Consumer complaint received 2025-12-21 00:00:00
Product: Mortgage — VA mortgage
Issue: Closing on a mortgage — Closing disclosure or other related disclosures
Company: Rhode Island Housing and Mortgage Finance Corporation
State: RI

Complaint narrative:
Executive Summary RI Housing mislabeled my {$3900.00} VA funding fee as a mortgage insurance equivalent amount, gave contradictory explanations about whether the fee was paid at closing or financed, and processed the fee through mortgage-insurance- and escrow-coded systems typically associated with FHA loans. My XXXX XXXX  was closed alongside {$17000.00} in XXXX Down Payment Assistance, yet RI Housing can not clearly explain which funds paid the XXXX funding fee or why it was repeatedly treated as single-year mortgage-insurance-like for disclosure, servicing, and tax reporting purposes. As a result, I can not verify my true loan balance, the proper classification of the fee, or the accuracy of my IRS reporting. 

This coordination of FHA-style labels, insurance-coded processing, and federal pandemic-relief funds suggests a systematic practice rather than an isolated error.

This complaint supplements prior complaints by addressing RI Housings XXXX RESPA responses, IRS Form XXXX reporting positions, and XXXX mortgage insurance equivalent coding of a VA funding fee, which were not previously reviewed.

Background : VA Loan and Down Payment Assistance I obtained a VA mortgage loan serviced by Rhode Island Housing ( RI Housing ) with a VA funding fee of {$3900.00}. The loan closed on XX/XX/XXXX. 

At closing, I received {$17000.00} in Down Payment Assistance ( XXXX ) administered by RI XXXX and later identified as funded under an XXXX subaward. 

On my Closing Disclosure dated XX/XX/XXXX, the VA funding fee of {$3900.00} is shown as paid at closing, with {$0.00} in closing costs financed, as required under 12 C.F.R. 1026.38. Based on this disclosure, I understood the fee was paid once at closing and not added to the loan principal. 

Issue # 1 : Mischaracterization of XXXX  Funding Fee Using Mortgage-Insurance Terminology ( XXXX XXXXXXXX ) RI Housing has described the XXXX  funding fee using mortgage-insurance terminology, stating in discovery : The financing of the XXXX  funding fee listed as mortgage insurance equivalent amount is referenced in Section L4I of the 1003. 

This description does not appear on my Closing Disclosure, which shows the XXXX  funding fee as paid at closing with {$0.00} financed. 

XXXX  loans do not have mortgage insurance. The only charge in the amount of {$3900.00} is the XXXX  funding fee. Labeling that fee as a mortgage insurance equivalent amount is misleading, inconsistent with XXXX  disclosure principles ( including XXXX  XXXX XXXX and VA XXXX XXXX XXXX, and directly conflicts with the Closing Disclosure. 

Issue # XXXX : Contradictory Treatment of the Same {$3900.00} Charge RI Housings records and explanations describe the same {$3900.00} in mutually inconsistent ways : Closing Disclosure : Paid at closing ; not financed Discovery / 1003 : Labeled using mortgage insurance equivalent terminology RESPA response : The VA funding fee was financed by you RESPA response : Funds debited from an internal XXXX XXXX XXXX ( XXXX XXXX XXXX ) disbursement account XXXX IRS Form XXXX : The entire {$3900.00} reported in Box 5 as a single-year mortgage insurance premium Mortgage statements : A later entry labeled XXXX XXXX XXXX in the same amount RI Housing later stated that this XXXX XXXX XXXX transaction actually moved the funds from XXXX  to RI Housings XXXX XXXX XXXX XXXX XXXX XXXX & XXXX ) disbursement account, rather than to an external investor. 

These descriptions create an irreconcilable and potentially duplicative accounting of a XXXX fee that should have been disclosed and treated consistently. 

Issue # 3 : Improper Commingling of a XXXX  Funding Fee with Mortgage-Insurance and XXXX-Coded Systems The XXXX  funding fee is not mortgage insurance and is not an XXXX  item.

