Consumer complaint received 2022-11-10 00:00:00
Product: Mortgage — Conventional home mortgage
Issue: Closing on a mortgage — 
Company: Bay Equity LLC
State: MT

Complaint narrative:
Dispute with Bay Equity ( see attachments for contact information ). 

I closed on a house in Montana on XX/XX/XXXX. I was supposed to close on XX/XX/XXXX ( and had loan approval ). About XXXX hours before I was to close, I was notified by the mortgage company that they wanted to see a Judgement that is with the courts in CA, related to my divorce in XXXX. They went through each line of this Judgement and asked that I produce a XXXX IRS tax transcript. I went to the local IRS office, and they pulled this transcript which showed an outstanding liability for this tax year, which I was not aware of, prior to receiving the transcript. Related to this liability, there is no tax lien. I have never received a tax bill. I have received IRS tax refunds for the last three years. This was the second loan I did with the same lender, and this issue never came up before. This judgement is currently under review with a CA Family Law Attorney, and we are working with the CA court to get a hearing so this liability, along with other issues related to my Judgement can be reviewed and ruled on by a CA judge. The mortgage company instructed the title company to withhold $ XXXX ( in the form of a check made out to the US Treasury ), as they stated, it was to protect their position, should the IRS decide to place a lien on the home I purchased before the deed recorded. The deed has subsequently been recorded ( XXXX XXXX Montana ), and then I did a Quit Claim Deed to place my home in our family Trust, which has also been recorded ( XXXX XXXX Montana ). I was told after closing that the $ XXXX was withheld due to a lien ( which there is/was none ), then I was told it was a loan condition. The mortgage company keeps telling me different reasons and changing the terminology as to why they believe they had the authority to withhold this $ XXXX from me. I have been trying .to get them to authorize the title company to release the funds back to me, they will not. Because there is no tax bill, there is no way to attach this money to a specific debt ( as stated by the title company ), because there is no bill or proof that the money is actually owed by me. Therefore, the check has been voided and is currently being held by the title company in a " holding account ''. I worked with an attorney ( Montana ) who provided the mortgage company two Demand Letters to release the funds back to me ( attached ), which the mortgage company has not complied with. I also talked to my CA attorney, and he agrees that the mortgage company has no jurisdiction over the Judgement in the CA courts, therefore, they need to release the money back to me so it can be handled by the appropriate state court. The house sold had no lien, the house purchased is now in my Trust. The Judgement is with me as an individual. A transcript is not a bill ( as confirmed by my attorney and the title company ). I don't even know if it is me that owes the money, as it was a joint return, and for all I know the IRS is working with my ex, which is why they have not reached out to me. I paid all other obligations under the judgement, so they may be working on with my ex on this one outstanding liability. All attorney 's, the title company, and my realtor, agree that the mortgage company has overreached their authority and has none over the judgement or what is happening in the CA court. In addition, the loan has now been sold to a new lender. I asked the question to the mortgage company why they think they still can withhold this $ XXXX from me, and they will not reply. I want this $ XXXX returned to me because XXXX ) they had no right to withhold it in the first place ; XXXX ) there was no IRS tax lien ; 3 ) I had loan approval 8 hours before I was set to sign, then they requested information from me at the last minute and all I was able to produce was an IRS tax script ( which is not a bill ) showing an outstanding liability based on a judgment filed in the CA court ; XXXX ) the Montana transaction has no jurisdiction in CA ; 5 ) two Demand Letters have been sent by a Montana attorney and they refuse to comply with the demands ; XXXX ) the Judgment is currently under review in CA to resolve the liability by a CA judge ; 7 ) I had no choice but to move forward with the loan because if I didn't close on the home purchased we would have been homeless ; XXXX ) this delay caused me tremendous stress and financial burden because we had to move out of the old house with nowhere to go because of the delayed closing and pay unnecessary storage and moving expenses ( we had to be out of the old house and could not close on the new one timely ; XXXX ) the mortgage company no longer has an interest in the loan, as it was sold ; XXXX ) the house is recorded in Montana under my Trust, and therefore no lien can be placed on the house for anything that is potentially owed by me personally ; XXXX ) I don't even know if this tax liability is mine to pay. Bottom line, Bay Equity completely overstepped their authority, and this is a complete overreach related to withholding money that was not for them to withhold. The title company stated yesterday that the instructions at closing to withhold this $ XXXX made no sense, as there is no corresponding lien or tax bill to attach the check to. If the check was sent into the US Treasury, it would go into some black hole and not be applied properly. Bay Equity has made several attempts to get the title company to send in the check to the US Treasury, they will not, as there is nothing related to what is simply called out in a transcript.

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