Consumer complaint received 2017-09-16
Product: Mortgage — FHA mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage — 
Company: Flagstar Bank, N.A. (MI)

I found loan officer XXXX XXXX through the XXXX XXXX XXXX website where there were only five or so participating banks listed. He represented Flagstar bank. I contacted him on XX/XX/XXXX, and inquired specifically about the XXXX XXXX XXXX ( XXXX ) program ( Email attached ). I was interested in this particular loan product because it was designed especially for those looking to purchase distressed homes in the city of XXXX, and it would allow me to finance both the purchase, and repair costs associated with buying such a property, at one time. In addition, there is no PMI nor MIP insurance on this mortgage, and a minimal, if any, down-payment requirement. The buyer is only responsible for 1 % of the total loan value out-of-pocket. I later learned that I could use down-payment assistance to cover the rest of the down payment amount. OnXX/XX/XXXX XXXX sent me a pre-approval letter for the XXXX program, and I began to shop for homes ( see email and pre-approval letter ). 

After a months long search, I was finally able to sign a purchase agreement on a home, which I sent to XXXX on XX/XX/XXXX. At that time ( and another time weeks later ) he requested pay stubs, and my most recent bank and XXXX statements ( see both emails ). Later that day I spoke to him, and he advised me that Id need a project manager to assist with bids for the repair of the home, and suggested one that he was familiar with from a local organization. I paid the man {$450.00} to create a scope of work to present to the bank regarding necessary repairs, and XXXX denied both requests ( the first via email, the second in a phone conversation ), stating that they included items that were not covered within the scope of my loan program ( see email ). I never got my money back, and when I spoke to XXXX about it, he just told me the man no longer worked at the organization. No apology, no explanation, nothing. 
OnXX/XX/XXXX, I notified XXXX that I was approved for a {$15000.00} down payment assistance program, called LIFT. At the time, he confirmed that I could use these funds to cover all but the 1 % of out-of-pocket costs for the home purchase. The deal on this property fell through after several months, but then in XX/XX/XXXX, I found another home for a greater purchase price, and requested a new preapproval letter. When I spoke to XXXX, he agreed to provide it, but questioned what type of loan I was requesting. I told him that I was under the impression that we were still working with the XXXX program, but he suggested something to the effect that a conventional loan would be easier to close, so I agreed. Upon visiting the home, I found that it did not have a working furnace, at which point, XXXX advised that I would have to use a FHA XXXX or conventional renovation loan ( seeXX/XX/XXXX email ), never mentioning the XXXX program that I originally requested, and was subsequently approved for ( see doc ). He then sent a preapproval letter for a Conventional Loan w/ repairs ( see preappXX/XX/XXXX ). My offer on that home was not accepted, but shortly after, I found another one, and had to request another approval letter, as this property cost more than the previous one. I asked XXXX onXX/XX/XXXX for the maximum allowable approval amount ( both purchase price & rehab ) that I would qualify for ( see email XX/XX/XXXX). He replied by phone, stating that he wouldnt be able to calculate the exact preapproval amount until he received the bid requests for the needed repairs for the home. He then sent me yet another approval letter ( see preapp XXXX XX/XX/XXXX ), this one listing the type of loan as XXXX XXXX XXXX, which I imagine was supposed to be XXXX XXXX XXXX ( XXXX ), as the XXXX first originated as a partnership between local banks and the XXXX XXXX XXXX. Upon arriving at a final purchase price w/ seller, and estimating repair costs, XXXX provided me with a second XXXX XXXX XXXX preapproval letter onXX/XX/XXXX ( see XXXX ). Then on XX/XX/XXXX XXXX requested verification of my monthly student loan payment, which I provided ( see student loan doc ). Upon receiving my loan statement, he informed me that he would have to record my student loan at 1 % of its total value, instead of the payment I was actually required to make each month under my payment plan, which was over {$230.00} less, unless I could provide further documentation of the amortization table of the loan. I provided this documentation onXX/XX/XXXX ( see email XXXXXX/XX/XXXX ),  and was advised by XXXX that with this, he would accept the actual loan payment, both via email ( see email XXXXXX/XX/XXXX) and by phone, rather than the 1 % value he originally mentioned. However, when I reviewed my loan documents, I saw the 1 % value listed on my loan application, as opposed to the lesser amount. Though I now know that the FHA requires student loan balances be calculated this way, I dont appreciate him lying to me in saying he was using the lower amount when he was not. In addition to the loan discrepancy, I noticed that there were two credit card balances reflected there that had already been paid off, along with a credit card that did not belong to me. During this same period, he called to request my tax records for the previous two years, then said he would have to deduct the {$1500.00} average loss Id reported from a side business over that period from my income. When I asked why that was necessary, given that I hadnt used that business to qualify for the loan ( since I work full-time for an employer ), he told me it didnt matter, and that hed still have to count it against me. Then sometime between XXXX XXXX and XXXX XXXX, almost an entire year after first providing preapproval for the program, and three weeks prior to the closing deadline, XXXX called me and advised that I no longer qualified for the XXXX, given my excessive debt to income ratio. When I asked what had changed, he stated that my student loan payment, along with the {$1500.00} average loss on my taxes over 3 years, had driven the ratio too high to qualify for the XXXX program. I then asked XXXX why he would wait until so close to closing to request tax info, if that was in fact, a part of the criteria needed to qualify me for