Consumer complaint received 2023-12-10
Product: Mortgage — Conventional home mortgage
Issue: Closing on a mortgage — Closing disclosure or other related disclosures
Company: Lennar Financial Services, LLC (FL)

XXXX, a large builder of new construction homes in the XXXX XXXX XXXX XXXX Florida also has its own in-house mortgage company, XXXX XXXX XXXX By using XXXX Mortgage to finance a XXXX home, a homebuyer is given various credits to be applied at closing. My wife and I utilized XXXX Mortgage to finance our home located at the following address, which was closed on in XXXX of XXXX : XXXX XXXX XXXX XXXX XXXX, FL XXXX Recently, it became known to me that on new construction homes in Florida, property taxes for the first year will be based on the unimproved lot/land value considering the new build is not present on the lot for the entirety of the first tax year. During the second year of homeownership, property taxes will increase dramatically to take into account the presence of the new build. In XXXX, we paid approximately {$4400.00} in taxes. These taxes were based on the unimproved lot/land value. Our monthly mortgage payment for the first year was approximately {$2700.00}. 

It also came to my attention recently that XXXX, when determining whether a buyer will qualify for a mortgage payment in general, calculates one 's estimated monthly taxes for escrow on the value of the unimproved lot/land value as opposed to the appraised value of the home or XXXX of similar build and design in the area. In other words, XXXX calculates whether someone will qualify for a home and be able to afford the monthly mortgage payment under the assumption one will only have to pay taxes on the value of an unimproved lot indefinitely. This was not verbally explained to me or my wife at closing. Instead, we hurriedly were asked to sign a plethora of documents without being given the time to read or fully understand them while being told we barely qualified for the mortgage payment given our incomes. 

In XXXX, our taxes increased from around {$4400.00} to just over {$10000.00}, now rendering the home completely unaffordable due to the resultant required increase in the monthly mortgage payment to cover the taxes ( around {$550.00} ). The mortgage will now need to exceed {$3000.00} monthly, so the home will need to be foreclosed on. 

XXXX owes a fiduciary duty to its mortgagors and is essentially qualifying people for mortgages, using its own in-house mortgage company, by incorporating an improper measure of taxes ( the unimproved land/lot value ), quickly selling the mortgage within a month or XXXX of closing to a different lender, while knowing full well that the payment on which the initial approval was based will need to increase by, on average, over 20 % once a valid property tax bill is generated during the second year of homeownership. Since the loan is sold immediately after closing, the new lender bears the risk of foreclosure. This is the same type of predatory lending that resulted in the XXXX financial crisis. 

There are currently thousands of buyers in the XXXX XXXX area of Florida who now live in Lennar homes they can not afford that are either for sale or will be foreclosed on due to property tax increases not taken into account by Lennar when qualifying these buyers for homes to begin with. In my immediate Lennar home community, there are around a dozen homes for sale for this very reason.

While Lennar may have had its homeowners sign a document at closing indicating that property taxes may increase substantially during the second year of homeownership, it does not fully communicate the potential increase or qualify its buyers for mortgages based on a good faith estimate of what taxes on their homes will be. While one may qualify for a mortgage payment under the assumption taxes will remain at just {$4000.00} annually, Lennar should have asked itself whether the buyer will be able to afford a mortgage payment once standard property tax bills are generated beginning in the second year of ownership ( the majority of the time, the answer is " no '' ). 

In sum, mortgages are providers to Lennar by buyers based on misleadingly-low initial monthly payments, because, again, property taxes are not properly taken into account by Lennar when calculating those payments. During year two, homeowners are forced to sell or enter foreclosure once property taxes not previously-considered result in around XXXX XXXX increases to monthly mortgage payments. If that increase was taken into account when determining one 's debt-to-income ratio during the mortgage qualifying period, many buyers would be rightfully rejected ( myself included ). Instead, they are approved and forced to sell within two years. This type of predatory lending behavior warrants investigation.