Product: Mortgage

Subject : Request for Clarification on Cash-Out Refinance Denial and Student Loan Treatment Dear Navy Federal Credit Union , I hope this message finds you well. I am writing to seek clarification regarding the recent denial of my cash-out refinance application. I believe this denial may not be compliant with CFPB regulations and would appreciate your attention to the details provided below. 

Credit Information : Your Credit Score : XXXX Date : XX/XX/XXXX Score Range : XXXX to XXXX XXXX XXXX Adversely Affecting Credit Score : Serious Delinquency, Public Record, or Collection Filed Time Since Derogatory Public Record or Collection is Too Short Amount Past Due on Accounts Length of Time Accounts Have Been Established Too Many Inquiries in the Last 12 Months Reason for Review Request : Upon receiving the denial, I immediately requested a review. During this review, I was informed that the primary reasons for denial included old collections and my husband 's student loan. Since applying, I have successfully removed two collections from my account. Additionally, my husbands student  loan is on an income-driven repayment plan with payments of {$0.00} per month, and payments are not scheduled to begin until XX/XX/XXXX. 

Debt-to-Income Ratio Clarification : Other financial institutions have approved us for similar refinancing applications without considering the student loan in our debt-to-income ratio, given our documentation. However, we prefer to be mortgage clients with Navy Federal Credit Union and seek clarification on the following points : Student Loan Treatment : Our loan officer initially informed us that 1 % of the student loan amount would be included in our debt-to-income ratio. However, when we sought further clarification, the supervising officer could not provide a definitive answer. 
Consistency and Compliance : We request a clear explanation of how Navy Federal Credit Union calculates the debt-to-income ratio for borrowers with student loans on income-driven repayment plans, in accordance with CFPB regulations and relevant laws.

Relevant Laws and Regulations : Fair Credit Reporting Act ( FCRA ) : Ensures accuracy and privacy of information in credit reports. This includes the right to dispute incomplete or inaccurate information.

Equal Credit Opportunity Act ( ECOA ) : Prohibits discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or because you get public assistance.

Truth in Lending Act ( TILA ) : Requires clear disclosure of key terms of the lending arrangement and all costs.

CFPB Regulations on Mortgage Servicing : Includes requirements for servicers to promptly correct errors, process payments, and communicate effectively with borrowers. 
Title 12, Chapter 27, U.S. Code 2601 - Real Estate Settlement Procedures Act ( RESPA ) : Ensures consumers receive disclosures about the costs of their real estate settlement process and protects them from unfair practices. 
CFPB Guidelines for VA Loans : According to CFPB guidelines and VA XXXX XXXX, XXXX  XXXX, Section XXXX ( VA Pamphlet XXXX ), when calculating debt-to-income ratios for VA loans, if a borrowers student loan is in an income-driven repayment plan with payments deferred for over 12 months, the lender should not include the student loan payments in the debt-to-income ratio calculation.

We believe this inconsistency and lack of clarity may affect not only our application but also other borrowers in similar situations. Understanding the exact process and criteria used by Navy Federal Credit Union is crucial for us to ensure compliance with all applicable laws and regulations.

I kindly request a detailed response to our concerns and an explanation of the applicable laws and codes governing this process. Additionally, please consider re-evaluating our application in light of the updated information provided.

Thank you for your attention to this matter. We look forward to your prompt response. 

Sincerely, XXXX XXXX