Consumer complaint received 2022-11-26
Product: Mortgage — Conventional home mortgage
Issue: Trouble during payment process — 
Company: Flagstar Bank, N.A. (CO)

I purchased my home at the beginning of XXXX, and this being my first home, I was required to purchase PMI since I did not have a 20 % down payment. Flagstar Bank was assigned as my servicer and I began researching my options for removal of PMI immediately since real estate prices in XXXX, Colorado were increasing so rapidly. In XXXX of XXXX, I submit my application for removal of PMI based on improvements made to the property ( of which there are many ), and opted to have an appraisal once my application was processed. Things were fine until the company I work for lost several large commercial projects due to Covid 19, and instead of laying anyone off, were able to keep everyone by cutting hours. I reached out to Flagstar Bank to talk about my options and was able to enter into a temporary forbearance plan which we originally set up to last three months, and eventually ended up extending it for six. This started in XXXX of XXXX, and I resumed payments in XXXX of XXXX. Flagstar reached out several times to discuss what my options were with finalizing the forbearance, and each time I let the representatives know I was looking into several options and would get back to them, but every single day a new representative would call and question me about the same thing. During this time, I had filled out an application with XXXX XXXX XXXX Assistance Program - Homeowner Assistance Fund for Assistance covering the months of mortgage payments I had missed including filling out a Third Party Release. I never heard anything else about the Homeowner Assistance Fund, but Flagstar continued to call me every day. Once I had all the paperwork in with HAF, I called Flagstar to finalize anything necessary with the forbearance plan and the woman I spoke to presented me with the same options every other representative had every single day they would call. I let her know that I had filled out the application with HAF and that was the route I would like to take and she told me, " you can't chose that option its too late, '' and I pointed out that the date on the application was within whatever timeframe they needed to meet the requirements and she said " well you have already been payed in a deferred payment plan because you hadn't made a decision up until this point. '' I told her I had spoken with several reps who I let know I was working on options and that this particular option wasn't even presented to me- I found it on my own - to which the woman seemed genuinely surprised- which also caused me to feel alarmed ( that I wasn't presented with this option but maybe was supposed to have been ). I never signed or agreed to anything with Flagstar, they only keep telling me to " refer back to the physical documents sent out '' - so I assumed I was out of luck and had to work on their terms with this issue. What ended up happening- and I would definitely NOT chosen this option if I knew this was the case ( I didn't chose it to begin with they chose for me )- was that a subordination loan was created in the amount of some $ XXXX - which I am still having trouble understanding what it consists of - no clear breakdown provided, even in the physical documents. The way it was presented to me, when a representative was informing me of " almost '' all my options was that my balance would just stay stagnant just that portion would stay not be included in the interest calculations - a second mortgage was never mentioned. For a several months my mortgage was showing the original amount plus this subordination loan, and I called several times to explain that it shouldn't be both and the reps assured me that it was and to " refer to the documents sent out '' ( this issue has since been resolved ). Fast forward to XX/XX/XXXX, I receive a letter regarding the PMI removal ( a response from my XX/XX/XXXX request ) asking for additional information on the property improvements ( which was included on the original application from the previous month ), but I complied and filled out this information once again in a formal letter and returned it to them as they requested. I never heard anything back from them regarding that but did get a notice in XXXX that my mortgage was being transferred on XX/XX/XXXX to XXXX XXXX XXXX. Throughout this whole mess, I was willing to just move forward with the path that Flagstar set me on even though it was not the one I specifie- this is my mortgage and responsibility and so that's fine, however, the issue that brings me here is that one of the 'additional " stipulations XXXX XXXX  specifies on their PMI removal requirements application is that " there must not be any subordination leins against the property '' and obviously this is what Flagstar set me up in - but this was NOT one of the stipulations that Flagstar had on their PMI removal application. Now I am screwed because unless I refinance into a 7 % interest loan from my 2.875 % - I am stuck paying PMI - an added {$200.00} per month/ {$2400.00} per year - unless I come up with the extra {$10000.00} to pay the subordination loan or refinance - either way I am screwed! This is not fair or ethical for them to do since I requested this removal almost a year ago and my property has had significant improvements which they are aware of - between the payments I've made, increase in neighborhood property value, and improvements to my property ( re-plumbed house, brand new roof, all new professional landscaping, addition of a laundry room when there was not one, replaced carpet with hardwood floors, remodeled bathroom, upgraded electrical, etc. ), and offering to pay for the appraisal this should have been an opened-and-closed situation, but since their first response and after sending them the same information they already had for a second time, never received a response again. Now instead of just the PMI issue I am bringing to light the unethical nature of the process they took to " resolve '' my forbearance on my behalf as well. 

I will include the PMI removal paperwork in the attachments, as well as the XXXX XXXX  Assistance Programs Third Party Release form but I do not have the original application from them since it was filled out online. I will also attach the Forbearance Options from Flagstar ( which again, does not give an option for what I was trying to pursue and I'd like to note that I never signed this but upon rereading apparently making one contractual mortgage payment automatically 'opted " me in since I started making payments again in XXXX ). Then I received a Payment Deferral Agreement from XXXX, the representative I spoke with who refused to process my XXXX XXXX XXXX Application ( please also note this document is not signed by me ). I am happy to provide any of the documents I've received from XXXX XXXX Servicer if requested, although I am not sure that would be helpful.