Consumer complaint received 2021-10-24
Product: Mortgage — Conventional home mortgage
Issue: Trouble during payment process — 
Company: LoanCare, LLC (IA)

My former husband and I got a loan from XXXX XXXX in XXXX to purchase our home. XXXX XXXX sold our loan to LoanCare of XXXX  XXXX, Virginia. I have been trying to pay down the principal and pay off the balance of my loan with LoanCare with the proceeds of my home insurance policy for several months now, and have been having a lot of difficulty doing so. 

In XXXX my former husband and I both filed ChXXXX bankruptcy and our obligation to pay the LoanCare loan was discharged. We wanted to keep our home and avoid foreclosure, so we continued to make payments on the loan. We then got a divorce in XXXX of XXXX. The divorce decree required him to give me the house and for me to make future payments, so he deeded over all of his ownership and other interest in my home in XXXX of XXXX. I continued to make payments to LoanCare on my own after the divorce, so that my son and I could continue to live there and avoid foreclosure. 

In XX/XX/XXXX my home was totally destroyed by fire. I filed a claim with my home insurance company, XXXX XXXX headquartered in XXXX, Iowa. I tried to explain to the LoanCare Customer Service department many, many times, that I did not intend to rebuild my home and I would simply pay off the account once my insurance claim was paid. However, rather than any acknowledgment of what had happened or any effort to work with me regarding the insurance proceeds I received, I simply received a series of identical form letters, stating that I needed to repair my property in order to avoid foreclosure. I moved in with my parents after the fire, where I have been living ever since. I have been unable to afford rent since I continued to make monthly payments to LoanCare pending payment from the insurance company. 

The claims process took longer than expected, but I received a partial payment of {$88000.00} dated XX/XX/XXXX. The check was made payable to myself and LoanCare as the loss payee. My ex husband was not included on the check because I explained to XXXX XXXX that he no longer had any interest in the house and had been discharged from any obligation on the loan. XXXX confirmed what I told them and then made the check payable to me and to LoanCare only, since my ex husband no longer had any insurable interest. In addition, my ex husband and I have recently been through a contentious custody dispute and he refuses to communicate with me. He will not respond to texts, calls or emails, and he refuses to cooperate with me in any way regarding the care of our son or the payment of the account secured by the house, so he would never have endorsed a check if it had been made payable to him. 

I endorsed the XXXX insurance check and sent it in to LoanCare with a request that they apply the payment to the principal balance of my loan. The balance at the time was {$94000.00}, and my goal was to reduce the principal as much as possible so that the interest I was paying would be on a much lower principal amount going forward. I was told at the time that LoanCare was holding the payment in a restricted escrow account and would not apply it to reduce the principal until I paid them enough to pay off the balance in full. I therefore continued to make monthly payments on the entire outstanding balance. 

XXXX XXXX required that the house be completely demolished before they would finalize the claims process. The house was demolished at the end of XX/XX/XXXX, and XXXX sent me a second and final check dated XX/XX/XXXX for {$36000.00}. Again, it was made payable to myself and LoanCare only. My ex husband was not on the check. I again endorsed the check and sent it in to LoanCare with a request that they pay off my account balance, believing that they would now apply it as I requested since I had paid them more than enough to pay off the entire balance. However, the LoanCare Customer Service department contacted me last Tuesday, XX/XX/XXXX, XXXX, and told me that my ex husband would need to agree with how the proceeds were to be applied, and that he would need to give them written permission to apply the proceeds to pay off the account. This was the first time I had ever been told this in the entire time that I have been trying to get LoanCare to apply my home insurance proceeds to the outstanding balance of my account.

I dont understand why my ex husbands permission is required in order for me to have the insurance proceeds applied to my account as I have requested. My ex husband does not owe LoanCare anything on the loan because of his bankruptcy. He has no interest in the home securing the loan because he deeded his interest over to me. The insurance company didn't make the check payable to him, only to me and to LoanCare. ( If the checks had been made payable to him as well, he would not have endorsed either of them and I would never have been able to give the insurance payments to LoanCare. ) The payments to LoanCare came from me, not from him, and I dont think that his refusal to cooperate with me and give me permission to have the insurance proceeds applied as I have requested should result in me not being able to pay off the loan and for the insurance proceeds of {$120000.00} to simply sit in escrow indefinitely, instead of being applied as requested so that I can stop paying the interest that continues to accrue.