Consumer complaint received 2018-01-15 00:00:00
Product: Mortgage — FHA mortgage
Issue: Struggling to pay mortgage — 
Company: Evergreen Moneysource Mortgage Company
State: WA

Complaint narrative:
I am asking the Consumer Financial Protection Bureau to investigate my Lender for not Qualifying our Mortgage correctly and our Ability to Repay because of their failure to do their duty of care in investigating the documents and evidence given to them when financing our loan. They were careless and did not follow normal standards. Now XXXX XXXX is trying to foreclose on our property, so they can profit from our demise. If they would have followed the FHA minimum standards and disclosed our rights to us when we switched from a Conventional Loan to a FHA Loan, we would not be in the situation we are in today. 

The CFPB has adopted the Ability to Repay requirements so, the Lender, would use reasonable measures to investigate consumers looking to buy a home. This also requires them to use reasonable measures to read all evidence presented to them and not ignore the information given to them when processing the loan. Only the Mortgage Lender and Underwriters have ALL information, documents, disclosures such as form 17, appraisals, reserve studies, estimates for damages from contractor, holdback agreements, HOA/Condo Association CC & Rs presented to them all together. They are responsible for going through them and making sure everything is legal. Ignoring evidence may affect the ability to repay a loan. XXXX XXXX XXXX, was responsible for failing to do their duty in lending. XXXX XXXX did not do their duty to disclose, investigate and evaluate the property. Evidence from Third party participants and inconsistent standards were used, without reasonable justification. This has caused us financial harm and may cause us to lose our home. 

We were preapproved for a Conventional Loan in XX/XX/XXXX. 

XX/XX/XXXX The Appraisal was done on by XXXX XXXX XXXX for our Conventional Loan. 
A holdback agreement was drawn up for the water intrusion damages at the backslider door and the floor in front of it. The seller had a dog and we were under the impression she had left the door open and water had gotten in. 

We switched to FHA financing on XX/XX/XXXX. 
The only changes disclosed to us, by XXXX XXXX, was the percentage down would change to 3.5 % and the closing date would be delayed 15 days. We were told everything else had to stay the same. 

A Direct Endorsement Underwriter was assigned to our loan. This Underwriter verifies everything on the loan is done correctly and can void a loan even after the closing date, if she finds that the property is not insurable due to damages. We were not informed that we had a Direct Endorsement Underwriter or that she could cancel the loan. We also were not told we had the right to have all damages fixed prior to purchase and change the loan agreements, now that we were going FHA. Evergreen did not disclose the water intrusion damages holdback agreement on the HUD-1 agreement or any FHA paperwork. 

A FHA minimum appraisal was required to be done. Evergreen is responsible for making sure the FHA minimum appraisal is done. Instead, they used the Conventional Appraisal done on XX/XX/XXXX that neglected to do the FHA minimum standards. There was no inspection of the roof, attic or notes of the damage at the slider door/floor. Instead, Evergreen had the appraiser sign and date it for XX/XX/XXXX and submit it has a FHA Appraisal. This Breach of Duty caused a manipulation of the value of the home. Evergreen had a duty of care when they decided never to disclose to us that we had any rights to change the Conventional loan agreement, when we switched to the FHA loan. ( We did not receive the appraisal until 2 weeks ago. That is when we realized they did not follow the standard of care. ) The Direct Endorsement Underwriter, XXXX XXXX, from XXXX XXXX had a duty to double check that ALL REASONABLE standards and a proper minimum FHA appraisal were to be done to check ALL Documents were properly filled out, signed and there was nothing that wasnt improper. Many things were missed and red flags that a reasonable underwriter and lender should know to look for. The New roof was never inspected or checked for permits. The HOA never pulled permits, so it is not up to code and there are no warranties. Also, FHA requires our utilities be metered separately, which they are not. These are FHA minimum standards that the DE Underwriter ignored and would have been caught in a FHA minimum appraisal. There were other significant red flags the DE Underwriter should have known to look for. If she did not know these minimum standards, she should not have a DE underwriter certification. It is the Direct Endorsement Underwriters responsibility to investigate the buyer and the property to make sure they both are viable candidates for the ATR and to be insured by the FHA. If the property wont last the time of the loan, it can not be insured. 

