Consumer complaint received 2020-05-28
Product: Mortgage — VA mortgage
Issue: Closing on a mortgage — 
Company: Freedom Mortgage Company (CO)

On XXXX XX/XX/XXXX, I was signing closing paperwork for an IRRRL mortgage refinance. The originator of the loan was XXXX XXXX Loans ( XXXX  ), and the company agreeing to loan the money was Freedom Mortgage Corporation. XXXX XXXX XXXX was handling escrow duties. I came to a form titled " XXXX XXXX to the Use of Tax Return Information. '' My complaint is that this consent form is so broad and vague as to be ridiculous, and gives the mortgage company an abusive amount of latitude in what they could do with the borrowers tax return information. The text of the consent form was marked : Borrower Consent to the Use of Tax Return Information - XXXX ( Modified ) copyright XXXX The Mortgage Industry Standards Maintenance Organization. 
Freedom Mortgage modified XXXX words with no consequential difference from the XXXX recommended wording. The complete XXXX consent text can be found at the following link : XXXX XXXX XXXX I was lucky to be in a position that this refinance going through was not of great consequence to me, and so when XXXX Mortgage insisted they had to have this form signed to fund the loan, I canceled the transaction on XXXX XX/XX/XXXX. My concern is for the many consumers who really need their loan to go through who will be pressured into signing this abusive consent document. I spelled out my concerns with the consent form in a letter to XXXX  as follows : From : **************** XXXX XX/XX/XXXX To : XXXX XXXX and Mr. XXXX, XXXX Mr. XXXX asked for a recap of my objections to the Borrower Consent to the Use of Tax Return Information in my loan closing package. My attorney, ******************** XXXX have additional objections, but below you will find my main thoughts on this issue. 

First, this loan was described to me by PHLoans employees as a no-income-verification loan. If you refuse to close this loan should I not grant your company permission to access my tax returns, you have de facto created an income verification requirement contrary to the way the loan was represented to me. 

This is an IRRRL loan. The VA does not require income verification for this loan. Contrary to what I heard from some of your representatives on XXXX XXXX, to the best of my knowledge the IRS does not require you view these documents to close this loan. The purpose does appear to be for making the loan more attractive to other firms to which you might sell the loan. In that case, the returns are again being used for income verification purposes, and again that is contrary to the way the loan was represented to me. 

If you need my tax return information for some other legitimate purpose, pending my lawyers advice I am potentially willing to consider submitting my most recent tax return for one-time use by your company for purposes such as insurance. Of the purposes listed in your consent form, again pending my lawyers advice, the purposes which I can see as legitimate at this point are limited to selling, insuring, and securitizing the loan. 

I know your consent form is based on XXXX language, which means it works entirely to the advantage of those in the mortgage industry. In general, the consent form is far too broad in scope for an informed consumer. The form would have me consent to your company using my tax information for undefined marketing purposes, which means, in effect, absolutely any marketing purposesnow or in the distant future! It also says I would permit you to use my tax return for any other purposes permitted by applicable laws. It does not specify what those purposes are or could be. 

The consent form asks for permission to share my information with affiliates of your company, without saying who your affiliates are. Does that include direct-marketing companies? Does it include XXXX XXXX Used Car Lot down the street? An affiliate could be absolutely anybody! And the way this consent is written, it could be absolutely anyone your company could choose to have as an affiliate in the future, so a list of current affiliates would be uselessit could change tomorrow. And if you sell the loan, that reopens the question of who the affiliates are of that company, for good or for ill. I have similar serious concerns about giving permission to unknown acquirers of some vague other interest in the loan. 

I know this consent form you have presented me is a relatively new form, as a result of the IRS change in procedural requirements after XXXX XX/XX/XXXX. It could well be that your loan clients to date in this calendar year have not fully understood what this consent form is giving you permission to do. It is essentially a blank check to do with the borrowers tax information almost anything you would like to do. Your company and I do not have a fiduciary relationship, and so what you ( or your successors and assigns ) could decide to do would not necessarily be to my benefit. 

I believe we can change the language of this consent form to something acceptable to me. We need to clear this issue up quickly today. I am available all day long. I will be consulting with my attorney as we work to resolve this issue. 

Sincerely, ************** To back up to the day of closing : At the closing session on XXXX XXXX, I contacted XXXX XXXX, a senior loan processor with XXXX XXXX XXXX, and we agreed that I would not sign the tax form consent document, and that she would forward my objections to the necessary departments. On the next business day, XXXX XXXX, I talked about the problems with the consent form in detail with Ms. XXXX, XXXX XXXX ( the loan originator ), and XXXX XXXX of XXXX XXXX XXXX. At the end of the day, I was informed by Mr. XXXX that the loans underwriters were insistent that the loan could not go through without the consent form signed. That night I wrote the letter I quoted above and emailed it to Mr. XXXX and Mr. XXXX at some time after midnight of XXXX XXXX. 

My XXXX right-to-cancel period on the loan transaction was to expire at midnight, XXXX XXXX. On the morning of XXXX XXXX, I talked with Mr. XXXX and the consent form requirement was still in place. I decided to cancel the transaction while still in the XXXX right-to-cancel period, and did so. That evening at about XXXX XXXX  ( all times XXXX XXXX ) I got a phone call from Mr. XXXX saying their underwriters had changed their minds, and that no tax form release consent form would be required by the underwriters. Mr. XXXX emailed me at about XXXX XXXX  with the same information. They were both aware that I had already canceled the transaction, and each of them asked me if I would reconsider and go ahead with the loan. I told both of them the transaction remained canceled. 

To summarize the complaint : the XXXX Borrower Consent to the Use of Tax Return Information is an abusive consent form which grants permissions so broad as to be ludicrous, but which borrowers who may feel they have no other options will be pressured to sign. Freedom Mortgage Corporation is using XXXX  language, and I can only presume many other mortgage brokers are using it nationwide, as something of a nationwide industry standard. The government needs to protect consumers from this systemic abuse.