Consumer complaint received 2026-07-12 00:00:00
Product: Mortgage — Other type of mortgage
Issue: Trouble during payment process — Escrow, taxes, or insurance
Company: Kiavi, Inc.
State: PA

Complaint narrative:
I am the sole member of XXXX XXXX XXXX XXXX. XXXX XXXX, the owner of the property at XXXX XXXX XXXX XXXX, XXXX XXXX, PA XXXX. Kiavi Funding , Inc. originated a hard-money fix-and-flip loan on this property ( original principal approximately {$100000.00} ). I personally guaranteed the loan. In XX/XX/XXXX Kiavi pre-qualified the LLC for a refinance of up to {$190000.00} ( letter dated XX/XX/XXXX ). XXXX XXXX prepared a full title commitment ( File XXXX, Loan ID XXXX, Commitment Date XX/XX/XXXX ) with Kiavi as Proposed Insured for a {$120000.00} refinance loan policy. Title work, payoffs, and closing documents were prepared. Kiavi then pulled the refinance at the last minute. I had no alternative financing. This directly caused default, foreclosure pressure, and my XXXX XXXX bankruptcy filing on XX/XX/XXXX ( XXXX. XXXX. XXXX XXXX. XXXX ). The appeal of related bankruptcy orders is pending in the XXXX XXXX XXXX for the XXXX XXXX XXXX Pennsylvania ( No. XXXX ). In the bankruptcy case, Kiavi filed Proof of Claim No. XXXX expressly designating its claim as unsecured, relying exclusively on my personal guaranty. The Bankruptcy Court accepted this characterization based on Kiavis own judicial admission. Despite that admission, Kiavi simultaneously pursued a secured mortgage foreclosure against the LLC in XXXX XXXX XXXX XXXX XXXX XXXX ( No. XXXX of XXXX ) including a charged premium for force-placed hazard insurance. Kiavi force-placed Mortgagees Interest hazard insurance through XXXX XXXX XXXX XXXX XXXX XXXX under XXXX XXXX Certificate No XXXX XXXX, Master Policy XXXX, Loan No. XXXX ). The annual premium charged is {$970.00} for only {$100000.00} dwelling coverage. The policy is a limited Mortgagees Interest policy that protects only the lenders claimed interest. I timely submitted Notices of Loss for multiple covered events : XXXX XXXX, XXXX Tree fell due to high winds ( denied by letter dated XX/XX/XXXX from XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX. XXXX XXXX, XXXX Wind uplift of roofing membranes and interior water damage. -May XXXX, XXXX and ongoing Internal water damage from multiple plumbing line ruptures. Two of the most recent dated claims were both entered on or about XX/XX/XXXX and submitted to the carrier by XXXX XX/XX/XXXX. Adjuster XXXX XXXX inspected on or about XX/XX/XXXX, photographed areas with no plumbing damage ( including childrens bedrooms and kitchen closets ), and requested invoices. As of XX/XX/XXXX more than 50 days later there has been no further response, no general contractors or plumbers authorized, refusal to coordinate with the general contractors, no reimbursement of either {$3100.00} and {$1800.00} in out-of-pocket mitigation and repair costs, and complete silence from the XXXX Account Manager XXXX XXXX since XX/XX/XXXX. On XX/XX/XXXX after the first insurance claim regarding the fallen tree had already been filed and while the federal bankruptcy case and district court appeal were actively pending Kiavi Asset Resolution Specialist XXXX XXXX XXXX emailed me stating she was aware of the insurance claim filed for property damage and demanded an update on how I intended to resolve the loan with Kiavi. This is additional post-petition collection activity conducted despite ongoing federal court proceedings. Force-placed insurance exists solely to protect a lenders security interest in the collateral. After Kiavi judicially admitted in Proof of Claim No. XXXX that its claim was unsecured ( an admission accepted by the Bankruptcy Court ), there was no legitimate security interest left to protect. Consequently, there was no legitimate basis either ( 1 ) to force-place the Mortgagees Interest policy and charge me {$970.00}, or ( 2 ) to continue prosecuting a secured mortgage foreclosure against the property. The force-placed policy has further failed to protect even the lenders claimed interest by refusing or ignoring multiple valid claims. Combined with the dual-collection tactics ( unsecured claim in bankruptcy + secured foreclosure + post-petition demand emails from Asset Resolution Specialist XXXX XXXX XXXX XXXX XXXX this constitutes improper force-placement, improper foreclosure activity after a judicial admission of unsecured status, waste, abuse, and unfair/deceptive practices. In addition, Kiavis own online loan portal currently shows the account with a Due Today balance of approximately {$160000.00}. The Accrued Charges & Advances section lists two separate force-placed hazard insurance charges ( {$970.00} and {$970.00} ), multiple years of XXXX Taxes marked Due at Payoff, and approximately {$20000.00} in post-petition attorney fees from firms including XXXX & XXXX XXXX XXXX & XXXX XXXX and XXXX XXXX XXXX all while Kiavi continues to accrue interest daily on a claim it judicially admitted is unsecured. The local tax bureau continues to send sheriff sale notices ( XX/XX/XXXX ) despite Kiavi listing the taxes as advanced, raising serious questions whether the taxes were actually paid. These ongoing charges and interest