Mortgage Q&A: True story too unreal to believe

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I want to share a true story so outrageous you may find it unbelievable.

My very good friend and neighbor, “Joe,” is a recently retired U.S. Marine colonel who purchased a home and moved to Charleston, S.C., with his wife a year ago. When rates bottomed out last fall, I refinanced his mortgage through SunTrust Bank.

He chose to pay his taxes and homeowners insurance separately, waiving the escrow requirement. At settlement, SunTrust properly required evidence that his insurance and real estate taxes were paid.

A month later, Joe received a letter from SunTrust stating that his flood insurance was inadequate. While Joe’s insurance company asserted that his property is in a “C” zone, SunTrust insisted that it’s in the more expensive “AE” zone.

To settle the matter, Joe’s insurance company provided SunTrust with the declaration and flood map that indicates the property is in a “C” zone. SunTrust then told Joe to stand by because the insurance matter was “in research.”

Meanwhile, Joe started to receive letters from SunTrust’s insurance department telling him that if he didn’t upgrade his flood insurance, the bank would impose its own, very expensive, insurance policy. Joe got on the horn once again with the insurance department and was told not to worry because the issue was still “in research.”

Joe made his payments as agreed for the next three months. In February, he received a letter from SunTrust’s collection department stating that his monthly payments were insufficient. (Remember, Joe waived the escrow and paid his insurance and tax bills upfront. Therefore, he makes only the required monthly principal and interest payment.) He called the collection department, which offered no help and refused to make an inquiry to the insurance department.

Let me quote an excerpt of an email sent by Joe to Hugh Suhr, from SunTrust’s corporate communications department:

“They referred me to a special customer-service representative (Monique) who promised to give my problem personal attention. She hasn’t returned my calls nor did she call me at the time she said she would. The people in this company don’t even know the telephone numbers to other departments within their own business! Every conversation with an employee leads to blaming another department that they can’t help you contact, and they’ve told me that no one can answer questions that cross departmental turf. Their only responses to me have been form letters, which get more and more threatening.”

On May 2, after more than seven months, Joe received the most outrageous letter to date. It begins, “Please call us. Together we may be able to save your home.” The letter continues with statements like, “We’ll discuss ways for you to get back on track,” “you will be treated with respect,” and “will do everything possible to help you keep your home.”

Joe and his wife have perfect credit, good income and assets, and have made every mortgage payment on time - yet he received a letter threatening foreclosure.

I contacted Mr. Suhr and told him I would be writing this column and told him my deadline. I asked if he would like to comment. Specifically, I asked him if it is SunTrust’s policy to send a letter threatening foreclosure over an insurance dispute and whether he could comment on the fact that the same day Joe received the letter, SunTrust’s insurance department again told Joe the insurance issue was still “in research.”

Mr. Suhr replied with an email: “I’ve got people digging into this - I’ll get back to you tomorrow with what I can share.”

As I was finishing this column, Mr. Suhr called my cellphone. He said the letter was sent in error and it is not SunTrust’s policy to send such letters to its clients over an insurance dispute. This is curious because the collections department told Joe that the letter is sent automatically if SunTrust thinks the payment is insufficient. Mr. Suhr said the case wasn’t handled the way it should have been and SunTrust is working to resolve it.

Meanwhile, Joe hasn’t received any calls, and I have encouraged him to contact the Federal Trade Commission, the Department of Commerce and the South Carolina Bureau of Financial Institutions.

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