Consumer complaint received 2018-06-05
Product: Mortgage — Conventional home mortgage
Issue: Trouble during payment process — 
Company: COLORADO HOUSING AND FINANCE AUTHORITY (CO)

To Whom It May Concern : I am writing to share a terribly egregious situation created by the holder of my home mortgage, Colorado Housing and Finance Authority ( CHFA ), and their servicer XXXX e. I am also writing to request your assistance in this matter as multiple attempts to contact CHFA/XXXX  to resolve the dispute have proven futile. Due to CHFA/XXXX 's neglect, I was unknowingly exposed to a huge potential liability and I am now being penalized for CHFA/XXXX 's failure to properly service my home mortgage. CHFA/XXXX has levied a {$1600.00} unauthorized penalty against my escrow account which more than doubles my escrow payment and increases my monthly mortgage payment over 20 %.

I closed on my home on XX/XX/XXXX. I utilized an independent mortgage lender/originator, XXXX, to obtain a CHFA Home Loan, and I obtained an initial Property/Hazard policy through a XXXX XXXX agent in XXXX, CO.

Upon closing I learned that XXXX XXXX would not be able to continue my Property/Hazard coverage due to some ' fire line inspection issues ( it is a mountain home ). I immediately obtained a new policy via XXXX XXXX brokerage, under an insurance company named XXXX   with no lapse in coverage. I paid approximately 70 % of the annual premium with the understanding that the servicer would be billed for the remainder to be paid from escrow. I took steps to notify the mortgage originator, XXXX, and provided a copy of the policy ( see attached 1 / XX/XX/XXXX email and policy ). Around this same time I was notified my mortgage would be transferred or acquired by CHFA and serviced by XXXX. I was assured all account information, including insurance policy, would be forwarded to the new loan holder and servicer.

Approximately 12 months later, XX/XX/XXXX, I was contacted by CHFA/XXXX stating my XXXX   Property/Hazard Policy had been cancelled. I explained that a new policy had been obtained back in XX/XX/XXXX, with no lapse in coverage, and information was provided prior to CHFAs acquisition of the loan. I subsequently provided a copy of the XXXX policy ( see attached XX/XX/XXXX email ).

Later in XX/XX/XXXX I received another notice from CHFA/XXXX  stating again that my Property/Hazard Policy had been cancelled and that I was required to maintain coverage, and either to provide proof of insurance or obtain insurance. I contacted CHFA/XXXX  again who then notified me that the XXXX  Policy had also been cancelled, and that CHFA/XXXX now had no record of coverage after XX/XX/XXXX.

CHFA/XXXX  did not provide any reason as to why the XXXX policy was cancelled, and could not verify payment for the coverage as they had no record of the XXXX  policy. After several attempts to contact XXXX XXXX brokerage and XXXX   myself, I was unable to determine why the policy was cancelled.

As quickly as possible, I obtained a new home owners policy, again through XXXX, but this time I utilized an agency in XXXX, CO accustomed to insuring mountain homes and dealing with ' fire line ' issues. The policy and premium information were provided to CHFA/XXXX  who made payment in full on XX/XX/XXXX in the amount of {$1000.00}. This is my current Property/Hazard policy in full effect, so once again I believed the matter had been resolved.

In late XX/XX/XXXX I received yet another correspondence from CHFA/XXXX  again stating I needed to provide proof of insurance. I contacted CHFA/XXXX and spoke, at length, with their representative XXXX on XX/XX/XXXX. I explained all the events which had occurred over the past year and confirmed I have complete Hazard/Property coverage in effect through XXXX. I advised her that I was not made aware of any lapse in coverage and that CHFA/XXXX had in fact failed to adequately service the loan from its inception failing to obtain policy coverage information and make payments on the new XXXX policy for 12 month s. At the conclusion of the conversation I was assured by CHFA/XXXX   representative XXXX, that I would only be billed for the lapse in coverage from the date I was notified ( XX/XX/XXXX) until the date the new XXXX XXXX policy went into effect, XX/XX/XXXX. XXXX   gave me an estimated charge of approximately {$160.00}. You can imagine my shock when I received the attached notice that CHFA/XXXX had actually assessed a charge of {$1600.00} against my escrow account on XX/XX/XXXX, under the guise of " forced place " insurance, intended to cover a prior period in time ( please see attached CHFA notices XX/XX/XXXX &XX/XX/XXXX ).

I have spoken with CHFA/XXXX  on multiple occasions since that unauthorized penalty was assessed, even contacting senior servicers in CHFA ' s XXXX  Office, all to no avail.

CHFA/XXXX has charged a so called " premium '' for a backdated policy by an insurance company who had never before inspected or insured the property. CHFA/XXXX  's attached escrow transaction claims an effective date of XX/XX/XXXX, but the policy states the coverage is for the period of XX/XX/XXXX to XX/XX/XXXX ( again a past period ). The expeditious nature with which the backdated policy was obtained and cost of coverage imply a pre-existing relationship with their provider, possibly indicative of kickback and/or commission on the so called " policy '' purchase.

Per Colorado Revised Statutes definition, insurance is a service which transfers risk from one party to another and insurance can not be provided when there is no risk being transferred. In this case no risk or uncertainty exists, because all events are known and in the past. Further Colorado Revised Statutes provide no insurer is capable of assuming the insured 's risk when there is no risk to be assumed. CHFA and their servicer XXXX are therefore attempting to assess an unauthorized and unsupported penalty claiming to obtain an insurance policy to cover a past period in time. This practice is also prohibited under Dodd-Frank.

I agree through the execution of my loan documents that CHFA may obtain insurance on my behalf in security of the asset, if l refuse to maintain hazard/property insurance. However, in this case I never refused or failed to obtain coverage. Had CHFA/XXXX  adequately serviced the loan from their initial acquisition, no lapse would have occurred. CHFA/XXXX  has assessed an unauthorized penalty on my escrow account, rather than doing their job and properly servicing the loan as follows : 1. They failed to obtain and maintain accurate Property/Hazard Policy information upon acquisition/transfer of the loan.

2. They failed to ensure payment and continuing coverage under the XXXX Property/Hazard Policy.

3. They failed to notify me timely of any lapse in coverage and any potential liability.

In failing their due diligence and responsibility as mortgage holder and servicer from the beginning, CHFA/XXXX   has exposed me to substantial risk and have charged my escrow for a supposed policy which does not meet the Colorado Revised Statutes for insurance, potentially defrauding my escrow account under the guise of a " forced place " premium.

I am insisting per the loan agreements, Colorado Revised Statutes and Dodd-Frank Federal Regulation : 1. The reversal of the {$1600.00} unauthorized penalty levied against my escrow account 2. A new escrow analysis ( post reversal ) I would like to conclude by stating that I am a relatively new resident to the state, who fell in love with Colorado, deciding to make it my home. However, I am seriously beginning to question that decision given how this state sponsored agency conducts business, attempting to take advantage of new home owners. I would greatly appreciate any assistance you or your agency may provide in resolving this matter.