Consumer complaint received 2018-03-26
Product: Mortgage — Conventional home mortgage
Issue: Trouble during payment process — 
Company: Flagstar Bank, National Association (SC)

In XXXX of XXXX, we executed a Note and Mortgage for the refinance of our property located at XXXX XXXX XXXX XXXX, XXXX XXXX, SC XXXX. The salient terms of the loan documents are dated : XX/XX/XXXX for the principal amount of {$340000.00} at the initial rate of 4 %, with a maturity date of XX/XX/XXXX. Until the latter part of XXXX, the loan was serviced by New York Community Bank ( NYCB ). In XXXX, XXXX, we received a notice that as of XX/XX/XXXX, our loan would be serviced by XXXX XXXX XXXX ( XXXX ). ( Exhibit A ). The last paragraph of that notice stated, If you are currently in loss mitigation, your loss mitigation will remain active. Any documentation will be transferred to XXXX XXXX. I contacted NYCB concerned about the modification and they advised XXXX would stand in their shoes and there was no need for concern. 
Before the trial payments began, we were paying a total monthly payment in the amount of {$2000.00} which included principal, interest and escrows. 
In XXXX, I applied to NYCB for a loan modification. Finally, by letter dated XX/XX/XXXX, we received their offer for a loan modification ( Offer ) ( Exhibit B ). We accepted the terms in a timely manner. The letter outlined the terms of the modification in that four trial payments were to be made, each in the amounts of {$1600.00}. No changes were to be made to the original loan documents other than the adjustable rate mortgage was to be converted to a fixed rate. The Offer also stated, in part, Once your loan is modified, your interest rate and monthly principal and interest payment will be fixed for the life of your mortgage. 
No fees or expenses were to be charged to us. 
The purpose of the Modification was to lower our monthly payments. The Modification allowed us to save {$410.00} per month. 
The Modification Package ( Exhibit C ) had a cover letter from XXXX. The first sentence stated, If you comply with the terms of the required Trial Period Plan, we will modify your mortgage loan ( Exhibit D ) NYCB quoted the new payment amount at {$1600.00}. XXXX figure was higher - {$1600.00} ( {$1200.00} ( p & i ) plus {$410.00} ( escrows ). There was nothing in the Offer about extending the maturity date. After the closing however, I discovered the maturity date had been extended by 16 years. The mortgage payment had not been re-amortized over the now 46 year term. In fact, it appeared the only reason to extend it by the additional 16 years, was to require the Borrower to make an additional XXXX payments for a total amount of additional debt of {$390000.00}. I was extremely concerned over this unilateral change by XXXX. ( Exhibit E ). See Exhibit E-1 for the first two pages of the original Mortgage ( maturity date XXXX XXXX ). 
XXXX returned the pages of the Modification Agreement showing their acknowledgement for the notary. The original was recorded among the Land Records of XXXX XXXX, SC on XX/XX/XXXX in Book XXXX, Page XXXX, Instrument No. XXXX. ( Exhibit F ) On XX/XX/XXXX, I received a form letter from XXXX stating they were unable to approve our request for hardship assistance due to Delinquency Guideline Not Met for Loss Mitigation Options. ( Exhibit G ) I immediately called XXXX and spoke to a number of different people. No one could give me any information, and I kept getting passed around. I spoke to XXXX ( XXXX ) who directed me to write an email to request that the trial period be restarted, and further state that I was delinquent for 90 days. I told her that was not true and I could not write that. The last person I spoke to was XXXX XXXX XXXX ). I told her the requirement that a borrower had to be delinquent, was changed in XXXX, and that all that was necessary now was that the borrower had to be in danger of falling behind on the mortgage payments. Further, I advised that the Modification Agreement had been recorded in the Land Records. She told me she had to report this information to Underwriting, and that I would receive a call back on Tuesday ( XX/XX/XXXX ). No one has ever called me since then. 
I called NYCB and was told legally they could not help me at all. I was not allowed to speak to the Loss Mitigation Department, and was forced to speak to Customer Service. Under the federal Rules, NYCB is under a statutory requirement to contact XXXX and provide any information to rectify the situation. XXXX is also required by statute to have policies in place to ensure that it honors the terms of the Offer originally extended by NYCB. 
When it became clear no one was going to call me, I wrote three letters ( Error Resolution/Information Request ) to XXXX. One was to advise that my real estate taxes had not been paid and were now in the penalty phase. ( Exhibit H ). The second was to request a copy of the Note ( Exhibit I ) ( I had to write a second letter because XXXX sent me the Note, but it was not endorsed to them ). And finally, I wrote a long letter dated XX/XX/XXXX, detailing questions and corrections for XXXX failure to acknowledge the Modification Agreement, mis-application of payments, extended maturity date to 46 year total, fees charged without notice or explanation, failure to provide monthly statements, etc. ( Exhibit J ). 
