Consumer complaint received 2025-10-14 00:00:00
Product: Debt collection — Mortgage debt
Issue: False statements or representation — Attempted to collect wrong amount
Company: LoanCare, LLC
State: TX

Complaint narrative:
LoanCare has now lied twice in responses to the CFPB regarding the cause of my balance irregularity. In response XXXX, dated XX/XX/XXXX, they stated the irregularity was due to an escrow shortage. Then again, in response XXXX, dated XX/XX/XXXX, they repeated this same false explanation, citing the original XX/XX/XXXX response as justification. However, in their subsequent QWR response to me directly, LoanCare admitted these charges were not escrow shortages but attorney fees they unilaterally assessed and are now attempting to justify under Paragraph 9 of the Deed of Trust a clause courts have rejected in similar circumstances.

Legal Interpretation of Paragraph 9 Courts across states interpret Paragraph 9 narrowly : it authorizes lender protection ( e.g. foreclosure, bankruptcy defense, lien challenges ). 
But courts often reject its use where : The borrower was current ( no default ). 
The proceeding did not jeopardize the lien or collateral. 
Fees were unrelated to foreclosure/property protection. 

The {$6800.00} is attempt to fee-shift their legal expenses to my mortgage account, which is unjustifiable, because my civil suit was about an offer the reneged on for a false reason. 
They said I missed a payment, which was not true so they tried to say later it was for an internal credit reason with no further explanation which was a violation of the following laws : Equal Credit Opportunity Act ( ECOA ) : Requires creditors to give consumers a notice with the principal reasons for a credit denial or adverse action, ensuring explanations are specific and relate to actual factors considered during the application process. 

Lenders must explain the specific reasons for denial, regardless of whether they use manual or algorithmic credit decision models. There is no exception for complex or black box systemsconsumers must always receive the explanation. 

The notice must be timely and allow consumers the chance to understand and potentially correct any issues behind the decision. 

Additional Disclosure Laws Fair Credit Reporting Act ( FCRA ) : If the denial is based on information in a credit report, the lender must disclose the credit score, the key factors affecting that score, and information about the reporting agency, along with a copy of the credit report upon request.

Supporting Regulations Home Mortgage Disclosure Act ( HMDA ) : Requires reporting and public disclosure of application data ( including denial reasons ) to monitor for discrimination and ensure transparency in lending patterns. 

This is not an attempt to re-litigate that case as it was dismissed by the judge, but the dismissal succinct it did not authorize either party to recoup any cost of litigation. The civil suit and/or the dismissal also does not meet the conditions for Paragraph 9 of the Deed of Trust to be used. Paragraph 9 is specifically grants rights to protect interests where there is default, foreclosure, or impairment reducing the value of the property. None of those conditions existed at the time of of the civil suit nor do they exist now. Please take note that LoanCare contacted me and offered a rate reduction refinance based on good payment history, then denied me ( falsely ) for bad payment history. My civil suit was specifically about the false denial, which never put LoanCare 's interest in the property in any danger. LoanCare can not claim their interest was in danger if they initiated the offer and interaction that led to the civil suit. 

1. What Paragraph 9 Requires Paragraph 9 allows the lender/servicer to take steps necessary to protect its interest in the property if : You default, The property is abandoned, or A legal proceeding might significantly affect the lenders interest or rights under the Security Instrument .

Even when it applies, the language is structured so that fees are reactive they can only be incurred after theres a real need to protect the lenders interest ( e.g., foreclosure, bankruptcy, lien enforcement, or litigation that jeopardizes the lien ). 

2. LoanCares Action in Your Case They added {$6800.00} in attorney fees to your account before the judge dismissed your civil case. 
In other words, they charged you as if they had already prevailed and were entitled to recovery without : A court order, A finding of default, or Any actual impairment of their lien. 

3. Why This Contradicts Their Paragraph 9 Defense No Default or Threat : Your loan was current, and your lawsuit did not challenge their lien or put their collateral at risk. Courts have consistently said Paragraph 9 does not authorize fees in that context.

Timing Problem : By charging before judicial disposition, they treated Paragraph 9 as if it was a blank check to recoup any litigation costs but the clause only covers protective action, not offensive recovery against a borrower exercising legal rights. 
Due Process Issue : Attorneys fees in Texas typically require ( 1 ) a prevailing party, and ( 2 ) a court order. LoanCare pre-empted both.

Pattern of Misrepresentation : They first disguised those fees as escrow shortage in XXXX. Later, when forced, they admitted they were attorney fees but still tied them back to Paragraph XXXX. That shows they knew their justification was weak. 

4. The Contradiction in Plain Terms If Paragraph 9 were truly their legal basis, they could only recover attorneys fees after a qualifying event ( default, foreclosure, lien risk, or a court order ).

Instead, LoanCare imposed them before resolution, without default, and without a court order. 

Thats not protection of the lenders interest its retaliation for litigation and an unauthorized cost shift. 

* Additional Note : Within the same year of the dismissal, where I applied for a HELOC LoanCare provided a mortgage verification form where that did not list any impairments to my mortgage loan and essentially said I had never been late, which contradicts their previous reason for denial of their offer to me and they also conveniently excluded the {$6800.00} past due ( the attorney fees they added ) which legally should have been included on the form as a legally required disclosure if it was valid.

Attachment : Paragraph 9 of the Deed of Trust Analysis 3 Letters from LoanCare 1. States mortgage balance is due to escrow shortage 2. Support and uses the same explanation of the first letter.

3. Finally admits they were charging attorney fees and tries to justify it with Paragraph 9

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