RI Housing nonetheless : coded the XXXX  funding fee as mortgage insurance equivalent, reported the full amount as a single-year mortgage insurance premium on IRS Form 1098, processed related movements through XXXX XXXX XXXX disbursement systems, and later explained XXXX-labeled transactions as internal XXXX XXXX XXXX transfers. 

If the XXXX funding fee had in fact been financed, it would not have been reported as a single-year amount in the full dollar value of the fee. This treatment is inconsistent with RI Housings claim that the fee was financed and further obscures how the fee was actually handled. 

Issue # XXXX : XXXX and Mortgage-Insurance-Equivalent Treatment of a XXXX Funding Fee Across multiple systems and years, RI Housing treated my XXXX funding fee as if it were XXXX-style mortgage insurance : Reporting the entire {$3900.00} on the XXXX IRS Form XXXX, XXXX XXXX ( Mortgage XXXX premiums ) as a single-year amount, even though XXXX  loans do not have mortgage insurance ; Describing the fee internally as a mortgage insurance equivalent amount tied to the 1003 ; Routing the same amount through internal XXXX XXXX XXXX  disbursement accounts ; and Later asserting that the 1098 reporting was accurate and compliant and would not be corrected. 

This reflects XXXXstyle handling of a XXXX  funding fee, allowing RI Housing to treat the fee as a movable, mortgage-insurance-like asset rather than a XXXX-specific charge with distinct legal and tax treatment XXXX 

Issue # XXXX : XXXX Processing Combined with XXXX-Funded DPA The final Closing Disclosure lists RI Statewide XXXX XXXX XXXX XXXX {$17000.00}, later identified as XXXXfunded. 

RI XXXX has not disclosed whether XXXX XXXX regulations impose restrictions on using pandemic-relief funds in conjunction with XXXX  funding fees, or whether XXXX  reporting requirements mandate specific documentation of how the XXXX was deployed when XXXX fee handling was also used. 

Issue # XXXX : Inconsistent Servicing Explanations ( RESPA Responses ) In responses to my RESPA Requests for Information ( submitted XX/XX/XXXX, XX/XX/XXXX, XX/XX/XXXX, XX/XX/XXXX, XX/XX/XXXX, and XX/XX/XXXX ), RI Housing stated that the XXXX  funding fee was financed, moved through internal XXXX XXXX XXXX accounts, and reflected through XXXX-labeled transactions. 

As of XX/XX/XXXX, RI Housing has not provided a coherent explanation reconciling these statements with the Closing Disclosure. 

Consumer Harm As a veteran who relied on XXXX  XXXX protections : Based on RI Housings own statements, the {$3900.00} XXXX  funding fee has been variously described as paid at closing, financed, reported as a single-year mortgage insurance amount, and moved through XXXX- and insurance-coded systems. This makes it impossible for me to determine whether the fee was counted more than once or whether my loan balance and IRS reporting are accurate. 

Other XXXX  borrowers receiving RI Housing assistance may be similarly affected.

Regulatory Concerns This complaint raises concerns under : TILA / TRID ( 12 C.F.R. 1026.38 ) RESPA ( 12 C.F.R. Part 1024 ) XXXX  Handbook 26-7 IRS reporting requirements The coordination of FHA-style terminology , single-year mortgage-insurance coding, XXXX-adjacent processing, and ARPA-funded DPA indicates a systematized workflow affecting VA borrowers. 

What This Complaint Seeks This complaint asks the CFPB to : Investigate RI Housings XXXX-style mislabeling and treatment of XXXX  funding fees. 

Determine whether VA funding fees were improperly reported as single-year mortgage insurance premiums on IRS Forms 1098.

Require RI Housing, under penalty of regulatory action, to provide a definitive loan-level accounting tracing the complete chain of custody for the {$3900.00} XXXX  funding fee. 

Evaluate whether VA funding fees were improperly routed through XXXX- or insurance-coded systems. 

Require audits of similarly situated VA loans and correction of inaccurate IRS reporting. 

These practices undermine the federal disclosure and XXXX  protections specifically designed to prevent veterans from being overcharged or misled about their XXXX  home loans.

Company response to consumer: Closed with explanation