Consumer complaint received 2025-07-02 00:00:00
Product: Mortgage — FHA mortgage
Issue: Closing on a mortgage — Closing disclosure or other related disclosures
Company: GERSHMAN INVESTMENT CORPORATION
State: IA

Complaint narrative:
# CFPB Complaint : Multiple Federal Lending Law Violations * * Lender : * * Gershman Investment Corp ( NMLS # XXXX ) * * Loan # : XXXX XXXX XXXX XXXX XXXX Property : XXXX XXXX XXXXXXXX XXXX XXXX, XXXX, IA XXXX * * Closing Date : * * XX/XX/year> * * Loan Amount : * * {$270000.00} ( FHA Purchase ) Loan Number : XXXX Loan Type : FHA Lender : Gershman Investment Corp. ( XXXX XXXX ) Appraiser : XXXX XXXX, XXXX XXXX Address : XXXX XXXX XXXX, XXXX, IA XXXX Closing Date : XX/XX/year> Appraisal receipt date : XX/XX/year> Closing discord receipt date : XX/XX/year> Email : XXXX Phone : XXXX # # SUMMARY OF VIOLATIONS Gershman Investment Corp committed multiple serious violations of federal lending laws during my FHA mortgage transaction, including TILA-RESPA disclosure violations, excessive fees, improper escrow collection, and acceptance of a deficient appraisal that missed critical safety issues. 

# # TILA-RESPA INTEGRATED DISCLOSURE RULE VIOLATIONS # # # XXXX. Closing Disclosure Timing Violation - * * Federal Requirement : * * Closing Disclosure must be provided at least XXXX business days before closing - * * What Happened : * * Final Closing Disclosure dated XX/XX/year>- same day as closing - * * Impact : * * Denied legally required XXXX review period for final loan terms- * * Evidence : * * CD shows " Date Issued : XX/XX/year> '' with closing same day # # # XXXX. Inconsistent Fee Disclosures- * * Issue : * * Commitment fee changed from {$1000.00} to {$1300.00} between disclosure versions without proper notice - * * Impact : * * {$250.00} increase in fees without required 3-day notice period - * * Violation : * * Changes to loan costs require new 3-day waiting period # # # 3. Appraisal Delivery Timing ( ECOA Violation ) - * * Federal Requirement : * * Appraisal must be provided at least 3 business days before closing - * * What Happened : * * Appraisal received XX/XX/XXXX for XX/XX/XXXX closing ( exactly 3 days, not " at least '' ) - * * Email Evidence : * * Lender email dated XX/XX/XXXX stating " last piece before final approval '' # # EXCESSIVE AND PREDATORY FEES # # # XXXX. Commitment Fee - * * Amount Charged : * * {$1300.00} ( 0.48 % of loan amount ) - * * Industry Standard : * * Typically $ XXXX for loan of this size - * * Impact : * * $ XXXX overcharge compared to market rates # # # XXXX. Inappropriate Buyer Agent Fee - * * Amount : * * {$390.00} charged to borrower for " Buyer Broker Fee '' - * * Issue : * * Buyer 's agent fees should not be charged to borrower - * * Impact : * * Improper fee shifting to consumer # # # XXXX. Questionable Additional Fees - * * Home Warranty : * * {$590.00} ( optional service charged as requirement ) - * * Real Estate Processing Fee : * * {$340.00} ( duplicate/junk fee ) - * * Total Questionable Fees : * * {$1300.00} in potentially improper charges # # RESPA ESCROW VIOLATIONS # # # Excessive Initial Escrow Collection - * * Amount Collected : * * 5 months of property taxes at closing - * * RESPA Limit : * * Maximum 2-month cushion plus amount needed until first payment - * * Potential Overcharge : * * Approximately $ XXXX excess collection - * * Section : * * RESPA Section 10 escrow account limitations # # FHA COMPLIANCE AND SAFETY VIOLATIONS # # # 1. Deficient Appraisal Acceptance - * * Appraiser : * * XXXX XXXX ( XXXX XXXX, XXXX ) - * * Critical Oversight : * * Failed to identify swimming pool lacks required XXXX  electrical protection - * * Safety Violation : * * Violates National Electrical Code Article 680 - * * FHA Standard : * * Appraisals must identify conditions affecting " safety, soundness, or structural integrity '' # # # XXXX. Life Safety Risk - * * Issue : * * Pool electrical system lacks XXXX protection - creates electrocution hazard - * * Observable : * * Violation was visible at electrical panel during appraisal inspection - * * Impact : * * Lender accepted appraisal missing obvious safety code violation - * * FHA Risk : * * Creates liability for FHA insurance fund # # # 3. Lender Oversight Failure - * * Responsibility : * * Lender must ensure adequate property evaluation for FHA loans - * * Failure : * * Accepted appraisal with obvious safety oversight - * * Pattern : * * Demonstrates inadequate quality control procedures # # PATTERN OF NON-COMPLIANCE These violations demonstrate systematic non-compliance with federal lending laws : XXXX. * * Multiple TILA-RESPA violations XXXX * - disclosure timing, fee changes, escrow limits XXXX. * * Consumer protection failures * * - excessive fees, improper charges XXXX. * * FHA compliance breakdown * * - acceptance of deficient safety evaluation XXXX. * * Regulatory oversight gaps * * - multiple federal law violations in single transaction # # FINANCIAL HARM TO CONSUMER - * * Disclosure Violations : * * Denied legal right to 3-day review period - * * Excessive Fees : * * $ XXXX in overcharges and improper fees - * * Escrow Overcharge : * * $ XXXX in excess escrow collection - * * Safety Risk : * * Life-threatening electrical hazard not identified - * * Total Estimated Harm : * * $ XXXX in financial impact # # REQUESTED ACTIONS # # # Immediate Relief XXXX. * * Investigation * * of Gershman 's TILA-RESPA compliance procedures 2. * * Audit * * of fee practices and escrow calculation methods XXXX. * * Review * * of appraisal oversight and quality control standards XXXX. * * Restitution * * for excessive fees and improper escrow collection # # # Systemic Reform XXXX. * * Enhanced oversight * * of Gershman 's disclosure timing procedures XXXX. * * Fee structure review * * to prevent predatory pricing XXXX. * * Appraisal quality control * * improvements for FHA loans 4. * * Staff training * * on federal compliance requirements # # # Consumer Protection 1. * * Public database entry * * to warn other consumers 2. * * Regulatory monitoring * * of future compliance 3. * * Industry guidance * * on proper disclosure timing and fee practices # # SUPPORTING DOCUMENTATION - Closing Disclosure documents showing same-day issuance - Email evidence of appraisal timing violations- Photographs of electrical panel showing GFCI violations XXXX Appraisal report with safety oversight - Fee comparison documentation To reiterate : XXXX. Nature of the Complaint This formal complaint is submitted to HUD, the Consumer Financial Protection Bureau ( CFPB ), and the Iowa Division of Banking regarding egregious violations associated with my FHA-insured loan transaction that closed on XX/XX/year>. The violations implicate the lender ( XXXX XXXX XXXX ), the appraiser ( XXXX XXXX XXXX XXXX ), and associated closing agents, and include breach of HUD guidelines, violations of the Real Estate Settlement Procedures Act ( RESPA ), misrepresentations under the Truth in Lending Act ( TILA ), and endangerment of borrower safety due to defective appraisal and closing practices. 

