Consumer complaint received 2026-05-29 00:00:00
Product: Mortgage — Conventional home mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage — Changes in loan terms during the application process
Company: K. HOVNANIAN AMERICAN MORTGAGE, LLC
State: HI

Complaint narrative:
SUPPLEMENTAL COMPLAINT TO CONSUMER FINANCIAL PROTECTION BUREAU Re : Continued Violations Following Initial TRID Complaint filed on XX/XX/XXXX Date : XX/XX/XXXX Complainant : XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Respondent : K. Hovnanian American Mortgage , LLC XXXX # XXXX / Arizona License XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX FL XXXX XXXX XXXX : XXXX XXXX XXXX XXXX : XXXX / Arizona License XXXX XXXX Supervising Manager : XXXX XXXX XXXX XXXX XXXX XXXX Reference : Initial CFPB Complaint Filed XX/XX/XXXX PURPOSE OF THIS SUPPLEMENTAL COMPLAINT I am filing this supplemental complaint to document that after filing my initial CFPB complaint against K. Hovnanian American Mortgage for willful TRID violation , the company continued to engage in conduct violating additional federal laws. Rather than remedying the initial violation upon receiving notice of my complaint, K. Hovnanian American Mortgage provided documents and withheld information in ways that reveal systematic additional violations of TRID, RESPA, the SAFE Act, and Dodd-Frank UDAAP provisions . This supplemental complaint should be read together with my initial complaint and treated as evidence of a continuing pattern of willful non-compliance rather than an isolated incident. BACKGROUND INITIAL VIOLATION My initial complaint documented that XXXX XXXX stated in writing : Can not put together formal documents. That would require you purchasing the home in direct response to my request for a Loan Estimate. He acknowledged my application information was complete You are correct. Those are the same things I have on my list before fabricating a shifting series of false legal justifications for withholding the required disclosure. A Payment/Cash to Close Illustration was provided instead a document containing a disclaimer written by their own legal team stating : THIS IS NOT A LOAN ESTIMATE OR PART OF A LOAN ESTIMATEREQUIRED UNDER THE REAL ESTATE SETTLEMENT PROCEDURES ACT. That initial violation is fully documented. * * * This supplemental complaint addresses what happened after on XX/XX/XXXX * * * CONTINUED VIOLATION 1 LOAN ESTIMATE ISSUED WITH MANDATORY FIELD MISSING After regulatory pressure forced K. Hovnanian American Mortgage to issue a Loan Estimate on XX/XX/XXXX, the document was found to be missing the occupancy type classification a mandatory required field under 12 CFR 1026.37 ( a ) ( 9 ). This field must state whether the property is a primary residence, secondary residence, or investment property. It does not appear anywhere on the three-page Loan Estimate issued by XXXX XXXX XXXX This omission is not accidental. XXXX XXXX own written pre-LE communications explicitly referenced investment property seller contribution limits proving he knew my occupancy type from the beginning of this transaction. He withheld this classification from the formal disclosure after being forced to issue the LE under regulatory pressure. A Loan Estimate missing a mandatory field does not satisfy the TRID disclosure requirement under 12 CFR 1026.19 ( e ) ( 1 ) ( iii ). The CFPB has stated that missing required fields constitute violations of Regulation Z regardless of whether the consumer was harmed. This means the TRID violation documented in my initial complaint has not been remedied. The LE issued after regulatory pressure remains legally defective. CONTINUED VIOLATION XXXX DEFECTIVE LOAN ESTIMATE ISSUED WITH IN PROGRESS WATERMARK The Loan Estimate issued on XX/XX/XXXX carries a large In Progress watermark across all three pages. A valid final Loan Estimate must be a completed document as required under TRID. A document marked In Progress raises serious questions about whether this constitutes a legally valid final disclosure. If this document is not a valid final LE then the TRID violation from my initial complaint continues unabated. If it is claimed to be a valid final LE then issuing a final federal disclosure document marked In Progress is itself a compliance failure demonstrating the inadequacy of K. Hovnanian American Mortgages compliance processes. CONTINUED VIOLATION 3 MATERIAL MISREPRESENTATION OF LOAN COSTS NOT REFLECTED ON LE Prior to issuing the Loan Estimate XXXX XXXX provided written communications stating