Consumer complaint received 2024-04-11 00:00:00
Product: Mortgage — VA mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage — Loan estimate or other related disclosures
Company: Rocket Mortgage, LLC
State: NC

Complaint narrative:
This is a continuation to my previous complaint ( # XXXX ) that was not resolved and prematurely closed. 

It is accurate that we signed our closing document per our understanding that the money would be disbursed to us to apply to our creditors ; however, the documents provided were sequentially unclear in two specific ways detailed below, leaving us both unaware that our money would be disbursed as checks to creditors and what creditors were even being paid. The closing documents with financial information redacted are attached hereto ( Attachment A ) as evidence of the following : 1 ) On page 15 of the closing documents. It vaguely states that we may receive checks made out to creditors. On the immediate next page of the closing documents titled, How Would You Like to Receive Your Money, we selected that funds should be disbursed to our bank account via ACH payment. If checks were being made out to creditors, this would be the sensible place to declare this with amounts and creditors listed, however, there was no indication that our money would be distributed anywhere but to our bank account. 

The next listing of debts in the closing documents is on p. 69 in the Closing Disclosure, which appeared to be pulled from our credit report. We understood the listing to be just a credit report summary as it is just a random table amongst numerous other listings within the document. Still, there is no explicit statement that checks would be made to the listed creditors here, or anywhere in the 161 page document. 

2 ) We understood the requirement to use the money from the equity disbursement toward our debt consolidation ; however, we never discussed with the loan officer any specific debts to be paid with our disbursements, nor did we ever agree explicitly in writing that checks would be sent to the listed creditors. Had the loan officer discussed debts to be paid with us, this would not have been the list and we would have disclosed other debts to be paid that would have a significantly larger impact on our debt to income ratio and minimize our monthly payments to ensure we could meet the new monthly mortgage cost under the refinance, and ultimately, improve our financial position. 

Specifically, we kept a spreadsheet of debts we planned to pay with the refinance funds shown in our personal XXXX sheet ( Attachment B ) dated XX/XX/2023, attached hereto. By misallocating our funds, Rocket Mortgage prevented us from paying {$9700.00} of debt in the way we had planned. We changed our plan the best we could ( Attachment C ) but the damage had been done. There was no choice but to pay {$9700.00} on our credit card because the XXXX debts had to be paid as a lump sum. We incurred large interest penalties and brought our credit card balance back to an unmanageable level in conjunction with the new mortgage. The total of our credit cards new minimum payment plus our new mortgage was slightly more than the monthly payments of all our debts before the refinance ( Attachment D ). Furthermore, our plan outlined in Attachment D accounted for completely paying off our XXXX credit card and debts with large cumbersome monthly payments. This fell through due to the unclear application of funds. 

The Truth in Lending Act is meant to help protect average borrowers like us from predatory lending practices. As an average borrower with no financial background, we had no idea there was a difference between how a debt consolidation loan is disbursed versus our previous experience with refinancing our home. 

Upon first bringing this to the attention of our Rocket Mortgage loan officer after finding out about the checks, he said there was no other way to get our loan approved if he hadnt gone this route. This should have been made clear and options provided to us before closing, not with him blindly selecting creditors from our credit report and making checks out to them with money from the equity in our house. Rocket Mortgage stole our money and misappropriated the funds in a way we did not know of, anticipate, nor agree to. 

While Rocket Mortgage could provide our phone recordings to support these claims, the closing documents alone are blatantly unclear. Please hold Rocket Mortgage accountable and require them to change their processes and paperwork.

Company response to consumer: Closed with explanation