Consumer complaint received 2020-05-05
Product: Mortgage — FHA mortgage
Issue: Trouble during payment process — 
Company: Freedom Mortgage Company (FL)

I. BACKGROUND On or about XX/XX/2020 : I used Freedom Mortgage 's ( " Freedom '' ) website to submit a request for the 180 days, COVID-19 forbearance required by HUD. I was instructed that I would need to submit a Freedom-created, COVID-19 Hardship Attestation form ( Attestation form ) in order to be considered for the program. 
XX/XX/2020 : I sent Freedom Mortgage a completed copy of its required Attestation form via email. I also provided them with a copy of the U.S, Department of Housing and Urban Developments ( HUD ) XX/XX/2020 Mortgagee Letter XXXX ( Mortgagee Letter ), and requested that I be allowed to utilize the COVID-19 National Emergency Standalone Partial Claim for repayment, as I will ostensibly meet all eligibility requirements contained in the Mortgagee Letter ( I already meet the occupancy and currentness criteria, leaving only my claim of ability to resume on-time mortgage payments ).

In a letter from Freedom, dated XX/XX/2020, the company informed me that they received the Attestation form and that I would receive the terms of my Forbearance Plan within 14 days of receipt of that letter. The letter then went on to explain that I may receive a Forbearance Plan of up to 180 days and that there is not an automatic payment deferment or loan modification at the end of the forbearance period and that action would be required on my part.

Then, in two separate letters/agreements, from Freedom, both dated XX/XX/2020, I was told that I had been approved for a Forbearance Plan. One of the letters/agreements states that under the Forbearance Plan, my mortgage payments are temporarily suspended until XX/XX/2020. The other letter/agreement, which is otherwise virtually identical to the aforementioned, states that my monthly mortgage payments are only suspended until XX/XX/2020. Both letters/agreements state, The terms of your mortgage will not change during the forbearance period. As a result of not making any payments during the term of the forbearance plan, you will become delinquent on your mortgage and your credit score may be impacted. 
Both letters/agreements also require that one or more inspections will be conducted to determine the physical condition of the property, as part of the next steps and potential solutions. 
Both letters/agreements also state that, depending on investor requirements you may be required to provide a complete loss mitigation assistance application at the conclusion of your Forbearance Plan.

Both letters/agreements include a signature page whereby we, the homeowners, are expected to sign and accept the terms of the letter/agreement.

It is my contention and concern that Freedom is not in compliance with HUDs rules and instructions regarding the execution of the COVID-19 forbearance.

II. HUD Rules and Guidance In pertinent part, the aforementioned Mortgagee letter provides the following : If a Borrower is experiencing a financial hardship negatively impacting their ability to make on-time Mortgage Payments due to the COVID-19 National Emergency and makes a request for a forbearance, the Mortgagee must offer the Borrower a forbearance, which allows for one or more periods of reduced or suspended payments without specific terms of repayment. 
... 
Any Borrower who is granted a Forbearance for Borrowers Affected by the COVID-19 National Emergency and is otherwise performing as agreed is not considered to be delinquent for purposes of credit reporting. FHA requires Servicers to comply with the credit reporting requirements of the Fair Credit Reporting Act ( FCRA ) ; however, FHA encourages Servicers to consider the impacts of the COVID-19 National Emergency on Borrowers financial situations and any flexibilities a Servicer may have under the FCRA when taking any negative credit reporting actions. 
... 
... Eligibility for COVID-19 National Emergency Standalone Partial Claim : The Mortgagee must ensure the following eligibility requirements are met : The Mortgage was current or less than 30 Days past due as of XX/XX/2020. 
The Borrower indicates they have the ability to resume making on-time mortgage payments.

The Property is owner-occupied.

In HUDs COVID-19 Questions and Answers ( HUD Q & A ) Last revised : XX/XX/2020, available online at https : //www.hud.gov/sites/dfiles/SFH/documents/SFH_COVID_19_QA.pdf, the following is provided : Q. What documentation is required to prove the borrower has financial hardship due to COVID-19?

A. No documentation is required to prove financial hardship due to the COVID-19 National Emergency. Mortgagees must offer borrowers experiencing financial hardship due, directly or indirectly, to the COVID-19 National Emergency a COVID-19 Forbearance upon borrower request. 

Q. Mortgagee LetterXX/XX/XXXX includes a COVID-19 Forbearance. How is this forbearance different than the informal and formal Forbearance from HUDs Priority Waterfall? 
A. The COVID-19 National Emergency forbearance is not a written agreement ; it must be approved, upon borrower request, for up to six months and extended up to an additional six months, upon borrower request. The COVID-19 Forbearance may only be offered under the guidance for this COVID-19 National Emergency.