that both the 5.25 % and 5.5 % rate scenarios cost a total of XXXX points approximately {$39000.00} on a {$420000.00} loan. These points were represented as real costs determining which rate and seller contribution structure was available to me. The formal Loan Estimate shows zero discount points and zero lender credits anywhere on the document. Nearly {$40000.00} in costs described in writing to influence my mortgage decision do not appear anywhere in the formal disclosure. This discrepancy constitutes either : A deliberate misrepresentation of loan costs in prior written communications used to influence my decision making a UDAAP violation under Dodd-Frank. Or an undisclosed third party payment of points not appearing on the Loan Estimate a TRID and RESPA disclosure failure. Either way the formal Loan Estimate issued after my initial complaint contains a material unexplained discrepancy from prior written representations and no explanation has been provided. CONTINUED VIOLATION 4 CREDIT REPORT FEE INCREASED BETWEEN INFORMAL DOCUMENT AND FORMAL LE The Payment/Cash to Close Illustration provided in lieu of a Loan Estimate showed a credit report fee of {$370.00}. The formal Loan Estimate issued on XX/XX/XXXX shows a credit report fee of {$750.00} a 100 % increase. This doubling of a specific fee between the informal document used to influence my decision making and the formal disclosure issued after regulatory pressure is consistent with deliberate understatement in the informal document. The informal document showing lower fees created a more attractive picture to induce commitment. The formal document reveals the actual higher fee once commitment was being sought. This is the precise predatory practice TRID was enacted in XXXX to prevent using informal non-binding documents with understated costs to influence buyer decisions while reserving the true costs for formal disclosure when the buyer is already committed. CONTINUED VIOLATION 5 ONLY ONE OF TWO PRESENTED RATE SCENARIOS FORMALLY DISCLOSED XXXX XXXX presented two rate options in writing prior to issuing the Loan Estimate : Option A : 5.25 % rate with 1.25 % points and 0.75 % seller contribution toward closing costs Option B : 5.50 % rate with 2 % seller contribution toward closing costs A formal Loan Estimate was issued for Option B only. No Loan Estimate was issued for Option A. The 5.25 % option saves approximately {$65.00} per month in principal and interest compared to the 5.5 % option. Over 30 years that represents approximately {$23000.00} in savings. The difference in seller contribution between the two options is approximately {$6800.00}. The net long term benefit of the 5.25 % option is approximately {$16000.00} over the life of the loan. By formally disclosing only the more expensive option while presenting both verbally K. Hovnanian American Mortgage denied me the ability to make a formal informed comparison between the options which is the fundamental purpose of the Loan Estimate under federal law. Selectively disclosing only the option that costs the consumer more over the life of the loan while withholding formal disclosure of the less expensive alternative is a deceptive practice under Dodd-Frank UDAAP . CONTINUED VIOLATION 6 HOA AMOUNT OMITTED FROM LOAN ESTIMATE The Loan Estimate issued on XX/XX/XXXX checks the HOA box under Estimated Taxes Insurance and Assessments implying inclusion but simultaneously marks HOA as not in escrow and excludes it from the Estimated Total Monthly Payment of {$2600.00}. The HOA dollar amount does not appear anywhere on the three-page Loan Estimate despite being a mandatory periodic payment obligation. Under TRID Regulation Z 12 CFR 1026.37 ( c ) the Loan Estimate must disclose the complete periodic payment obligation. My actual monthly payment obligation is {$2800.00} {$210.00} more than the {$2600.00} figure prominently displayed on page XXXX. As an investment property buyer my entire return on investment calculation depends on accurate monthly payment figures. This XXXX XXXX monthly understatement {$2500.00} annually materially affects my ability to evaluate the investment and constitutes an incomplete payment disclosure under federal law. CONTINUED VIOLATION 7 CONTINGENT SELLER CREDIT CONSTITUTES ILLEGAL KICKBACK The Loan Estimate issued on XX/XX/XXXX shows a seller credit of {$10000.00}. This amount is identical to the cash deposit on sales contract of {$10000.00}. K. Hovnanians own promotional materials state that buyers must finance through their affiliated