Consumer complaint received 2020-08-02 00:00:00
Product: Mortgage — Conventional home mortgage
Issue: Trouble during payment process — 
Company: Flagstar Bank, N.A.
State: CO

Complaint narrative:
Days after setting up automated withdrawals with my initial loan servicer, the loan was transferred to the service of Flagstar. As a result, the automatic payment feature that I had just implemented ( please see attached autopay confirmation ) was interrupted. It would be more than four months before I realized that none of my mortgage payments had been withdrawn. I understand this is a long time without realizing withdrawals were not being made. But, a quick look at my credit history and its clear that the methods I used to ensure my bills were paid was successful. One hundred percent successful until this incident. 

This was, and still is, absolutely sickening to me. My biggest fear related to the home purchase was specifically being late on a payment and damaging my credit. And this is exactly the reason I set up automatic payments in the first place. To remove human error. To give me peace of mind. To know that I will never be late on any payment to a lender. That is also why my credit report and credit score are near perfect ( again, the only blemish being this issue with Flagstar ). Every single other account I have open currently has no record of any late payment. 

XX/XX/XXXX was the first time I was made aware that my automated monthly mortgage payments had not been processed. The situation was aggravated by a long period of time between closing and the date of the first payment. This concerned me, so I set up autopay with XXXX and scheduled the first payment well in advance of the due date. I did this specifically to protect myself against any possible problems that can occur when first initializing autopay. Additionally, and even though it would never be an issue, I established overdraft protection with my personal bank, XXXX XXXX. A week or two after setting up autopay with XXXX, I received a hard copy confirmation, via mail, verifying autopay was set up successfully. 

After receiving that letter, I was supremely confident that I had covered all my bases. I had done everything possible to ensure my mortgage payments would never be missed, late, or not received for any reason. Or, so I thought. There would be more than four months between me receiving the confirmation letter from XXXX and me to go through my junk mail. Somewhere in that pile of junk was a letter from a bank, of which I had never heard before, trying to get my attention with mentions of litigation, missed mortgage payments, debt collection agencies, foreclosure, and more.. After re-reading a few times, frantically combing through my bank statements ( still, I thought it was a misunderstanding ), I came to the understanding, for the very first time, that a new company ( XXXX XXXX ) had purchased my loan, that the service provider was now different, and with this change the new provider ( Flagstar Bank ) would now require that I go through the automated payment sign-up process again in order to continue them. To my knowledge, I didn't receive any phone or email messages letting me know there was any sort of issue or problem. Indeed, in late XX/XX/XXXX, two months after the first missed payment, I was approved for an auto loan. My credit was scrutinized during this process and came back with nothing that would suggest I was delinquent on my mortgage. 

Incredulous, I immediately called XXXX and spoke with a representative. I let them know my non-payment had nothing to do with insufficient funds, or any reason other than honest oversight and unfortunate coincidence. This was my first home purchase, and I was not aware that the first month is typically when these mortgages are purchased by other companies to be used as investment securities. I still would have assumed the automated payments would continue, but I would have been more vigilant over my bank statements to ensure the money was being automatically withdrawn. 

I was a wreck and the XXXX representative was fantastic that day ( XX/XX/XXXX ), and quickly relieved my concern and helped me make things right. Unfortunately, her calm dont worry about a thing, well take care of it right now, belied just how serious this situation was, and how it could haunt me for up to SEVEN YEARS!! As far as credit reporting and future loan opportunities are concerned, having a 90-day late mark on my history is potentially as troubling as having a personal bankruptcy. 

Unaware of the severity of the situation at the time, I ultimately paid the entire lump-sum to get current ( {$7000.00} ). I did not ask for any sort of accommodation or to enroll in payment plan installments as this was a technical issue, not a financial distress situation ( which I can prove and have offered to prove ). I also established autopay with Flagstar that same day and have been vigilantly overseeing payments to ensure this never happens again, which, from my credit report, shows clearly that it has not. 

Fast forward to XX/XX/XXXX. With mortgage rates reaching all-time lows, I reached out to my broker to inquire about refinancing as I was hoping to take advantage of the lowered interest rates. He informed me that an initial pre-verification showed that I would be approved for a 3.25 % interest rate. But he also informed me of a 90-day non-payment disclosure on my credit report from Flagstar. I was in disbelief upon hearing this. The missed payments were unquestionably due to a technical issue. The account was made current as soon as the error was discovered. And the person I spoke to made it seem as though no credit agencies had or would be contacted. 

I explained all the above to my mortgage broker. Unphased, he replied that because this was a technical issue, I should have no problem disputing it by calling or writing Flagstar, and that they would be able to remove it from my credit report. So, after speaking with my broker, I mailed a letter to Flagstar detailing the events and asking that they remove the 90-day non-payment from my credit report. I received a reply a few weeks later stating my request was denied. I was incredulous. My entire adult life making sure I kept an impeccable credit history, completely wiped away by one technical oversight.

Since then, I have placed four phone calls to Flagstar, waiting on hold for at least 30 minutes in all four instances, and have spoken with more than five separate agents. They all stated that since they tried to contact me, there was no fault on their end and they would not entertain the idea of removing this from my credit report. My latest phone calls were placed this past XXXX as I had been told from my mortgage broker that after one year, I may be able to call again to see if my credit report could be adjusted. The representatives at Flagstar continued to be uninterested in hearing my side of the story, or that is was even plausible that someone wouldnt receive mail or voicemails from them. What I found to be surprising and insulting was the refinancing offer from Flagstar in XX/XX/XXXX XXXX attached ) for a lower interest rate only to be told over the phone that I was ineligible for that offer due to the 90-day non-payment they refuse to remove.

This entire situation has been a nightmare and the fact that it could remain on my credit report for possibly seven years is incredibly distressing. I am clearly not someone with questionable credit or a questionable credit history. My credit is excellent, and my entire credit report is flawless up until Flagstar acquired the loan from XXXX and my automatic payments were no longer being accepted. This was in no way due to financial distress - which I was, and am more than willing, to prove - and my credit reflects this.

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