Consumer complaint received 2021-11-15
Product: Mortgage — FHA mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage — 
Company: Flagstar Bank, N.A. (CA)

We have resided in our current home since XX/XX/XXXX after securing a mortgage. Due to many financial struggles, the mortgage we secured had a XXXX  % interest rate which made our monthly payment approximately {$3100.00}, an amount that was not easy to maintain. Soon after moving in, I made it a priority to put us on a budget that would allow me to fix our credit, which was flawed due to many medical debts, and build our credit scores to a better place that would allow a refinance at a lower interest rate. 
When the covid-19 pandemic hit, we were able to maintain our budget for several months and fortunately stay afloat, a blessing so many others did not have. However, my sons XXXX XXXX began to falter and his need for XXXX care increased, causing us to increase his doctor visits which are not covered by our insurance. Our budget suffered, and in XX/XX/XXXX we entered into a temporary forbearance with our mortgage lender Flagstar Bank. Before entering this forbearance, I asked the loan officer at Flagstar who was helping with this, if the forbearance would cause any problems when I was finally able to refinance as this was of the utmost importance. The Flagstar loan officer assured me, the forbearance would not have any affect on my ability to refinance. Fortunately, after just two months of forbearance we were back on track with our budget and able to come out of the forbearance. When I called the Flagstar loan officer to proceed with stopping the forbearance, I was advised it was best to continue the forbearance for the full six months just in case. I told this loan officer it was not necessary and, we would continue our regular payments immediately as our ultimate goal is to refinance for a lower interest rate. The loan officer assured me that even though I would continue to make the monthly payments, it was best to stay in the forbearance.

We continued to make our regular monthly mortgage payments even though we were in a forbearance. I hired a financial advisor in XX/XX/XXXX to assist me in keeping our budget on track as well as guidance to clean up our credit reports all with the intention to refinance our home. XX/XX/XXXX, I spoke with Flagstar again to begin the process of ending the forbearance. After a lot of discussion, we chose to move the two missed payments to the end of the mortgage. This was the advice given to us after telling Flagstar again of our intention to refinance as soon as possible, even within the following couple months. I was assured once again, there would be no issue when it came time to refinance. We signed the final paperwork on XX/XX/XXXX. 
While I was not fond of Flagstar Bank for many various reasons, I made the assumption it would be best to try to refinance with them. They had sent several advertisements touting the great rates they had and how the fees would be less because we were already a client. Soon after submitting an application, I was told our credit scores were not good enough and we had to much medical debt. I waited a couple weeks thinking perhaps the credit bureau needed to update and tried again. 
On XX/XX/XXXX after applying with a different lender ( XXXX XXXX XXXX XXXX we were conditionally approved and things were moving in the right direction finally. Unfortunately, the loan officer we had been working with was unexpectedly terminated by the company with no explanation, but I was assured everything was still good to go and they would be in contact to set up the appraisal. We paid XXXX {$590.00} for the appraisal. On XX/XX/XXXX after months of poor communication with XXXX and misleading information, I was told by XXXX XXXX  they could not move forward because of the HUD lien. I did not know what they were talking about and had never heard or seen evidence of a lien on my property. After further research I discovered Flagstar bank used the two deferred payments and put them into a lien that had to be paid before I could refinance. This was a major blow to my refinance goal.

I called Flagstar to inquire about the lien and was told to refer to the paperwork I signed when ending the forbearance. I asked them directly to please explain this to me as I had been clear in my communication regarding refinance. They said it was not something they could help me with. I was beside myself with frustration and after everything I had been through over the last couple months, I was going to give up. I decided to try one more time with a nationally recognized bank that was local so I would be able to speak with someone in person if needed.

I called a loan officer at my local XXXX XXXX and explained everything that happened. I asked if it would be possible to try to refinance one last time. The loan officer was very understanding and suggested I apply with XXXX XXXX. Upon receiving my application and the necessary documents to begin a loan application I was once again conditionally approved. A few days later, we scheduled an appraisal and paid the {$390.00} fee. After about a week, the XXXXXXXX XXXX loan officer called to tell me the FHA rules do not allow a refinance for an entire year after ending a forbearance even if I was attempting to refinance with a conventional loan. This was another major letdown, and I didnt know what to do. My budget was beginning to suffer because of the credit card consolidation loan as well as tuition for my daughters school increasing. Medications for myself and my son were increasing in price and the medical bills continued to burden us. 
Not once during the forbearance with Flagstar bank did anyone tell me about the FHA rules governing the wait time to refinance, nor did they tell me I would have a lien. I pride myself on my communication skills as I feel it is of the utmost importance to be upfront and honest. Clearly Flagstar bank does not hold the same standards. 
I hope there will be steps taken to resolve this.