Q. Will the monthly mortgage payments that are reduced or suspended under a COVID-19 Forbearance need to be repaid?

A. Yes. A borrower who receives a COVID-19 Forbearance is responsible for repaying the suspended mortgage payments or the balance of reduced mortgage payments. Mortgagees must offer eligible borrowers the COVID-19 Standalone Partial Claim. For those that do not qualify, Mortgagees must offer the standard FHA Loss Mitigation Options to assist in making these payments as outlined in the Single Family Housing Policy Handbook 4000.1, Section III.A.2.k HUDs Loss Mitigation Options. All late charges, fees, and penalties must be waived as long as the borrower is on a COVID-19 Forbearance Plan In HUDs If You Need Assistance in Making Your Mortgage Payments, Help is Available Q & A ( Last Updated : XX/XX/2020 ), available online at https : //www.hud.gov/sites/dfiles/SFH/documents/COVID-19HomeownerHelp.pdf the following : I am having trouble making my mortgage payment due to the impacts of the COVID-19 National Emergency. Do I need to provide my servicer with documentation to prove I need forbearance?

A. FHA servicers will ask you to confirm that you are having a financial hardship, either directly or indirectly, due to the COVID-19 National Emergency in order to qualify for a COVID-19 Forbearance, but will not require that you supply any documents.

III. Issues and Analysis 1 ) Freedom can not require its Attestation form, Forbearance Plan agreement execution, physical inspections, and/or loss mitigation assistance application at conclusion of the forbearance plan depending on investor requirements as conditions or terms of granting the COVID-19 forbearance.

The Mortgagee letter and the HUD Q & A state that No documentation is required to prove financial hardship due to the COVID-19 National Emergency. Mortgagees must offer borrowers experiencing financial hardship due, directly or indirectly, to the COVID-19 National Emergency a COVID-19 Forbearance upon borrower request. Further, the HUD Q & A also provides that The COVID-19 National Emergency forbearance is not a written agreement ; it must be approved, upon borrower request, for up to six months and extended up to an additional six months, upon borrower request. The COVID-19 Forbearance may only be offered under the guidance for this COVID-19 National Emergency. 

Nonetheless, Freedom required a financial hardship form and a subsequent agreement be executed before granting the forbearance. Additionally, in the terms of that agreement, Freedom also requires physical inspections, and loss mitigation assistance application at conclusion of the forbearance plan depending on investor requirements 2 ) Freedom sent two letters/agreements, one with incorrect forbearance length. Despite my request for the 180 days, Freedom either intentionally or negligently sent duplicate letters/agreements, one of which only allowed 90 days forbearance. I am uncertain which is being pursued by Freedom.

3 ) Freedom has thus far ignored my request for consideration of the COVID-19 National Emergency Standalone Partial Claim as an option for repayment after the forbearance period ends. Freedom is either intentionally or negligently omitting any information or reference relating to COVID-19 National Emergency Standalone Partial Claim in its letters/agreements, despite the fact that we already meet two of the three criteria required for eligibility, the third being the indication that we are ready or have the ability to resume on-time mortgage payments.

4 ) Freedom can not state, as it did in its letter/agreement, that we will become delinquent and our credit score may be impacted in the manner in which they have. The Mortgagee letter is very specific on this subject, providing, Any Borrower who is granted a Forbearance for Borrowers Affected by the COVID-19 National Emergency and is otherwise performing as agreed is not considered to be delinquent for purposes of credit reporting. 

Freedom used an asterisk near its credit reporting statement that connects the reader to another section in which it contradicts the former statement, advising that they will not furnish delinquency information during the forbearance period, but will furnish information about the Forbearance Plan to the credit reporting agencies in accordance with the relevant law. However, immediately following that sentence, with all caps and bold lettering for emphasis, Freedom states, CREDIT SCORING COMPANIES MAY CONSIDER WHETHER THERE IS AN INCREASED CREDIT RISK DUE TO LACK OF REPORTING. WE ARE UNCERTAIN AS TO THE IMPACT ON YOUR CREDIT SCORE, PARTICULARLY IF YOU ARE CURRENT ON YOUR MORTGAGE OR OTHERWISE HAVE A GOOD CREDIT SCORE. This, combined with the previous contradictory, and blatantly non-compliant statement regarding delinquency, appears to be an intentional attempt to confuse and deter borrowers from utilizing the legally prescribed COVID-19 forbearance by creating unnecessary anxiety and apprehension through the use of stylistic writing.

IV. Request for Remediation/Relief Pursuant to the authority and claims included above, I respectfully request that Freedom Mortgage grant the COVID-19 forbearance to me and my spouse without mandating any agreement be entered into ; and that Freedom acknowledges the COVID-19 National Emergency Standalone Partial Claim as a legitimate option for my repayment after forbearance end and/or upon my advising them of my ability to resume making on-time monthly mortgage payments.