accruals after the unsecured admission further demonstrate waste, abuse, and improper dual-collection practices. The improper debt-inflation and force-placement has strong characteristics of fraudulent or abusive force-placement. To synthesis sylogistically for CFPB : XXXX XXXX ( XXXX XXXX ) A creditor may force-place hazard insurance only to protect a valid, existing security interest in the collateral. Once a creditor has judicially admitted that its claim is unsecured, it no longer possesses a security interest that force-placed insurance can protect. Taking inconsistent positions in different courts ( claiming unsecured in federal bankruptcy court while claiming secured for force-placement and foreclosure ) constitutes dual collection, judicial estoppel, and, when done knowingly, fraud on the court and abuse of process. Minor Premises ( Undisputed Facts ) -Kiavi filed Proof of Claim No. XXXX in Bankruptcy Case No. XXXX expressly designating its claim as unsecured, relying solely on the personal guaranty. The Bankruptcy Court accepted this characterization. -Kiavi force-placed Mortgagees Interest insurance ( Certificate XXXX ) and charged two premiums totaling approximately {$1900.00} ( {$970.00} + {$970.00} ). -Simultaneously, Kiavi continued to treat the debt as secured by prosecuting a mortgage foreclosure in XXXX XXXX XXXX No. XXXX of XXXX ) and by adding post-petition interest, attorney fees exceeding {$20000.00}, and other advances, bringing the claimed Due Today balance to approximately {$160000.00} far exceeding both the original principal ( ~ {$100000.00} ) and the force-placed coverage limit ( {$100000.00} ). -The force-placement occurred after Kiavi had pre-qualified the borrower for a {$190000.00} refinance, ordered title work, and then pulled the refinance last-minute, precipitating the bankruptcy and foreclosure. -The force-placed policy itself has failed to perform ( tree claim denied ; plumbing/water claims ignored for more than 50 days with no contractors, no reimbursement, and silence from the TPA ). Syllogistic Conclusions : Syllogism 1 No Legitimate Basis for Force-Placement Major : Force-placed insurance requires a valid security interest. Minor : Kiavi judicially admitted the claim is unsecured no security interest remains for force-placement or foreclosure in state proceedings. Conclusion : There was no legitimate basis to force-place the insurance or charge any premiums with attempted unjust enrichment in state court. Charging nearly {$2000.00} for coverage of a non-existent interest is unjust enrichment and fraudulent. Syllogism 2 Fraud on the Federal Court / Judicial Estoppel Major : A party may not take a position in one judicial proceeding and the opposite position in another when the court has relied on the first position ( judicial estoppel / fraud on the court ). Minor : Kiavi told the Bankruptcy Court the claim is unsecured and objected to being treated as secured in a XXXX XXXX, then acted as if it is fully secured for foreclosure in state proceedings, charging interest and attorney-fee advances. Conclusion : Kiavi is perpetrating dual and inconsistent positions that defraud or abuse the federal bankruptcy process and the integrity of the judicial system. Syllogism 3 Dual Collection/ Abuse of Process Major : A creditor may not simultaneously pursue the same debt as both secured and unsecured. Minor : Kiavi is maintaining an unsecured claim in federal court while force-placing insurance, adding secured-style charges, and prosecuting a state-court foreclosure. Conclusion : This is classic dual-collection abuse and abuse of process. Syllogism 4 Predatory Pattern / Bad Faith Major : Inducing reliance on a refinance, pulling it after title work is ordered, then force-placing limited insurance and inflating the debt far beyond coverage constitutes predatory lending. Minor : That exact sequence occurred here, followed by non-performance of the forced policy. Conclusion : The entire course of conduct is in bad faith and abusive. Syllogism 5 Waste and Failure of Consideration Major : A party who charges premiums for a product that provides no actual protection and is not even authorized by a security interest commits waste and obtains money under false pretenses. Minor : The force-placed policy has paid nothing, ignored claims, and covers only {$100000.00} while the debt is inflated to ~ {$160000.00}. Conclusion : The premiums charged constitute waste, lack of consideration, and further evidence of fraud. Overall Conclusion : Kiavis force-placement after its own judicial admission of unsecured status, combined with continued secured-style collection, interest accrual, attorney-fee stacking, and dual proceedings, constitutes : -Improper and fraudulent force-placement -Fraud on the courts ( or at minimum, bad-faith dual positions that abuse the judicial process ) -Unfair, deceptive, and abusive acts and practices ( UDAAP ) -Dual collection and unjust enrichment This pattern is not merely technical non-compliance ; it is a knowing exploitation of inconsistent positions across forums for unjust financial gain. Additional supporting documents are available and will be provided upon request.

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation