Product: Mortgage

Dear Sir/Madam ; This memorandum documents our experience while securing a refinance/buy-back loan from Navy Federal Credit Union ( NFCU ) during XXXX XXXX. We found the conduct of NFCU and its employees during this experience uniformly unsatisfactory. Because of the likelihood that this recounting alone will fail to stimulate internal consideration of personnel evaluation and business practices at NFCU, it has also been provided to various regulatory, personnel certification and business ratings organizations as seem appropriate. 
Background In XX/XX/XXXX, we identified a townhome under construction in XXXX XXXX, XXXX, that we wished to purchase. Wishing to avoid a XXXX mortgage, our financing strategy was to take out a loan against our current home in XXXX, and use the money to purchase the XXXX property for cash. We determined to apply for the loan and lock-in a rate immediately, as news reports indicated mortgage rates would rise significantly throughout XXXX and early XXXX. The completion date for the property is XX/XX/XXXX. So, we also planned to delay closing the refinance/loan until as late as possible to allow time to refine the precise loan amount, and reduce the number of payments required prior to closing on the property. 
Chronology of Events The following chronology is provided as an objective outline of the sequence of events that led to our current situation. 
Early XX/XX/XXXX. We applied for what the NFCU XXXX XXXX termed a refinance-buy back loan. We explained the background described above to the XXXX XXXX, including our desire to refine the loan value prior to closing, delay closing the loan for as long as possible within the rate lock period, and occasionally pay down principal with the objective of reducing monthly payments. 
XXXX. We received pre-approval of the loan package for a maximum value of {$400000.00}, locking in a XXXX XXXX rate on a XXXX, fully-collateralized loan. The expiration for the rate lock-in was XXXX XXXX. 
XXXX XXXX. We notified the XXXX XXXX, by phonecon and email, that the final loan amount desired for the loan was {$270000.00}. We have copies of the emails and, presumably, NFCU has recordings of the phonecon relaying this information. 
XXXX XXXX. Loan documents were delivered for signature. The loan value identified in the documents was {$400000.00}, rather than the {$270000.00} we requested. We signed the documents, assuming we could either cancel the contract, or that NFCU would undertake whatever administrative procedures were necessary to correct its error. We contacted the XXXX XXXX immediately, who responded that NFCU would not correct its error and that if we exercised the three-day cancellation option, NFCU would not rewrite the contract within the rate lock period. 
XXXX XXXX. The XXXX XXXX rate lock-in period expired. 
XXXX XXXX XXXX XXXX  XXXX. We contacted the XXXX XXXX to express our dissatisfaction with being held accountable for NFCUs clerical error. She provided us another point of contact at NFCU Member Services. 
XXXX XXXX. We called NFCU Member Services. The advisor informed us that the monthly payments for the loan could not be recast, ever, and that payments would be required for the full value of the erroneous {$400000.00} loan amount. 
XXXX XXXX. Calls to and from NFCU yielded various limited options for correcting NFCUs mistake. 
NFCUs Response The conduct of virtually all NFCU personnel involved has been uniformly unhelpful, frequently condescending to the point of insulting, and breathtakingly uninformed throughout this process. While starting off as little more than annoyances, the general sloppiness, laziness, technical incompetence and lack of attention to detail, culminated in a major clerical error on the part of NFCU that may, as of XXXX XX/XX/XXXX, result in significant financial consequences for us, with no apparent adverse consequences or accountability, either corporate or individual, for NFCU. In some scenarios NFCU might actually benefit, at the customers expense, from its own mistake. 
Because she was the principal customer interface, and is personally responsible for the major clerical error, XXXX XXXX XXXX, the NFCU XXXX XXXX bears at least initial responsibility for the problem. Starting out with the annoyances, that in some cases exacerbated her mistake, XXXX XXXX provided several different names, phone numbers and email addresses for contact. Her supervisors contact information, listed on the signed loan documents, is incorrect. That NFCU is unable to provide something as simple as clear, unambiguous, correct, contact information unfortunately accurately reflects the overall competence demonstrated during this experience. XXXX XXXX seemed to have difficulty comprehending our desire to delay closing as long as possible, and perhaps erroneously assumed that mistakes on the closing documents were of little consequence since she expected there would be time to fix them. Contributing to the lack of timely response to this clerical mistake, beyond NFCUs general lack of a sense of urgency or customer service, was XXXX XXXX insistence on assigning a title agent from XXXXXXXX XXXX, rather than the local XXXX title agent that we specified. No explanation for this arbitrary assignment of a non-local title agent was provided. Most significantly, despite being notified on XXXX XXXX both in writing and on the phone of the required new loan amount, and despite a lengthy previous phonecon on the same subject, XXXX XXXX failed to ensure that the correct loan amount was entered in the loan documents provided for signature. This was a significant clerical error. XXXX XXXX apparently lacked the authority to correct her mistake. Her supervisor was completely absent during all phases of this process and is, presumably, XXXX of the problem ( s ). Supervisor, and supervision seem completely absent at all levels at NFCU. 
