Consumer complaint received 2026-01-22 00:00:00
Product: Mortgage — FHA mortgage
Issue: Struggling to pay mortgage — An existing modification, forbearance plan, short sale, or other loss mitigation relief
Company: LoanCare, LLC
State: AZ

Complaint narrative:
On XX/XX/XXXX, I submitted a complete loss mitigation application ( File Attachment A ) and written request for temporary forbearance based on dependent family medical caregiving hardship ( File Attachment B ) via electronic communication ( File Attachment C ). 

On XX/XX/XXXX, LoanCare confirmed in writing that my application was complete ( File Attachment D ). Under 12 CFR 1024.41 ( c ) ( 1 ), LoanCare was required to evaluate the complete application and issue a written loss mitigation determination within 30 calendar days. During this evaluation period, Regulation X requires the servicer to evaluate the application under the hardship asserted by the borrower and prohibits adverse servicing actions inconsistent with that protected status.

LoanCare failed to issue any lawful loss mitigation determination within that statutory timeframe.

The correspondence dated XX/XX/XXXX ( File Attachment E ) does not constitute a valid loss mitigation determination under Regulation X. It was based on a hardship classification ( unemployment ) that I did not assert or request and that directly contradicts the hardship stated in my written application and supporting documentation. LoanCare had no authority to substitute, recharacterize, or fabricate a hardship category inconsistent with my written application. Any servicing action taken on that basis is legally void and can not satisfy the servicers obligations under Regulation X. LoanCares XX/XX/XXXX correspondence therefore functioned as an unauthorized servicing action taken outside the loss mitigation framework required by Regulation X, rather than a lawful loss mitigation determination.

This was not a clerical or harmless error. Hardship classifications determine the governing regulatory framework, including borrower protections, timelines, coverage, and downstream consequences. By processing my account under a fabricated unemployment classification, LoanCare placed my loan into a different loss-mitigation pathway than the one I applied forone that reduced borrower protections, altered forbearance coverage, and advantaged the servicer. As a result, my account was processed, aged, and reported under the wrong regulatory
framework during the evaluation period itself, to my detriment and LoanCares benefit.

Further, the XX/XX/XXXX correspondence excluded XX/XX/XXXX and XX/XX/XXXX from forbearance coverage while continuing to treat those months as delinquent. An option structured this way is inherently non-performable and does not constitute a lawful foreclosure-prevention alternative under 12 CFR 1024.41 or applicable FHA/HUD servicing requirements. The document therefore can not be considered a valid offer, denial, or determination.

Because LoanCare issued an unlawful document instead of a compliant determination, my application was never lawfully evaluated, and I remained without the temporary forbearance relief and borrower protections required during the statutory evaluation period. LoanCares obligations were not tolled or satisfied by the issuance of an unlawful document.

LoanCares actions materially advantaged the servicer by allowing continued account aging and accrual of obligations during a period when statutory protections should have applied. In parallel, LoanCare reported a late payment to the credit bureaus during the protected evaluation period, causing concrete consumer harm through credit reporting that would have been prohibited had LoanCare complied with its evaluation obligations. 

LoanCares conduct is not explained by error or delay. By fabricating an unemployment hardship classification and excluding XX/XX/XXXX and XX/XX/XXXX from forbearance coverage, LoanCare structured the account to exit forbearance with manufactured arrears created solely by its unlawful handling of my application. This predictably shifts leverage to the servicer by enabling demands for immediate cure, renewed underwriting, income documentation, or acceleration toward foreclosure based on arrears that would not exist had my application been lawfully evaluated. This pattern reflects a servicing practice that, if systemic, raises supervisory concerns beyond this individual account. 

A subsequent correction or reclassification can not retroactively validate servicing actions taken under an unlawful framework or restore the statutory protections denied during the evaluation period. 

On XX/XX/XXXX, after the statutory evaluation period expired without any lawful determination, I prepared and transmitted a written notice of noncompliance to LoanCare via certified mail ( File Attachment F ). LoanCare has not issued a lawful loss mitigation determination, has not remediated the fabricated hardship classification, and has not addressed the downstream harm caused by its servicing actions. The violations described above remain unresolved.

This complaint is not a request for reconsideration or appeal. It reports completed and ongoing servicing violations arising from LoanCares failure to lawfully evaluate and service a complete loss mitigation application.

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation