Consumer complaint received 2023-03-22
Product: Mortgage — Conventional home mortgage
Issue: Trouble during payment process — 
Company: CITIZENS FINANCIAL GROUP, INC. (VA)

I signed a loan modification with the bank on XX/XX/XXXX under the COVID Disaster Relief Program and XXXX XXXX XXXX Modification Program. Under RESPA the bank was required to perform an Escrow Analysis and present it to me prior to me accepting their Payment Deferral plan. This never happened. Also in the past 30 days and nearly seven months after my loan was modified the bank for the first time alerted me of an alleged {$14000.00} escrow shortage in my account and without my consent " automatically '' spread it over 12 months which resulted in an increase to my mortgage payment of approximately 50 % in violation of the terms of the loan agreement and Federal law ( without borrower consent any shortage must be spread over 60 months, see XXXX XXXX bulletin below ). I can not afford the new payments. 

I have attached two files. The first is a letter I received " Escrow Account Disclosure Statement '' dated XX/XX/XXXX notifying me for the first time of the alleged deficiency of {$14.00}, XXXX. The second page shows how the amount was calculated and shows a " beginning balance '' in XX/XX/XXXX of $ XXXX, which the bank never informed me about prior to presenting me with the COVID-19 Payment Deferral Plan and was required to amortize into my new loan mod payment, or at a minimum, spread over 60 payments which the bank never did ( " [ e ] scrow shortages resulting from Escrow analyses performed as part of evaluation for a Flex Modification must also be spread over 60 equal monthly payments. '' ) Also the future analysis section incorrectly includes a cost for " Property Insurance '' which is paid by me directly. The second letter is the bank notifying me that I am in " default '' of the terms of the mortgage and threatening acceleration and foreclosure action. FHFA states " [ t ] he Servicer may not accelerate or compress the remaining Escrow shortage amount into a new Escrow payment or shorter repayment period as a result of a future Escrow analysis, '' which is exactly what the bank did here by rolling over my alleged XXXX escrow shortage into XXXX. The bank sending these letters to me was unlawful because it is in default of RESPA and the express terms of my flex modification. 
-- -- -- -- Bulletin XXXX Servicing Issued XX/XX/XXXX ESCROW SHORTAGE FOR COVID-19 AND DISASTER PAYMENT DEFERRALS AND FLEX MODIFICATIONS Effective XX/XX/XXXX, but Servicers are encouraged to implement the new escrow shortage requirements immediately. 

At the direction of FHFA, and in coordination with Fannie Mae, effective XX/XX/XXXX, when evaluating a Borrower for either a COVID-19 or Disaster Payment Deferral, Servicers must perform an Escrow analysis in accordance with the Real Estate Settlement Procedures Act ( RESPA ) and any applicable federal, State, XXXX local law. 

If the Servicer determines that there is an Escrow shortage, the Servicer must disclose the amount of the shortage to the Borrower before the Borrower accepts the Payment Deferral. If the Borrower is unable to pay the Escrow shortage as a lump sum, then the Borrower must pay the shortage as part of the monthly principal, interest, taxes and insurance ( PITI ) payment. If the Borrower must make monthly Escrow shortage payments, then the Servicer must : Spread the repayment of the Escrow shortage amount in equal monthly payments over a period of 60 months, unless the Borrower chooses to pay off the shortage over a shorter timeframe, not to be less than 12 months Take into account any remaining unpaid amount of the Escrow shortage in any subsequent Escrow analysis to ensure that the Borrower is able to continue to pay all Escrow shortage amounts over the remaining portion of either the current remaining Escrow shortage repayment period or a period up to 60 months. The Servicer may not accelerate or compress the remaining Escrow shortage amount into a new Escrow payment or shorter repayment period as a result of a future Escrow analysis.

If the Borrower is unable to afford a COVID-19 Payment Deferral or Disaster Payment deferral based on the increased monthly payment resulting from an Escrow shortage repayment, the Servicer must evaluate the Borrower for a Flex Modification.

Any Escrow account shortage that is identified at the time of the Payment Deferral must not be capitalized and the Servicer is not required to fund any existing Escrow account shortage.

Additionally, the COVID 19 Payment Deferral and Disaster Payment Deferral Agreements ( see Attachment A and Attachment B to this Bulletin in the dropdown above ) have been updated to reflect this change.

Flex Modification Escrow shortages resulting from Escrow analyses performed as part of evaluation for a Flex Modification must also be spread over 60 equal monthly payments. A Borrower may pay the shortage off in a lump sum or may choose a shorter repayment period, not to be less than 12 months.