I have not heard from XXXX, however, they have sent me information that is troubling to say the least. The records of XXXX and their submissions to me during the last month, show they are continuing on with the adjustable rate terms and are completely ignoring the Loan Modification, even though all the steps were accomplished to consummate the transaction. 
On XX/XX/XXXX, NYCB provided the disclosure for changes to the mortgage interest rate and payments on XX/XX/XXXX. They showed the new payment was {$1900.00} ( without reference to the modification ), slightly less that what we had been paying ( Exhibit K ). 
XXXX sent the same disclosure dated XX/XX/XXXX, showing a higher payment in the amount of {$2100.00}. ( Exhibit L ). The Modification converted the adjustable rate terms to a fixed rate. 
Our Loan Overview dated XX/XX/XXXX, shows, notwithstanding the fact that all loan payments have been made in a timely manner, an amount due of {$4500.00} with an interest rate of 4 % and a term of 360 months. They are completely ignoring the changes of the Modification Agreement. ( Exhibit M ) XXXX Escrow Account Disclosure Statement dated XX/XX/XXXX, shows a surplus of {$360.00} with a note stating Due to the delinquent status of your account, your surplus will be retained until the account becomes current. ( Exhibit N ) In addition, they state they are a debt collector attempting to collect a debt, however, they have not sent a 5 day notice and other required information under FDCPA. I fail to see why the Lender would make it a condition of bringing the loan current before it would refund escrow surplus. It is a violation of the Rules to condition action by the Lender on payment of the loan. It isnt their money and I suspect no interest is being paid to us, but I suspect the Lender is making money by refusing to refund it.

Notwithstanding the fact that NYCB has stated our account will remain open, they have made it impossible for me to contact them. Legally they are responsible for errors up to one year after transfer of the loan. 
Under the Dodd-Frank Act, it is unlawful for any provider of consumer financial products or service to engage in any unfair, deceptive or abusive act or practice. In this case I submit both NYCB and  XXXX are in clear violation of this Act. The outrageous actions of XXXX have caused substantial injury to us ; the injuries were not reasonably avoidable and the injuries are not outweighed by countervailing benefits to consumers or to competition. The stress created by this whole situation has been overwhelming. Just the act of secretly extending the maturity date for a total of 46 years seems to satisfy any definition for lack of fairness, deception and/or abusive practices. And we have been left with little alternative to protect ourselves. Neither NYCB or XXXX will acknowledge us as borrowers who have been taken advantage of. In addition, so may borrowers have been substantially injured in the transfer of loans in loss mitigation, there is already a presumption to use extra care. 
In light of the information readily available from the internet, I have to ask what in the world was NYCB thinking to even deal with XXXX. Not surprisingly, I am reminded of a XXXX case where Freedom was found guilty of violating the New Jersey Consumer Fraud Act. There, the borrower, a XXXX XXXX XXXX woman, sued XXXX after she was charged {$11000.00} to refinance her mortgage. According to the facts in the case, the {$63.00} reduction in her monthly payment would have taken more than 5 years to amortize against the additional fees she incurred to lower the interest rate. The Court, in its decision, took account of the self serving acts of the lender and recognized the transaction was effectively one sided, for the benefit of the lender. The cases by elderly borrowers are too numerous too list, so why is NYCB exposing another elderly couple to the outrageous actions of XXXX. 
If that isnt persuasive enough, that decision followed closely on the heels of a settlement between XXXX and the US Department of Housing and Urban Development over claims that XXXX   discriminated against loan applicants with XXXX. According to the court documentation, XXXX used one set of underwriting criteria for mortgages to people with XXXX. Loan applicants without XXXX were scored according to a different and easier criteria. XXXX paid an incredible {$110.00} XXXX in settlement of their actions. And these are just two of the complaints and cases that I found, all requiring XXXX to pay exorbitant compensatory and punitive damages to compensate for their outrageous and illegal actions. 
I am just a consumer, but NYCB is in the mortgage business. They know or should have known how XXXX conducts its business. And the amount of cases by the elderly alone is astounding. NYCB had absolutely no right to deal with companies with such dishonorable reputations. If they made the decision to sell loans to XXXX, they should have monitored every aspect of the transaction. When I contacted them, it should have been a huge red flag for them to intervene. 
If XXXX written procedures dont say when a problem arises, do not call or return the call to the customer and do everything you can to work against closing the loan, then they are not correct. NYCB should work on post sale review and communication with TransfereXXXX, and apply whenever possible common sense. Raise the bar just a little ; you are working for honest people who may, only have their home to show for a lifes work. How would you feel if someone treated your grandmother with such disrespect?