Consumer complaint received 2023-11-12
Product: Payday loan, title loan, personal loan, or advance loan — Installment loan
Issue: Problem with additional add-on products or services — 
Company: NEW YORK COMMUNITY BANCORP INC (SC)

In regards to the boat loan that I've had with Flagstar Bank since XXXX  : The original loan for the boat was {$45000.00}, and the current principal balance is {$37000.00}. 

The above mentioned loan requires that I keep an insurance policy on the boat for the duration of the loan. That insurance policy failed to auto-renew in XXXX of XXXX  for the {$360.00} yearly premium that I was paying. I was unaware of this due to the email address that was tied to that account no longer being accessible. I continued making my loan payments to Flagstar online -- as I have always done -- for XXXX, XXXX, XXXX, and XXXX. When I went online to flagstar.com to make my XXXX payment around XX/XX/XXXX, I saw an additional charge of {$4800.00} from XX/XX/XXXX, and my monthly payment " amount due '' had almost doubled from {$620.00} to {$1100.00}. I looked into the the reason for this charge, and it was for a yearly insurance premium for lender placed insurance ... more than 13X my previous yearly premium. After several frustrating phone calls in which I was transferred back and forth between Flagstar and XXXX XXXX ( which I was told was the insurance division ) and taking some time to decide if I should sell the boat, I purchased a new insurance policy for a yearly premium of {$550.00} on XX/XX/XXXX. Since XXXX, I have spent no less than 50 hours dealing with Flagstar and XXXX XXXX. The entire time I was given the run-around by members of both companies, lied to and given different explanations by different people, and received nothing but combative responses as opposed to helpful customer service. I finally asked for financial assistance/payment deferrals so that I could have time to resolve this situation. To me, this " situation '' seems like : XXXX XXXX ; collusion between Flagstar Bank, XXXX XXXX, and XXXX  XXXX XXXX ( XXXX purchased the lender placed policy from XXXX, who purchased it from XXXX  XXXX XXXX ) ; and failure to give proper notice about the lender placed policy and it's extortionate rate. 

Here are the issues : 1. Failure to give proper notice : One piece of information I received during the countless phone calls to customer service was that a piece of paper was put in the mail in XXXX and XXXX to notify me. I had moved in XXXX and did not receive these notices. It seems highly unfair and unreasonable that in the year XXXX, I did not receive an email, a phone call, a text message, or an online notification when I logged onto Flagstar.com each month to make my monthly payment. It's as if they didn't want me to know so that they could make an additional profit off of me by adding this unfair and unreasonable cost for insurance. Had I realized my insurance had not renewed when I logged on to make my XXXX payment, for example, I would have remedied the situation immediately and only been responsible to pay the inflated premium from the force placed policy for one month. This would have totaled {$400.00} for one month of insurance at the extortionate rate I'm being charged. This is the cost of more than one year of insurance based on my previous policy. 

Not only was I told that they were unable to give me notice via any means other than a piece of paper being put in the mail, but I have requested since XXXX that a copy of the force-placed policy that I'm being charged for be sent to me so that I have a record of what I'm paying for. I was told by XXXX employees that they didn't have access to it and I had to deal with XXXX XXXX. I was told by XXXX XXXX that they could only mail it. I reminded them that they requested both verbally and then by email for me to email over a copy of the policy that I purchased so they could verify coverage. Once the member of XXXX XXXX realized how ridiculous it was that they asked me to email my policy to them, but said that they couldn't email my lender-placed policy to me ( even though I would be paying for it and thus owned it ), he said that Flagstar should be able to email it to me. He said that he was looking at all of my account documentation on a shared software or website called XXXX XXXX. He said this is all accessible by both Flagstar employees and XXXX employees, and he didn't understand why they said they can't access it. I have a copy of this conversation recorded. Finally, I was able to speak with a reasonable and helpful person who works with the financial assistance division of Flagstar after I requested payment deferrals. She was able to get the documents emailed to me and I received them two days ago on XX/XX/XXXX. This email also included a copy of the notice that was supposedly put in the mail back in XXXX, which proves they were lying to me when I was told that they were unable to email that letter and could only put it in the mail. 

This seems similar to the XXXX  case against Flagstar Bank in which the US Consumer Financial Protection Bureau found that they were committing unfair practices by not giving proper notice to consumers about home foreclosures and ordered them to pay {$37.00} XXXX dollars. Foreclosures are a far more serious issue than what I'm dealing with, however the failure to give proper notice seems to be along the same lines of deceitful practice. 

2. Back-charging insurance for past months : This premium was not charged to my account until XX/XX/XXXX. However, I'm being charged for XXXX, XXXX, and XXXX as well. This represents that Flagstar purchased insurance for months in the past, which makes XXXX sense whatsoever unless time travel is possible. 

3. Extortion and collusion : The yearly premium for the force-placed insurance is not bona fide and reasonable. It is more than 13X my past premium, and almost 9X my new premium. After I got my new policy in place, Flagstar credited my account so that I was only being charged for about 4.4 months of insurance instead of a full year. This total was {$1700.00}. In the same duration of my new policy, I would have paid {$200.00}. This is unfair banking practice. All I was told over the numerous phone calls with Flagstar and XXXX was that " this is our policy ''. So if the policy was to charge me {$50000.00} for a yearly premium, or {>= $1,000,000}... I'd just have to pay it or they'd repossess my boat that is worth $ XXXX {$15000.00} more than I owe on it? It is extortion because I am being threatened to have my equity taken from me with the repossession of my boat if I do not just comply and pay this ridiculous, unreasonable rate. If 9-13 times more than my normal premium isn't unfair and unreasonable, where is the limit? It seems obvious that there are parties involved with Flagstar Bank, XXXX XXXX, and possible XXXX  XXXX XXXX that have colluded by making up these ridiculous premiums in order to make excessive profits off of their customers. 

To conclude, I have a full understanding that it was and is my responsibility to keep the boat insured while I have an active loan. I should have let them know that I moved, but I moved into a temporary situation and did not have a permanent mailing address that I could provide. The issue is not that I think I shouldn't have to pay a penalty for the error on my part. The issue is the amount that I'm being charged relative to any other policy I've purchased for the boat. If the yearly premium was double or even triple my normal policy, I would have thought it was excessive but I would have just paid it. Had they given me a notification appropriate for the year XXXX, I would have only been a couple weeks without my own insurance policy, not four and a half months. Had I purchased this new policy in XXXX, the four and a half months of coverage would have cost me {$200.00}. Since I had to defer the payments in order to find some help with the issue ( since Flagstar  and XXXX customer service did nothing but give me the run-around and be combative ), there will be an estimated {$1100.00} in additional interest on the loan. That plus the {$1700.00} totals {$2900.00}. {$200.00} vs {$2900.00} ... more than 14 times what it would have cost me if it weren't for the simple hiccup of a mistake of not realizing that my boat insurance policy didn't auto-renew. This seems criminal. If this is legal, the law needs to be changed.