued interest balance of {$17000.00} in addition to the principal balance and unpaid late charges. This loan was subsequently sold to XXXX XXXX XXXX  XXXX XXXX which also included the accrued interest balance and unpaid late charges. XXXX XXXX contracted with Rushmore Loan Management Services to service this loan on their behalf. 

Through great sacrifice and diligence in an effort to save our home, in XX/XX/XXXX, we paid off the entire balance owed which included all this deferred accrued interest and an obscene amount of late charges. In a previous complaint submission to the CFPB, we attempted to gain your intercession on the abusive practices employed by the various lenders throughout the term of this loan. Lacking the receipt of any assistance, we moved on to successfully implementing a strategy to payoff this loan. However, the abusive treatment by these lenders is not the issue that is the root of this complaint. 

The basis for this complaint involves the form XXXX  1098 Mortgage Interest Statement provided by Rushmore Loan Management Services that did not include the {$17000.00} of accrued interest that was part of the final payoff in Box 1 Mortgage interest received from payors/borrowers box. ( see attached document # 1 XXXX   Rushmore 1098 Mortgage Interest Statement ) Rather, this accrued interest was included in the amount reported in Box 2 Outstanding mortgage principal which impedes our ability to include that amount as an itemized deduction for tax purposes that we are legally permitted to do with mortgage interest. 

In order to be able to submit my taxes in a timely manner for XXXX, immediately upon receipt of the 1098 document, I submitted a written notice of error on XX/XX/XXXX via certified mail to the address required by Rushmore for error notices. ( attached document # 2 - Rushmore XXXX  Mortgage Interest Statement Notification of Error ) In my communication, I clearly identified the error I was asserting and provided an excerpt form a communication from the prior servicer evidencing the amount in question as being deferred past due interest. Supporting my assertion, I noted the last mortgage statement provided by Rushmore ( dated XX/XX/XXXX ) prior to my payoff of this loan in XX/XX/XXXX, my outstanding principal balance was disclosed to be {$180000.00} with a deferred balance of {$17000.00} which is the accrued interest amount that is the basis of my dispute. 

In reviewing the footnotes for the XX/XX/XXXX mortgage statement, you will see they describe the Outstanding Principal as The loan balance only, not the payoff amount, and does not include any Deferred Balance. Moreover, the Deferred Balance is described as The amount of your principal balance that is deferred as part of the terms of a loan modification. This amount is not accruing interest So while they distinguish between Loan balance ( which is the unpaid principal remaining from the original loan amount after the application of payments over time ) and Deferred balance ( which is the amount of unpaid accrued interest that has been clearly establish as having been deferred ), it is quite clear they incorrectly included the accrued interest amount in the outstanding mortgage principal on the 1098. 

The following is a summary of the communications I have received subsequent to submission of this error notification : In a letter dated XX/XX/XXXX, Rushmore acknowledged receipt of our communication but characterized it as an inquiry ( or an information request ) as opposed to a notice of error. ( attached document # 3 Rushmore Acknowledgement ) While my communication did request information be provided to me, what was requested was related to the error in the 1098 Mortgage Interest Statement I was notifying them of. 
In a letter dated XX/XX/XXXX, Rushmore advised that additional research was required and as permitted by RESPA 1024.35 ( e ) ( 3 ) ( ii ) notified us of their intent to extend the investigation time period by 15 business days to conduct further research. ( attached document # 4 Rushmore Notice of Extension ) In a letter dated XX/XX/XXXX, Rushmore communicated the following : Due to the complexity of the deferred balance matter, Rushmore requires additional time to research and determine if a corrected Form 1098 is required to include the deferred balance of {$17000.00} as interest paid in XXXX. ( attached document # 5 Rushmore Preliminary Response ) Subsequent to the receipt of XX/XX/XXXX letter, we have not received any further correspondence from Rushmore. As a consequence, this matter is unresolved and to-date, we continue to be unable to submit our XXXX tax return. While our prompt communication to Rushmore upon receipt of the initial 1098 was intended to put us in a position to file our taxes within the requisite deadline, it is fortunate that the tax filing deadline has been delayed until XX/XX/XXXX given the failure of Rushmore to resolve this matter. However, our inability to file our taxes has had the following adverse impacts : 1. After years of focusing our financial resources on trying to exit from a predatory lending arrangement, we looked forward to enjoying the benefits of a tax refund predicated on a huge mortgage interest payment we finally managed to pay. Our understanding of the tax code is that interest is deductible only in the year that it is paid. XXXX was that year for us and Rushmore is denying us the benefit of taking advantage of what would be a legal tax deduction. As noted previously, we provided documentation from XXXX XXXX XXXX supporting the amount in question as being deferred past due interest ( see discussion in Document # 1 Notice of Error ) and a quick call to a competent tax advisor would have given them the answer to their question they indicated was necessary to respond to us. 
2. For the XXXX tax filing year, we ended up owing the federal government a significant amount of money. Given that, we did not file an electronic return and opted to make our payment in the form of a check. That has proven to work against us because lacking direct deposit information, and the fact we have not filed our XXXX tax return for the reasons noted in the preceding, we will only be able to receive our federal stimulus check via check. To-date we have not received the federal stimulus check due to us in the amount of {$2400.00}. Compounding our concerns on this, when we visit the IRS site to determine the status of the process of this payment, we receive the message of Payment status not available which leaves us concerned that we could be precluded from receipt of a payment that is rightfully due us. 

Rushmore has had more than ample time to resolve this matter. Lacking a resolution to an error they acknowledged receipt of on XX/XX/XXXX, and having now exceeded the time period allowed for an extension to the investigation period, they are in violation of the resolution timeframes provided for in 1024.35 ( Error Resolution Procedures ) of Regulation X. One might theorize that perhaps they recognize the error on our 1098 document and are concerned that hundreds ( if not thousands ) of 1098 documents they issued for other loans could be incorrect thereby exposing them to significant financial liability. 

In conclusion, in the current circumstances brought about by the Coronavirus pandemic, this is causing undue stress on my family. The funds represented in the tax refund and stimulus payment could be required to help us in the event an emergency or unforeseen circumstance brought about by the pandemic. We worked a decade to exit this bad situation and get our financial house back in order and now find ourselves being thwarted by the same parties who were the source of our agony over the last 10 years. Help restore my faith in the CFPB being an advocate of consumer protection by gaining a prompt resolution to this matter. We have done everything we could within the confines of available regulatory protections and now look to you use your powers to enforce the requirements of these regulations.