There were fraudulent statements made by the seller and her agents that were ignored by Evergreen. The seller disclosed on Form 17 that there were NO WATER INTRUSION in the home and NO DOORS had any damage. The DE Underwriter should have notice that the sellers disclosure statements did not match and that her contractor did an estimate for the water intrusion, prior to us getting the inspection results back. The date on the estimate from the sellers contractor, XXXX XXXX from XXXX, is XX/XX/XXXX and our Inspection was done on XX/XX/XXXX. How did they know the water intrusion damage was there? The seller and her realtor said there was NO WATER INTRUSION on Form 17, but knew enough to get estimates for water intrusion before we had results back from our inspection. Evergreen should have detected the fraud by the Seller, the Realtor. That  is the DE Underwriters duty of care to make sure these kinds of fraudulent misrepresentations are not used to finance a loan. This damage and failure to disclose will ultimately cause this loan to fail because we can not resale this home. We just found out that the Seller 's Realtor and Contractor are married and were using her maiden name to cover up that they were sharing information to our detriment. 

We signed a holdback agreement as a part of our Conventional Loan in good faith that the Seller was being honest. Evergreen had the evidence that the seller and her Realtor/Contractor were using Fraudulent Statements. We did not want to do the Holdback agreement and would have cancelled it if we were given ALL THE FACTS. WE FELT THIS WAS A SCAM. The DE Underwriter ignored the evidence and used inconsistent standards without reasonable justification. The seller and her contractor even tried to quit, so the seller would get the Holdback monies returned. They had planned the entire scam and Evergreen was helping them.

XXXX XXXX, the Property Manager, XXXX XXXX XXXX and the XXXX XXXX XXXX XXXX Condo Association also knew of the water intrusion and did not do their duty to restore the limited common area. They did not disclose that they had already approved over 10 % of the budget for XX/XX/XXXX and XX/XX/XXXX. The Property Manager supplied Evergreen with the XX/XX/XXXX Resale Certification, but gave us the XX/XX/XXXX Resale Certificate. The XX/XX/XXXX did not disclose the failing gutters, no waterproofing under the vinyl siding, or around the windows/doors and no sealant. We were given false information to base our buying decision. Evergreen should know the Condo Laws, that make them responsible for ALL DAMAGES and required them to fix them prior to purchase, but instead, they used fraudulent statements to finance a loan under the FHA. A Lender and Underwriters should know the Laws or they should not be a Lender. This has caused our home damages and has allowed the HOA to abuse their powers to restore. In the end, Evergreen will profit from our demise by getting the FHA to insure the loan when it fails. They could have prevented all damages, just by following the standard of care, instead they used inconsistent standards without reasonable justification. 

We reported further damages caused by the Seller, within 3 business days after the closing date, that showed water intrusion in the living room, that the seller hid. The DE Underwriter had the power to void the loan due to these damages. Instead, Evergreen ignored our report of the further water intrusion and sellers damages done to the home. 

Lenders should be held liable for using fraudulent statements and appraisals to finance a loan. They are the eyes and ears for the buyer to make sure the everything is disclosed, so it does not affect our ability to repay the loan. That the vinyl siding, windows/doors have no waterproofing under and around them, allowing water to seep into our walls and cause mold, wood rot and moisture intrusion. Plus, there is no sealant under our doors that allows water to rush in. Evergreen did not disclose all the documents, rules, and laws to us and knowingly made a misstatement of material fact when they said a FHA Appraisal had been done. They knowingly concealed our rights of being able to redo the FHA Loan and have all damages fixed prior to purchase or be able to cancel the loan. We relied on their facts to our detriment. 

Evergreen is responsible for not disclosing the truth in lending. They allowed fraudulent statements by the Seller, her Realtor, her Contractor, the Appraiser, and the HOA to be given and decided to ignore it, then not disclose it to us or on the HUD-1 statements or FHA paperwork. Evergreens failure in FHA lending laws that has caused us and may cause FHA to pay for a loan that will fail. The little details matter in Mortgage Loans. Evergreen had ALL INFORMATION and we were only given partial information. 

Our home has significant damages caused by the failing gutters, no waterproofing under the vinyl siding or around the windows/doors and the missing sealant under the front and slider doors. We have mold, wood rot and live in poor/substandard conditions. We are fighting and doing everything in our power to save our home and investment. The XXXX Associations Fraudulent reporting to the FHA should be cause for this project to be removed from the FHA list. Our roofs are not up to code and we will never be able to sell our home. FHA will end up paying for a Foreclosed home when we run out of money, due to Evergreens failure of duty of care.

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