XXXX. FHA Appraisal Delivery Violation The FHA appraisal was not provided at least three business days before closing, in violation of 12 CFR 1026.35 ( c ) ( 6 ) ( ii ) and HUD Handbook 4000.1. The email from XXXX XXXX dated XX/XX/year>, confirmed that the appraisal was first delivered on that date, just XXXX days prior to the XX/XX/XXXX closing without any express waiver by me. FHA loans require that the borrower receive the appraisal no later than three business days before closing to allow informed review. 

IV. Property Tax Overcharges Despite the seller occupying the property through XX/XX/year>, I was improperly charged for property taxes covering a period before I took possession. Page 3 of the Closing Disclosure reveals I was assessed {$1300.00} in prepaid property taxes and escrow funding for taxes while the seller lived there. This constitutes an unjust enrichment of the seller and RESPA violation for improper allocation of settlement costs. 

V. FHA Minimum Property Standards Violation XXXX  and Pool Safety The home includes an outdoor swimming pool and adjoining electrical outlet that lacks XXXX protection, in direct violation of HUD Handbook 4000.1, Section II.A.3.a ( 2 ) ( a ) and 24 CFR 200.926d ( e ) ( 2 ) ( iii ). This constitutes a life-threatening safety hazard and should have disqualified the home for as-is FHA appraisal approval. 

The appraiser falsely certified that the property met FHA health and safety standards, creating liability under the Uniform Standards of Professional Appraisal Practice ( USPAP ), 12 U.S.C. 1708 ( c ), and potentially the False Claims Act.

VI. Appraisal Deficiencies and Inflated Valuation The appraisal failed to reflect several observable deficiencies and exaggerated property value. No repair conditions were included despite issues such as missing XXXX, electrical system concerns, and other visible defects. HUD Handbook 4000.1 requires appraisers to require repairs when physical deficiencies or conditions affect the safety, soundness, or structural integrity of the property. 

The value should have been adjusted downward or made subject to repair. This constitutes appraiser negligence and necessitates disciplinary referral.

# # CONCLUSION 1. Full reimbursement of all improperly charged taxes.

2. Lender and appraiser referral to HUD Mortgagee Review Board.

3. Immediate re-inspection of the property for HUD MPS compliance.

4. Sanctions against Gershman Investment Corp. for RESPA and FHA violations. 
XXXX. Referral of XXXX XXXX, XXXX to the State Appraisal Board and removal from HUD Roster.

6. Civil monetary penalties where applicable under 12 U.S.C. 1735f-14 and 2605.

Gershman Investment Corps multiple violations of TILA-RESPA, ECOA, and FHA requirements demonstrate a pattern of non-compliance that harms consumers and undermines federal lending protections. These violations warrant immediate investigation, consumer restitution, and systematic reforms to prevent future violations. 
The combination of disclosure timing violations, excessive fees, improper escrow collection, and acceptance of deficient safety evaluations represents serious regulatory failures that require CFPB intervention to protect consumers and ensure compliance with federal lending laws. 

I respectfully request urgent corrective action, as this transaction was carried out in material violation of federal lending and housing safety regulations. 
On the XXXX of XXXX they sent me a waiver asking me to backdate the appraisal to the XXXX. This appraisal states that I am waiving the time requirement for the appraisal and that I am agreeing that I received the appraisal before the XXXX. If I did not receive it till the XXXX why am I being asked to backdate it. To backdate the appraisal date is illegal. The appraiser says that my electrical meets the minimum standards and he did not see that the breakers were overloaded, their was no main ground, their was no surge protector per code, and their was no XXXX. So when Gershman Mortgage accepted the appraisers report it did not meet HUD requirements and FHA requirements. Gershman Mortgage should have never accepted this report. The appraisers appraisals was inaccurate. The email from Gershman Mortgage stated the property came as is and the property was up to code. The National Electrical codes that were not followed 230.57, 230.85, 406.12, 210.12, 210.8, 314.23, 250.53, 250. If it does meet NEC it does not meet HUD safety requirements. The loan was a fraud loan. The loan should have not should been issued based on the electrical safety issues in the home.

Company response to consumer: Closed with explanation