Consumer complaint received 2022-01-30
Company: NAVY FEDERAL CREDIT UNION
State: MD
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage

Complaint:
Last XXXX, my wife and I applied for a mortgage at Navy Federal Credit Union. We were initially preapproved for a loan of XXXX and then approved for an increase to {$700000.00} on XX/XX/XXXX. The loan rate was locked at 2.625 % with no points with a target closing date of XXXX. Our down payment was a significant amount at 47 %. 

We paid for an appraisal and promptly submitted paperwork including personal tax returns and corporate returns for my real estate partnership. On XX/XX/XXXX, our loan officer XXXX XXXX XXXX notified us that the estimated completion date for the appraisal was XXXX after which our application would be submitted to underwriting for review/approval. 

On XX/XX/XXXX, underwriting requested signed copies of the tax returns along with signed copies of income and expense statements. After 12 days of not hearing anything, XXXX XXXX sent an email on XX/XX/XXXX indicating the closing date of XXXX would have to be delayed but did not provide any reasoning. Unable to contact XXXX XXXX XXXX I contacted her supervisor XXXX XXXX and discussed the lack of communication about my loan from XXXX XXXX. I also emphasized the need to close on XXXX. XXXX XXXX assigned a new loan officer, XXXX XXXX, to the case in order to expedite the application. Both XXXX XXXX and XXXX XXXX reviewed the application and were optimistic about approval and that it could proceed on schedule. 

After review by underwriting, questions were raised about a business loan for my LLC. I explained that the corporation had a 10 year loan which was ending in XXXX and that the corporation had a long history of positive cash flow. This was evident in the tax returns and balance sheet. 

With the imminent closing date of XXXX. I made numerous calls to XXXX XXXX in an attempt to get further clarification from underwriting. The XXXX date came and went and eventually we received an adverse action letter on XXXX, 5 days after the anticipated closing date. During the process, I told XXXX XXXX that we were willing to borrow a lower loan amount and increase the down payment if this would help gain approval. When the adverse action letter arrived, XXXX XXXX informed me that Navy Federal would not lend us any amount of money under any circumstances.

Navy Federal readily accepted our mortgage application but did not act in a careful and timely manner to either approve or reject the application and allow us to make alternate plans. Most calls to our loan officers went to voice mail and return calls were often delayed for up to 48 hours which is their official policy. The additional delays by the underwriting department to evaluate the application and our responses in a timely manner also contributed to the delay. Closing dates did not seem to have much significance throughout the process. 

I understand that our application was complicated by the fact that both my wife and I are retired from day jobs with income from social security, small business ( LLC ) and retirement assets. However, we were willing to lower the loan amount and increase the down payment in order to move forward. Apparently Navy Federal decided we were not worth their effort. 

Fortunately for us, we had no trouble obtaining alternate financing from another lender which was able to close in 13 days. I only wish we had abandoned Navy Federal early on once we realized they did not want our business. 

So this makes me wonder why the application was rejected. Some thoughts include : - Interest rates rose after I locked in the rate and the loan was no longer as profitable. 
- Navy Federal does not want to lend to XXXX XXXX who are relying on retirement assets to pay the mortgage. 
- Navy Federal does not want to lend to applicants that own small businesses. My understanding is that an LLC is liable for its own debt and not the members. The profitability of the LLC should stand on its own which in my case was over 10 years of positive cash flow. 

Whatever the real reason for denying our application, Navy Federal should have handled our application in a timely manner. Besides all the stress and anxiety, the delay cost us {$1300.00} in extra interest payments which we were required to pay to the seller of the property to keep our contract valid. It will also cost us almost {$30000.00} in interest over the life of the loan because of the higher interest rate we are now paying.

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