Consumer complaint received 2024-07-22
Product: Mortgage — VA mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage — Loan estimate or other related disclosures
Company: LoanCare, LLC (MD)

I am a XXXX who purchased a home for myself and my family for residential use. I closed on the property on XX/XX/XXXX. Unbeknownst to me, at the time of closing, there was a municipal lien on the property of which I was never advised. ( Attachment 1 ) Accordingly, on the date of closing, I did not receive a clear title to the property as the XXXX of XXXX, where the property is located, had an interest in my property which it maintains today. See generally, XXXX XXXX XXXX, Article 28, Taxes, Subtitle 2-6, Certificate required for recordation ; See also Md. XXXX XXXX XXXX XXXX, XXXX ( b ) ( XXXX ) ( i ) ) Moreover, much to my dismay, the property was not suitable for habitability. Although I had taken all of the appropriate cautionary steps and had a home inspection, the property lacked a mandatory Certificate of Occupancy ( COO ) contrary to the laws of the XXXX of XXXX. ( Attachment 2 ) Without the COO we can not legally reside in the property. The property, which had apparently been sitting vacant and in disrepair, has not been deemed fit for habitation. We have failed every mandatory inspection. However, by the terms of the VA loan, I was required to reside in the property for at least one year. Accordingly, we had no choice but to reside in the property, notwithstanding the property has not been deemed suitable for habitation and, in fact, contained multiple seriously dangerous instances of faulty construction. In fact, last year ( XXXX ) we had a fire in the basement and was advised by an electrician that the fire was due to faulty electrical wiring. ( Attachment XXXX ) We will be unable to obtain a COO unless the entire interior is opened up and the plumbing, electrical and mechanical work inspected because the mandatory rough-in inspections were not completed at the appropriate times. 

We have repeatedly advised our mortgage company of this situation to no avail. Our requests for the contact information to their legal department have been repeatedly ignored. In fact, all of our requests for pertinent information have been ignored. Our mortgage company refuses to intervene and yet requires payment of a mortgage for a house for which we can not legally reside and for which we do not have a clear title. Our mortgage company has refused to assist and refuses to give us a forbearance pending the resolution of this matter, save a single one-month forbearance. We have spent thousands on attorneys fees to pursue this matter and have numerous administrative complaints pending with state/local agencies and intend to file several civil suits which will be costly. Additionally, the mortgage company is in violation of federal law by reporting my loan as delinquent to credit agencies and having knowledge of the same. 


I direct your attention to the case of XXXX XXXX XXXX XXXX XXXX, XXXX XXXX XXXX XXXX XXXXp XXXX ( U ) ( decided on XX/XX/XXXX Civil Court Of The City Of New York, XXXX XXXX ). Even though the property is Maryland and not in New York, the arguments in XXXX are relevant to my case. XXXX also involved the lack of a COO and in that case, the court held : " [ XXXX ] hen any person permits a purchaser to close title and enter into possession of a premises that lacks a valid certificate of occupancy reflecting the actual use of the premises, that person is assisting in violating the XXXX. Likewise, a lender or lender 's counsel that closes title knowing that the premises either lacks a valid certificate of occupancy or that one remains in occupancy after the expiration of a temporary certificate of occupancy is also in violation of the statute. '' The XXXX court further held, " [ b ] ecause these statutes are safety statutes, this " right '' is in actuality an obligation. The public policy of this state and city is to insure that persons live in safe homes that are built in compliance with local building codes. The lender can not ignore the law, continue to collect mortgage payments when it is aware that at any moment its mortgagor may be issued a vacate order, and be required to leave the mortgaged premises. '' Just as was in the XXXX case, XXXX XXXX Revised Code regulations has a similar public policy provision regarding building code compliance, specifically, 102.15 ( Compliance with Code ) which contains the following prohibition : " No structure, premises, land or equipment XXXX be constructed, alter, added to, repaired, rehabilitated, demolished, moved, located, used, occupied, or maintained in violation of this Code. '' Id. 

Per the XXXX XXXX Revised Code, XXXX OCCUPANCY PERMIT ; CERTIFICATE OF COMPLETION [ A ] XXXX : Use and Occupancy : A building or structure shall not be used or occupied, and a change in the existing use or occupancy classification of a building or structure or portion thereof shall not be made, until the building official has issued a certificate of occupancy therefore as provided herein. Issuance of a certificate of occupancy shall not be construed as an approval of a violation of the provisions of this code or of other ordinances of the jurisdiction. XXXX XXXX Revised Code [ A ] XXXX My mortgage company has been aware that we can not legally occupy the property for which we have a mortgage, per the City of XXXX, just as in the XXXX matter. Again, although the XXXX matter took place in another jurisdiction, the laws of the XXXX of XXXX and the laws of the XXXX of XXXX XXXX, are quite similar in the stringency of their public policy provision. The circumstances surrounding the lack of a Certificate of Occupancy are similar as well, although we were never issued a temporary Certificate of Occupancy. 

It is also noteworthy that in XXXX the judge went further as to note that a mortgagee could face the loss of their license for violating the laws relative to Certificates of Occupancy which are required for obvious public safety reasons '' ( " In light of this legislative purpose and the fact that Banking Law 595 ( 1 ) ( a ) permits the XXXX of banking to revoke a license if a licensee violates " any other law, rule or regulation of this state or the federal government, '' it can only be concluded that lenders in the State of New York have the obligation to insure that a final certificate of occupancy is delivered on any building purchases they finance. " ). Id. Additionally, the court expressly addressed the specific circumstances under which a license could be revoked when it noted, " The failure of a lender to insure that a mortgagor borrowing money so as to purchase a residential property for human occupancy, becomes an act that may lead the superintendent of banking to revoke that lender 's license. '' Id. Furthermore, the court held, " As a licensee, a lender can not advance the money for purchase and then stick its head in the sand and ignore the strong public policy purpose of the XXXX of XXXX XXXX to provide safe housing and consumer protection. Such a course of action XXXX, in fact, constitute a " deceptive practice '' in violation of XXXX XXXX XXXX XXXX. Id. The court held this obligation becomes more relevant in situations involving residential properties : " This obligation becomes more concrete, especially in situations where the lender requires the borrower to sign an affidavit that the borrower will occupy the premises for residential purposes within thirty days of closing. How can the lender then be party to an escrow agreement that acknowledges that the borrower may be illegally in occupancy of the premises and forced to vacate by the XXXX Department? '' Id. 

Your assistance is greatly and urgently needed in this situation. The mortgage company is once again threatening foreclosure and we have already endured costly expenses related to this property and are no where near any resolution. I truly hope you will investigate this matter and/or refer it to the appropriate authorities as no homeowner, particularly a veteran who has honorably served his country, should be placed in such a precarious position. Every single day that we remain in the property, our physical health and mental well being are jeopardized. 

Attachments Attachment XXXX XXXX XXXX XXXX XXXX XXXX City Notice : No Occupancy of Building Without Occupancy Certificate Attachment XXXX Notice From Electrician Regarding Electrical Fire