Consumer complaint received 2025-03-15 00:00:00
Product: Mortgage — Conventional home mortgage
Issue: Trouble during payment process — Interest rate
Company: Shellpoint Partners, LLC
State: NJ

Complaint narrative:
Dear Sir/Madam, I have been trying to resolve an issue with my mortgage company NewRez LLC also known as Shellpoint Mortgage regarding the sudden increase of my ARM rate from 2.75 % to 7.125 % in the first increase effective XX/XX/XXXX. In the XXXX contract, I was told that when my 7 year ARM rate gets over, the rate will be increased to a maximum of 7.5 %. I am not disputing the terms of the agreement of ARM I signed. Newrez is within their rights to hike the rate to 7.125 % even for the first-rate increase. However, I am disputing the willful negligence by Newrez by misleading me about my first interest rate change. 

Consumer Financial Protection Bureau ( CFPA ) which says that If your interest rate is being reset for the first time, your lender must send you the information seven to eight months before your first payment at the new rate is due. This helps the customer to shop around for new lenders or look for more favorable interest rates. CFPA also adds that for the notification which comes seven to eight months before, the current lender ( Newrez ) must provide me with options to explore the new rate and how to contact a HUD-approved housing consultant ''. 

Also, as per Code of Federal Regulations ( CFR ), section 1026.20 specifies the rate-change disclosure requirements for the initial reset and subsequent resets of interest rates in 12 C.F.R. 1026 ( d ) and ( c ), respectively. It says that the first reset notice must be sent between 210 and 240 days before the first payment at the adjusted level is due ; see 12 C.F.R. 1026.20 ( d ) ( attached ). 

Newrez did not comply with any of the stated requirements above. After my repeated requests to enquire about my rate increase from XX/XX/XXXX, Newrez sent me a later dated XX/XX/XXXX, which mentioned the tentative estimated increased rate might be 7.75 % effective from XX/XX/XXXX, which is 143 business days or 209 calendar days or 6 months and 26 days. This is not even meeting the 210 business days requirement for advanced notice. Secondly, the letter was misleading which stated under the subsection rate limits that your rate can increase annually by no more than 2.00 %. I am providing an attachment of that below. 

This letter was very confusing to me since although it indicated in the table that a rate increase of 7.75 % is estimated and in the same letter it states that my rate can not go up by more than 2 % per year. There are examples of how such a standardized letter should be written in the CFR website where you must provide full disclosure. Examples of such letters are also given in the CFR website. Reading this letter, obviously, I was under the impression that my current rate will not increase from 2.75 % to 4.75 % ( as a 2 % increase at the most in one year ). 

Come XX/XX/XXXX, Newrez sent me a finalized rate change of 7.125 % effective on XX/XX/XXXX, which took me by surprise. It did not give me enough time to shop around for new lenders or chances to lower my rate, especially in this current environment where mortgage rates are exceptionally erratic. So instead of giving me 210 business days ( or 7-8 months ) to notify me of the increased rate, Newrez gave me 28 business days or just 40 calendar days ( or 1 month and 10 days ). I am providing the screenshot of that second letter below ( attached ). 

In the attached document, you will notice the detailed account of interest rate changes described in the rate limits sub section, which was strangely missing in the previous letter, dated XX/XX/XXXX. After I did not get any clear answer from Newrez, I reached out to XXXX with my question just to get Newrez 's attention. In the reply sent to XXXX  dated XX/XX/XXXX, Newrez has used a lot of facts, but failed to reply to my critical question which I was repeatedly asking by calling their customer service agents. Some of them were nice ( I have to admit that ) ; but most of them were either ignorant or rude. Some gave me wrong information, some resisted transferring my call to supervisors and once transferred, one supervisor just refused to listen to me and remarked that the final verdict is already provided and no further requests from my side will be entertained. I have detailed call records with names and time stamps, and I can provide them if needed. 

Since my question wasnt answered I filed a complaint in XXXX against Newrez. As a reply from Newrez to XXXX ( attached ) dated XX/XX/XXXX, please refer to the 3rd paragraph of page 1 where Newrez even admits that rate would not increase by no more than 2 % per year, but the rate increased to 7.125 %. How is this even possible? Am I the only one who is getting confused here? Newrez is accepting that they wrote this, but they are not accepting the fact they misled me by providing conflicting information. 

In summary, Newrez had broken the Code of Federal Regulations by not providing me timely information. The information they provided on XX/XX/XXXX, 7 months before as mandated by CFR was misleading. The accurate information of rate change was only provided to me on XX/XX/XXXX, for a XX/XX/XXXX rate change which is only 28 business days out. I am requesting Newrez to kindly consider this oversight and give me the benefit as a borrower who was never late in payment. Please consider the revised rate of 2.75 % + 2 % = 4.75 % as outlined as per the XX/XX/XXXX letter, instead of 7.125 % which I am paying since XX/XX/XXXX, to the current day. Please refund the extra interest charged to me due to the higher interest rate with proper calculations and adjustments. 

Hopefully I was able to clarify the facts to the effect that Newrez can understand this clearly. I have to reach out to Newrez via CFPB to get their attention just as I have also tried to reach out to Newrez before via XXXX. I haven't got any resolution from Newrez yet and I have been waiting for a favorable answer since XXXX of XXXX ( letter attached ). Strangely enough, Newrez prefers to reply to me saying due to the complex nature of the matter, Newrez respectfully requests additional time to fully respond to your inquiry and then doesnt provide me with a clear answer or diverts the entire topic. I have got a bunch of those letters at home. Hopefully this letter simplifies the complexity of the matter if this reaches Newrez via CFPB. 

Please feel free to forward this information to Newrez for their kind attention. Once again, thanks to you and CFPB for your kind help. 

Yours sincerely, XXXXXXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXXXXXX Email : XXXX Cell : XXXX. 

Attachments details : a ) Newrez responses dated XX/XX/XXXX where it says that my rate can not go up by 2 % b ) Newrez response dated XX/XX/XXXX ( announcing the increased rate of 7.125 % from 2.75 % effective XX/XX/XXXX ) c ) My clarification request sent to Newrez directly dated XX/XX/XXXX, explaining the whole situation d ) Website pdf describing the CFR rulings of notifying borrowers to inform about first rate increase timeline of at least 210 days in advance e ) CFPAs website as pdf stating the 78-month rule for advanced notification for first rate increase

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