mortgage company to receive financial promotions. A seller credit contingent on using an affiliated lender constitutes a thing of value given in connection with a referral of settlement services an illegal kickback under RESPA Section 8 ( a ). The appearance of this contingent credit on the formal Loan Estimate does not legitimize it. Disclosing an illegal arrangement does not cure the underlying RESPA violation. CONTINUED VIOLATION 8 INACCURATE NMLS DISCLOSURE ON FORMAL LOAN ESTIMATE XXXX XXXX NMLS number appears inconsistently across three documents : The Payment/Cash to Close Illustration lists : NMLS XXXX The formal Loan Estimate issued XX/XX/XXXX lists : NMLS XXXX / XXXX The K. Hovnanian American Mortgage licensing page lists : XXXX Federal regulations require accurate NMLS disclosure on all mortgage documents. The inconsistency across documents issued by the same loan officer in the same transaction constitutes inaccurate NMLS disclosure a reportable regulatory violation that calls into question the accuracy of all disclosures made by this loan officer. CONTINUED VIOLATION 9 CONSTRUCTION LOAN CHECKBOX ELIMINATES ALL CONSUMER PROTECTIONS The Loan Estimate issued on XX/XX/XXXX has the construction loan box checked on page XXXX. This checkbox triggers a provision allowing K. Hovnanian American Mortgage to revise the Loan Estimate and every number it contains at any time before 60 days before closing. This means : The interest rate can change. The fees can change. The seller credit can change. Every number that was informally represented and formally disclosed can be revised without limitation until 60 days before closing. Combined with the rate not being locked as confirmed on page 1, checking the construction loan box on what appears to be a standard purchase transaction eliminates every consumer protection the Loan Estimate is designed to provide. The document satisfies the technical requirement to issue an LE while providing no meaningful binding protection to the consumer. The CFPB should investigate whether the construction loan checkbox is being systematically applied to standard purchase transactions at K. Hovnanian communities to circumvent the consumer protection purpose of the Loan Estimate requirement. CONTINUED VIOLATION 10 MANAGER AWARE OF VIOLATIONS FAILED TO REMEDY Supervising manager XXXX XXXX ( NMLS # XXXX ) was copied on detailed written documentation of every violation listed in this supplemental complaint before the Loan Estimate was issued. He committed to a XXXX resolution call and to delivery of the Loan Estimate by morning. The Loan Estimate arrived late and the call did not happen on schedule. A sales manager subsequently called and verbally acknowledged some fault while unable to provide coherent explanations for the documented violations. XXXX XXXX awareness of these violations combined with his failure to ensure a compliant Loan Estimate was issued creates supervisory liability under CFPB examination standards. A supervising manager who receives documented notice of compliance failures and allows a defective non-compliant Loan Estimate to be issued anyway has failed his supervisory obligations under federal mortgage licensing standards. PATTERN OF SYSTEMATIC INSTITUTIONAL VIOLATION The violations documented in this supplemental complaint are not the result of individual error by XXXX XXXX. They reflect systematic institutional practices because : The Payment/Cash to Close Illustration used in place of the LE is a standardized company template designed by their corporate legal team with RESPA written into its own disclaimer. The construction loan checkbox appears to be systematically applied to purchase transactions to eliminate consumer protections. The occupancy type field is systematically omitted from Loan Estimates issued to investment property buyers as confirmed by at least two other investment property buyers at different K. Hovnanian communities who reported identical treatment. The contingent seller credit structure is a company wide policy applied across all K. Hovnanian communities as confirmed by their own promotional materials. At least two other investment property buyers at K. Hovnanian communities reported within the last six months that they were given seller contribution structures exceeding investment property limits, had rates changed after contract execution, and had earnest money withheld when transactions collapsed due to lender misrepresentation.

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation