Consumer complaint received 2023-02-20
Product: Mortgage — Conventional home mortgage
Issue: Trouble during payment process — 
Company: NEW YORK COMMUNITY BANCORP INC (NV)

I am a licensed attorney and former Flagstar Bank customer. I had a home mortgage with Flagstar Bank that was obtained in XXXXXXXX XXXX XXXXXXXX. This complaint centers around problems with the Bank 's autopay system -- which apparently many other customers besides myself have had -- resulting in late fees being charged and late payments being reported on my credit, even though : ( i ) autopay had been working properly on my account for over a year; and ( ii ) I had plenty of money in my personal bank account to make the monthly payments. 

I. WHAT HAPPENED : Flagstar acquired my mortgage from the original mortgage company within a few weeks after my house sale closed. Shortly after receiving the initial paperwork from Flagstar in XXXXXXXX XXXX XXXXXXXX, I setup an account online via the Flagstar.com website and setup an automatic payment each month, just like I do for all my other loans, credit cards and utility bills. For over a year, everything was fine and my payments went through automatically with no problems. However, in XXXX XXXX XXXX, I got a new job and also switched my primary bank to a local credit union and wanted to use that to make my Flagstar payments. What should have been a simple, bank account change turned into a nightmare lasting for months, resulting in late fees being charged and ( most importantly ) a 60-day late payment notice being reported to the 3 major credit bureaus that is now severely impacting my credit rating. For reference, I have included statements I received from Flagstar during the months of XXXX and XXXXXXXX XXXX XXXXXXXX as Exhibit A with this Complaint. 

During the timeframe in question I had between {$15000.00} and {$20000.00} in my credit union account ( See, e.g., excerpts from credit union monthly statements included as Exhibit B ). I had ample funds to make the payments in question, but was prevented from doing so by Flagstar 's own systems and practices. In particular, the XX/XX/XXXX payment was missed because I thought that my autopay settings had been updated properly. After I began receiving text messages in early XX/XX/XXXX telling me my payment was overdue, I called into the Customer Service line on XX/XX/XXXX and caught that missing payment up by making a double payment covering both XXXX and XXXX. 

I consider this " late payment '' to be 100 % Flagstar 's fault, due inter alia to numerous problems setting up automatic payments via the Bank 's online autopay system, coupled with confusing and constantly changing instructions posted to the website and a host of other factors. I tried numerous times ( unsuccessfully ) to change the bank account details, but always encountered technical or logistical obstacles caused by Flagstars own systems and polices. I attempted to read the instructions on the Flagstar website on multiple occasions, but still despite having worked in the finance / payments industries was utterly befuddled about what I was supposed to do. 

Compounding the problem, Flagstar also miscalculated the time period that I was " late '' on one of the credit reports ( XXXX ), saying I was " 60 days '' late when " 30 days '' would have been more accurate. Specifically, the XXXX XXXX was due on XXXX, and late fees are not assessed until after the XXXX of the month. By making a double payment for XXXX on the XX/XX/XXXX, this should have been listed as 30-days or ( at most ) 42 days past due. However, the XXXX report says " 60-days late '' which means it was over *2 months* behind, and this is seen as an even worse delinquency by creditors.

II. OTHER PEOPLE SEEM TO HAVE HAD THE SAME CONCERNS : In reviewing online CFPB complaints from other persons during that same timeframe ( Spring/Summer XXXX ) I can see that I am not the only one that had these types of problems with your autopay system. In fact, I reviewed many complaints from this past year that contain facts virtually identical to mine, included several submitted to the CFPB. I have included four ( 4 ) examples here with this submission, collectively labeled as Exhibit C. Some of these complainants have theorized that Flagstar deliberately chose to make the autopay process more difficult, in hopes of generating additional late fees as a away of offsetting lower profit margins due to the historically low interest rates in place since the COVID-19 pandemic. While my loan rate was indeed very low ( 2.75 % ), without sufficient evidence I can not say whether this is or is not true, but I still believe that, at minimum, this situation hits at least one - if not all 3 - UDAAP factors : >> Unfair prong : I incurred substantial injury by being wrongfully charged multiple late fees ( {$66.00} each ) and have also experienced a negative impact ( decrease of XXXX points ) on my credit reports, one of which even describing me as being more " late '' than I actually was. I was unable to reasonably avoid the injuries because Flagstar 's act ( s ) or practice ( s ) interfered with my ability to effectively make decisions or to take corrective action. In addition, such act ( s ) or practice ( s ) would not be seen as having an offsetting benefit to consumers.

>> Deceptive prong : As mentioned, I received confusing and highly misleading statements ( i.e. instructions ) on the Flagstar website and via telephone support interactions, leading me to believe that autopay on my account was working when in fact it was not. My interpretation would also be considered reasonable under the circumstances, as multiple people in similar situations were complaining about the exact same problems with Flagstar 's autopay system at precisely the same time ( Spring/Summer XXXX ). The misleading statements were " material, '' in that I would not have allowed the XXXX payment to lapse if I had known that autopay was not configured properly. 

>> Abusive prong : The act ( s ) or practice ( s ) in question were also abusive, in that they materially interfered with my ability to protect my interests in using a consumer financial product or service ( i.e. the mortgage loan autopay service ). 

See, e.g., https : XXXX XXXX. PREVIOUS ATTEMPTS TO RESOLVE THE ISSUE WITH FLAGSTAR : Aside from many calls into the Bank 's customer support phone line, I sent in a CREDIT REPORT REVIEWING REQUEST using the form that Flagstar provides for this purpose. The form was sent via fax on XX/XX/XXXX to the fax line listed at the bottom ( XXXX ). I have included both a copy of the submission form and the delivery confirmation showing a successful transmission as Exhibit D. In the form narrative, I explained the situation to the Bank much in the same way that I have done here. I also advised the bank that if the situation was not promptly resolved I would be pursuing additional legal remedies, including but not limited to filing a CFPB complaint ( like this one ) as well as complaints to other agencies, such as the Office of Comptroller of the Currency , Federal Reserve Board and one or more state banking agencies ( e.g. Michigan, New York ), etc. ), or filing a lawsuit against the Bank in state or federal court. I told the Bank that I would not take any action for 30 days from the date of the submission, but requested that the Bank promptly confirm receipt of my fax as soon as they received it, and to get back to me within a month on the larger issues raised. No response has been received, not even just a simple confirmation of receipt and " we're looking into it '' notice. I can only assume that this is because I am no longer their customer -- my loan was sold a few months ago to another bank -- and I no longer matter to them.