the loan? Upon later reviewing the XXXX  handbook, tax losses only factor into a loan decision for self-employed individuals, using their business income to qualify for a loan, which is not my case. At the time, XXXX claimed that the reason he never asked for tax info was because I told him I had no other income, which I didnt have because the business was operating at a loss, and I wasnt using that income to qualify for the loan anyway. Still, XXXX told me that in order to proceed with the loan, my only option was an FHA XXXX. He never explained in any detail how the program worked, nor the excessive paperwork and processes that were necessary to close on this type of loan. I only agreed to proceed because I believed I had no other option. After a week or two of working with contractors and paying them for repair estimates, I submitted the bids to XXXX, at which time he sent them all back, claiming that they werent completed correctly. He became frustrated with me because he wanted me to use a single contractor for the work, but I told him that I couldnt afford to. When I explained to him that hed given me no direction on how to ask the contractors to complete the forms, he claimed that he did, then told me that this was the reason why most people used an FHA XXXX Consultant for these loans. This was the first time hed ever mentioned this. When I asked him about it further, he said that I may want to consider using one, but never mentioned that they were required for full FHA XXXX loans, and that they were suggested for the streamlined version. The only reason I ended up hiring a consultant was because I saw that XXXX was refusing to offer any insight into how the process worked, and I was under a tight deadline to close, as the extra week it took to have the paperwork redone to specification forced me to request an extension on the closing deadline. I hired a consultant I found on the FHA XXXX website, and paid him {$250.00} to prepare the necessary documents to submit to the bank. It wasnt until two or so weeks later, after he submitted two sets of improperly completed documents, that XXXX advised my realtor of a consultant the bank worked with on a regular basis who could do the work for much cheaper. I had to extend the closing deadline again in order to allow the new consultant time to prepare a new write-up. Up until this point, I was never provided with a Good Faith Estimate, and every time I asked for an approximate amount from which to budget contractor repairs and improvements, he said he couldnt give me a figure. Out of curiosity, I contacted another Flagstar loan officer, and told him nothing about my pending loan. Instead I just asked him to tell me about the FHA XXXX loan program, and learned more from him in our 5 minute conversation then XXXX had told me since he first switched me to this loan. That confirmed my suspicion that he was not following proper procedure in guiding me through the loan process. Everyone that I spoke to at Flagstar, from the loan processor, to her supervisor, to XXXX supervisor, to loan officers at other branches, all agreed that XXXX was an expert in these types of loans, and very efficient at his job. Yet he consistently provided me with little to no information, even upon being asked, or even worse, inaccurate information about my loan and the loan process. Throughout this experience, he asked me for sets of documents from my contractors, then once I provided them, asked for more, or asked for information never initially requested, instead of outlining upfront what was needed. He requested an insurance declaration page for one of the contractors, then upon receiving it, stated that wasnt the document he was looking for, he instead needed something listing the coverages ( see email XXXXXX/XX/XXXX ). If not for the fact that he claims to have 30+ years of experience in this area, I would think he was just incompetent at his job, but he seems to be held in high esteem at Flagstar , and his coworkers rave about how good he is, so my only conclusion is that he purposely bumbled all of the work associated with my loan. From using outdated/inaccurate info on my application, to higher than quoted homeowners insurance rates, he just did a terrible job. When I asked him about these inaccuracies, he emailed a response that failed to address the question ( see email incorrect debt listed ) and simply told me when I called him to follow-up on it that it doesnt matter anyway because I still wouldnt qualify for the XXXX It took the supervisor of loan processing, XXXX XXXX, to go in and update/change the application to reflect a current snapshot of my credit info, but the inaccurate homeowners insurance premium listed on my loan estimate was never corrected. Also, the preapproval amount constantly changed. I was told {$150000.00} for repairs and purchase upon signing the XXXX for the last property, but then on XX/XX/XXXXXXXX claimed that he had to use my down payment assistance funds towards home repairs, because of the increased debt-to-income ratio caused by tax losses and a judgment repayment plan of $ XXXX. ( see email XXXX ). Unfortunately, when I contacted the issuers of the LIFT that same day, I learned that the {$15000.00} in down-payment assistance that I was receiving from them had been forfeited, due to lack of communication from the lender. When I called to find out what happened, I was told that XXXX was to keep in touch with them, and advise them when I switched purchase properties, however, they never heard from him. When I questioned him about, he acted as if it was no big deal, just a formality to have the money reissued ( see email XXXX ), but then when he saw that he would most likely not be able to get the funds reinstated, he simply passed the buck to me, stating that I would need to follow up with them ( see email IncreasedClosingCosts ). I had to reapply to the program, and beg them to expedite the approval process in order for me to receive docs in time for a third deadline extension. Unfortunately, it didnt matter that they rushed the approval, because my realtor was advised by XXXX shortly thereafter that Flagstar would still need another few weeks to close, even though at that point, we were over 2 month into the process, and theyd received all requested documents from my contractors, consultant and myself. 

