Consumer complaint received 2018-04-25
Product: Mortgage — Conventional home mortgage
Issue: Trouble during payment process — 
Company: Flagstar Bank, N.A. (NY)

We purchased a condo XX/XX/XXXX, sent the mortgage company all the XXXX  and flood insurance details before closing as requested. In XX/XX/XXXX we started to get notices from Flagstar bank that they required proof of insurance which we provided several times and our HOA, XXXX and XXXX also provided to them. The condo is fully insured and we pay this through our HOA. We also maintain a separate XXXX policy as they required. The unit is on the 7th floor in a concrete and steel building unit is well insured. We received a notice from Flagstar that they were not going to accept these policies and we would be required to take out another policy for an additional {$180000.00} and they will place their own forced policy on our mortgage. 

The following is an email from the insurance broker to Flagstar who handles our HOA policy and has been trying to settle this for us : -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- " XXXX, Thank you for the number. I spoke with XXXX and her supervisor XXXX in the Insurance Services department. They have advised me that your company will not update the excess flood policy limits in your system even though we have provided documentation in the form of a policy and certificate of insurance showing coverage in the amount of {>= $1,000,000} simply because it is a second flood policy. Although this is not my area of expertise it was my understanding that per Consumer Financial Protection Bureau ( CFPB ) regulation 1024.37 a lender could not force place insurance unless the lender has a reasonable basis to believe that the borrower has failed to comply with the mortgage loan contracts requirement. I understand that since XXXX XXXX loan closed after XXXX he is required to maintain a separate XXXX and stand-alone flood policy to meet his loan requirements. Where we part ways is that you acknowledge/approve the excess coverage we provide via the master association but refuse to apply this flood coverage in the amount of {>= $1,000,000}. XXXX XXXX is covered by all the master flood policies and pays for them in his HOA dues. Using your calculations below XXXX XXXX is required to provide {$250000.00} in flood coverage to meet his loan requirements. If you choose to apply the full master policy flood coverages of {>= $1,000,000} then divide by 74 units he has {$160000.00} currently in place leaving him deficient {$80000.00} which he could purchase on his own. Instead you are only applying the {>= $1,000,000} leaving him more significantly deficient {$180000.00} and threatening force placement. Im sure he will be in contact with you regarding this matter. 

Thank you, XXXX XXXX CISR | Insurance Support Manager | Commercial Insurance XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX, NC XXXX XXXX : ( XXXX ) XXXX | Fax : ( XXXX ) XXXX XXXX '' -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Flagstar is still insisting on charging us for another policy even though we have provided all documentation they asked for. Essentially, they are having us pay thousands of dollars for a second policy which is valueless. From what I have read, the National Flood Insurance Program will not pay twice for a loss in a condominium, even if that loss is insured by the complex 's policy and a policy covering individual units. 
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- The following is another email from XXXX to us advising us to contact you regarding this matter which I am doing. 

" Personally I would file a complaint with the CFPB online and look into refinancing if you can do so. I sent you the email earlier because I wanted you to have documented proof of what was occurring with Flagstaff. I have had my issues with lenders before and usually it is that they simply do not understand the coverage. Once you get someone on the phone and review everything its resolved. Flagstaff was a completely different scenario and you werent kidding about the maze to get to the flood group. They kept putting me in hold queues but they didnt realize I had all the time in the world to hold while I worked on other accounts. They did exactly what the link you sent me described. They sent forms and we filled those out but in the end they just say that they wont update the coverage. In the meantime to avoid force placement you may want to contact the agency who handles your XXXX and see if they can get you a XXXX policy that includes flood. Some brokers will do that as you are located on the 7th floor. If you purchase a regular flood policy then refinance with another bank that does not require this additional policy XXXX will not allow you to cancel it. On the other hand if they are backdating this force placement then they will charge you regardless of what you put in place. 

XXXX XXXX XXXX XXXX Insurance Support Manager | Commercial Insurance '' -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- I feel that we are being scammed by Flagstar when the condo is sufficiently insured by having us pay thousands more to them that I shouldnt have to for a duplicate policy