Consumer complaint received 2024-06-12 00:00:00
Product: Mortgage — FHA mortgage
Issue: Closing on a mortgage — Closing disclosure or other related disclosures
Company: PLAZA HOME MORTGAGE, INC.
State: AZ

Complaint narrative:
I am writing to formally lodge a complaint regarding the practices of all banking and lenders run this same issue however I am specifically talking about my situation with plaza home mortgage. concerning the endorsement of loan documents and the subsequent financial implications that are not disclosed to borrowers. I believe these practices may violate the principles of transparency and fairness as intended by the Truth in Lending Act ( TILA ) and other consumer protection regulations.

Lack of Disclosure on Endorsements It has come to my attention that when signing loan documents, borrowers, including myself, are not informed about the different types of indorsements and their potential uses by the lender. Specifically, the use of blank endorsements on these documents allows the lender to transform them into negotiable instruments. These negotiable instruments can then be utilized to secure funds from the Federal Reserve or other financial entities, often with collateral requirements as low as 10 %.

Financial Implications and Transparency This practice effectively enables lenders to obtain substantial funds from these endorsed documents without the borrower 's knowledge or consent. The funds obtained through these negotiable instruments are not applied towards reducing the borrowers loan or purchase amount. Instead, they are retained by the lender, often classified as a " gift '' on the books, thereby increasing the lenders financial gain at the expense of the borrower.

Regulatory and Legal Considerations Under the Truth in Lending Act ( TILA ), lenders are mandated to provide clear and comprehensive disclosures about the cost of credit, including the annual percentage rate ( APR ), finance charges, amount financed, and the total amount of payments. While TILA does not specifically address the issue of document endorsements, the broader principle of transparency and fairness should encompass the full range of financial implications related to the loan. 

Case law, such as Rodash v. XXXX XXXX  XXXX, XXXX XXXX XXXX ( XXXX Cir. XXXX ), underscores the necessity of full disclosure under TILA. In this case, the court emphasized the importance of clear and complete disclosures to prevent unfair practices. Similarly, in In re Bassett, 285 F.3d 882 ( 9th Cir. 2002 ), the court ruled in favor of the borrower due to the lenders failure to provide adequate disclosures, reinforcing the necessity for lenders to fully inform borrowers of all terms and conditions.

Request for Resolution Given the concerns outlined above, I respectfully request the following actions : Full Disclosure : That plaza home mortgage and whomever else provides full and clear disclosure to borrowers regarding the types of endorsements on loan documents and their potential financial implications.

Review and Adjustment : That any funds obtained through the use of negotiable instruments derived from my loan documents be reviewed and I have already paid this loan off in full but i fee I am entitled to any funds and interest obtained or gained by my blank endorsement as I was not properly informed of all options or that they would use my document to obtain any additional funds at my expense.

Policy Changes : That plaza home mortgage implement policy changes to ensure future borrowers are fully informed about the endorsement process and its potential impact on their loan obligations.

I believe these steps are necessary to align with the spirit of XXXX and to uphold the principles of fairness and transparency in lending practices. I look forward to your prompt response and resolution of this matter. 

Sincerely, XXXX XXXX References to Consider : XXXX XXXX XXXX XXXX  XXXX, 16 F.3d 1142 ( 11th Cir. 1994 ) : Case emphasizing the necessity of full disclosure under XXXX. 
In re XXXX, 285 F.3d 882 ( 9th Cir. 2002 ) : Case highlighting the importance of adequate disclosures to prevent unfair practices.

Company response to consumer: Closed with explanation