In the midst of all this, I received an email from XXXX stating that instead of the {$12000.00} that I was projected to need at closing, I would now need {$28000.00}! When I asked how that was so, and broke down the numbers, XXXX called me on the phone instead of responding on the email thread that we were previously conversing on ( with my realtor, the supervisor of processing, him and myself ) ( see email IncreasedClosingCostQuestionXX/XX/XXXXXX/XX/XXXX). He went in with a bunch of nonsensical logic about Flagstar having to increase the down payment by so much because of the increase in repair costs, although he couldnt provide any specific formulas to indicate what percentage of the total value he was charging, or where the extra costs and fees came from. While waiting to hear back from the LIFT program, I found another down payment assistance program that offered more money to close, and asked XXXX if it was compatible with the FHA XXXX. 
When I asked him why I wasnt allowed to use this new program to cover the new {$28000.00} closing cost, he asked me to resend him the information. This is after he clearly told me a week prior that the program did not qualify. When I asked him what had changed between then and now, and if hed ever bothered to look into it last week, or just said no without researching it first, he became upset and began to yell. I then told him how frustrated I was with his poor service, changing fees and repeated extended deadlines, and that I planned to file a complaint about my experience. He responded by accusing me of attempting to defraud him by failing to tell him about the loss Id reported from the side business, on taxes that he never asked for until hed already qualified me for a loan, and I was weeks away from closing on my house. 

I was so outdone after realizing that he actually expected me to come up with an extra $ 16k, for no justifiable reason, that I called both his supervisor, XXXX XXXX, and XXXX supervisor, XXXX XXXX ( sp ). XXXX called me back ( XXXX ( sp ) ) never did, and had the same nonchalant attitude that he did when I spoke to him a few weeks prior and told him about the issues I was having with XXXX, and requested a new loan officer. He assured me then that I was almost to close, that things should be smooth from that point forward, and that he would look into it and call me back. He never bothered to call me back until then, and even then, he had no concrete answers for me. He was unfamiliar with both of the down payment assistance programs that I mentioned to him, and seemed unbothered by the fact that his loan officer had potentially jeopardized my whole deal by blowing my down payment assistance. He didnt seem alarmed by the extra, out-of-nowhere closing costs, and proposed no solution to the matter, other than the fact that hed talk to XXXX again, and call me back, again, and again, I never heard from him. 

This was an absolutely horrific experience, from start to finish. I eventually ended up switching to another lender, but by then it was too late, because the seller was tired of waiting to close, and therefore cancelled the deal on the house. This loan officer practiced various forms of predatory lending practices against me, as follows : Excessive Points and Fees through all of these unexplained and unnecessary out of pocket costs with no Good Faith Estimate provided within first days of applying for the loan, Steering and Targeting, by trying to force me into loan products with less favorable terms and higher fees, designed for those with bad credit and/or low income, even though I am in neither of those groups, Inadequate or False Disclosures by changing loan programs and terms throughout the course of my time working with him, without any real explanation as to why. 

I have not been treated fairly in my dealings with XXXX XXXX, nor this bank, and I do n't know why. Not sure if it 's due to the picture on my license, my XXXX address, my gender, or something else altogether. But if this is how XXXX and Flagstar treats XXXX, XXXX, and XXXX, then they need not advertise in the city, nor be conducting business period, for that matter. Ive done everything I could to appeal these issues within the bank itself, to no avail. No one has even bothered to seriously look into my claims, and even those who have done preliminary inquiries into the matter quickly backed off once they either realized the offending party, and/or were persuaded by XXXX that this all somehow made sense. Any help that you can provide would be immensely appreciated, as I have now wasted an immense amount of time and money on contractor and consultant inspection fees, and almost a year of my life, due to the unethical and unscrupulous behavior of XXXX XXXX.