Consumer complaint received 2023-08-03
Product: Mortgage — VA mortgage
Issue: Trouble during payment process — 
Company: PENNYMAC LOAN SERVICES, LLC. (IN)

My VA mortgage is currently with Pennymac. On XX/XX/XXXX, I received my monthly statement and annual escrow analysis which showed an increase of my monthly mortgage payment by {$710.00}. This is a 52 % increase in my monthly payment. When I contacted Pennymac to inquire about this increase, I was informed that my escrow account was deficient approximately {$4500.00}. I was further advised that it has been deficient since XXXX, XXXX. 

In XXXX of XXXX, I was sent my annual escrow analysis along with an escrow refund of {$870.00}. The escrow analysis indicated that my escrow would have a surplus over the next year ( XXXX ) so I was being issued a refund. While discussing this with Pennymac customer service, I was informed that I should be checking on my account from time to time. I informed her that I check my statements every month and see the escrow account balance listed on the top in the following format : ( {$1200.00} ). She then asked me if the number was in parenthesis. When I confirmed that it was, she explained that a number in parenthesis ( ) is a negative number, so this actually indicates a negative balance. When I asked where on my statement it explained that a number in parenthesis was a negative number, she told me that its not there anywhere. I then asked where on the website, when I log in under my account, can I find information to tell me that numbers in a parenthesis are negative numbers, and she told me that its not listed there either. I then asked how I was supposed to know that a number was negative just because it was in parenthesis, and she stated that she didnt know. So the entire year that I have been watching the number next to my escrow balance go up, after receiving a letter telling me I would have a surplus for the year, I am informed that I have actually been watching my escrow account go deeper and deeper in the negative. 

I asked when my escrow went into the negative and she stated in XXXX of XXXX. I asked why I was not informed that it was in the negative or why no action was taken to correct it until the following XX/XX/XXXX, and she stated that the state of Indiana only requires them to do an escrow analysis annually, so that's all that they did. Even after having to use other funds to cover the disbursements for my insurance premium and property taxes, which make up a total of 3 sepearte disbursements, Pennymac took no action to correct the problem or inform me of the issue. 

After further discussion and investigation, it was discovered that when they conducted the escrow analysis in XXXX of XXXX, they did not review all of the disbursements from the previous year. They only went back to the last payment they made to my insurance company which was in XXXX of XXXX for the amount of {$180.00}. Had they conducted a proper analysis and reviewed the entire year, they would have captured the disbursement to my insurance company in XXXX of XXXX for the amount of {$1600.00}. Because they failed to do this correctly, they conducted the analysis of XX/XX/XXXX on the assumption of a {$180.00} annual insurance premium. This failure led to the improper analysis of an expected surplus for XXXX, and the refund I was issued in XXXX of XXXX. 

When I discussed the fact that Pennymac is the one who determines my payment, and how much money goes to escrow and that this entire deficit was their fault, I was told that while that's true I have to pay it back so they raised my mortgage 52 %. This would result in an additional {$8600.00} being paid to Pennymac over the next 12 months. This is hardly a negligible change in finances. Not only was it raised, it was raised without warning or explanation, like such a significant raise would not cause problems for a famiys finances and budgeting. When this was brought up, she offered to extend the repayment period over multiple years so it was less of a burden than trying to recoup it all over 12 months. While this reduced the monthly payments, it is still unacceptable. 

I believe that Pennymac has failed to adhere to 12 CFR Part 1024.17 ( c ) ( 3 ) and 1024.17 ( c ) ( 7 ) by failing to estimate the amount of escrow account items to be disbursed. The data was available to them but they failed to capture it by doing an improper analysis. By failing to do a proper analysis, this created a large debt that was completely preventable and is now forcing me and my family to pick up the pieces of thier failure. Further, they violated 12CFR Part 1024.17 ( i ) ( 1 ) ( v ) by failing to accurately provide the balance of the escrow account. The balance was displayed in parenthesis ( ) to indicate a negative number but with no explanation that this number was negative. It should be noted that this method of portraying the balance is used on the monthly statements as well as the annual escrow analysis. This is not a clear itemization of the balance as required by 1024.17 ( i ) ( 1 ).

In summation, Pennymac had the necessary data available to conduct a proper escrow analysis in XX/XX/XXXX and failed to do so. They also had ample opportunity to inform me, the borrower, that there was a problem with the escrow account so corrections could be made and failed to do so. Instead, they waited for an entire year, and allowed the deficiency to continue to worsen. Lastly, they provide a statement in a way that does not allow the borrower to fully understand the status of thier account by hiding the fact that the amount shown is a negative number. I would like Pennymac to be responsible for the debt/defeciency that has developed due to thier failure and thier inaction.