This explicit commission of errors, and more general demonstration of incompetence, lassitude and indifference, were in no way confined to XXXX XXXX. XXXX XXXX attempted to pass the consequences of her failure to properly process our loan on to XXXX XXXX XXXX in Member Services. When contacted, XXXX XXXX, having obviously made no effort to inform herself on the issue in the intervening XXXX days, proceeded to deliver a condescending and utterly uninformed lecture on the nature of our loan and the limited options we had to mitigate the consequences of NFCUs gross incompetence. Subsequent discussions with NFCU supervisors, such as they are, suggest XXXX XXXX was grossly misinformed as to our loan, and basic NFCU procedures. 
Throughout this process, NFCU and its employees consistently failed to acknowledge any responsibility ( or accountability ) for this mistake or take any initiative to address the consequences to the customer. Instead, we were contacted by a series of employees who were so comprehensively ignorant of the situation, and NFCUs own procedures, that we received completely different answers from each, and often different answers from the same employees at different times. On occasion the strategies offered were so utterly implausible we were left wondering if they were not simply efforts to stall until our options had all expired. This made planning and damage control, on our part, virtually impossible. NFCUs position has changed, at the time of writing, within bounds roughly defined by the following positions. 
Presumably, the initial plan was to process the loan properly. We borrow {$270000.00} at XXXX XXXX, and begin making payments in XXXX. This became untenable on XXXX XXXX when NFCU provided incorrect documents for signature and refused to correct the mistake. 
Process the loan for an amount we did not request, we pay down the principal by the overage before the first payment, and recompute the loan payments for the new principal ( recast ), putting us more or less back on the same track, except we only have two opportunities to pay down principal, one of which is exhausted correcting NFCUs mistake. 
Process the loan for the wrong amount, deny us the opportunity to pay down principal at all, and require monthly payments on a {$400000.00} loan that we did not request. We determined extricating ourselves from this mess of NFCUs creation would result in a loss to us of around {$40000.00}. This was XXXX XXXX position, and would have required recourse to legal action. 
Process the loan for the wrong amount, allow us to pay down principal at an unspecified future date of NFCUs choosing. This option still required us to pay the full {$400000.00} loan monthly payment for somewhere between XXXX to XXXX months while NFCU processed the loan. This seemed so fantastically incomprehensible that we assumed it was probably illegal, so much so we never really believed it was an option. Simply threatening legal action would have presumably collapsed this scenario, had it lasted long enough to do so. 
At some point, NFCU clarified, or altered, its position on recasting the loan, and declared that this process was allowed twice a year, not twice over XXXX years. The actual loan documents indicate that the recomputation of loan payment will be done at the lenders discretion with no additional qualifications. So, apparently, recasting can be done never, twice, XXXX times, as many times as the lender allows, or as many times as the borrower desires. This single issue serves as a convenient metaphor for the astonishingly amateurish manner in which this entire incident has been handled by NFCU. 
On XXXX XXXX, NFCU offered to grant an indulgence to pay down the principal with the overage, and recast the loan, before the first payment. 
The XXXX XXXX offer was followed by yet another slightly different offer on XXXX XXXX that, apparently, involves actually resubmitting the notarized loan paperwork for a {$230000.00} loan, purportedly also still at the original XXXX XXXX locked rate. Why this fix is now possible with nothing more than yet more inconvenience for the customer was not explained. 
Unfortunately, none of these scenarios have been provided in writing. Experience suggests that verbal agreements with, or explanations by, NFCU and its employees are likely to be at best obfuscatory, and frequently blatant falsehoods. We might be excused for being skeptical that the most recent offer of what seems to be essentially a new loan- actually close to the original loan we asked for at the original rate ( well after the rate lock has expired ) might simply be yet another NFCU stratagem for covering up its own mistake and passing on the consequences to the customer. 
Summary No formal summary should be necessary. Even if resolved in a manner that does not result in adverse financial consequences for the customer it has been - that hardly constitutes what could be deemed a successful business transaction. The burden and stress of mitigating the consequences of NFCUs mistakes and pervasive incompetence has fallen entirely on the customer. 
NFCU would do well to start at the basics by reflecting on the meaning of the word customer. Customers pay hundreds of thousands of dollars in finance fees for a service consisting of little more, beyond the risk of the loan itself, - XXXX in our case since our collateral is valued at substantially more than the loan than bookkeeping, secretarial work, and the occasional provision of coherent explanations and reassurance. Our experience with NFCU illustrates lack of competence at any of these tasks, aggravated by one or more layers of supervisors who neither supervise nor are technically competent at solving problems when they do arise. All this is complemented by a seeming default position of ignorance, rudeness, blamecasting and condescension when dealing with those same customers. The right answer here, that apparently continues to elude NFCU management, was on the afternoon of XXXX XXXX, we are contacted by someone in a position of sufficient authority to apologize for NFCUs mistake, and with a guarantee ( with a credible timetable ) that NFCU will make it right without further burden to the customer. How NFCU might subsequently handle its glaring training, competence and supervisory shortcomings is a different matter. 
Respectfully, XXXX XXXX XXXX XXXX XXXX XXXX