Consumer complaint received 2022-02-17
Company: ALLY FINANCIAL INC.
State: NC
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage

Complaint:
I am writing to file a formal complaint regarding denial of my mortgage loan in the amount of {$470000.00} by Ally Bank. 

My spouse and I were recently offered faculty jobs and were excited to move to a new state and buy our first house. When I first called to get pre-approval ( XX/XX/XXXX ), I mentioned our new positions and asked if it would be possible to determine loan amounts under two scenarios : ( 1 ) our current jobs and ( 2 ) our future jobs, which come with much higher salaries. The reason for this was that our new city 's real estate market is extremely " hot '' and I wanted to know whether waiting until we started our new positions and were earning more would be necessary to afford the type of home we need. As it turned out, our current salaries were sufficient, and we moved forward with our real estate search after being pre-approved. We got lucky and found the quickly perfect house and are now under contract with scheduled closing on XX/XX/XXXX. This meant we'd be moving a little earlier than originally planned, but we loved the house and were excited for a chance to get settled in before starting our new jobs. 

At this point, we began the process of uploading numerous supporting documents to our application. This was time-consuming because many documents would get sent back to us. On XX/XX/XXXX, we tried calling our assigned " team member '', but were told he was busy and would call us back later. He never did. Nevertheless, we finally submitted all requested documents, which included ( 1 ) paystubs for my current position ; ( 2 ) W2 's for my current position ; ( 3 ) an employment verification letter noting my spouse 's salary in his current position as paystubs are not provided by his current employer ; ( 4 ) 1099 's for my spouse 's current position ; ( 5 ) bank statements for my spouse 's current position to document monthly pay ; ( 6 ) tax returns for my spouse 's current position as additional proof of income ; and ( 7 ) signed offer letters for each of our future positions. As stated in our offer letters, our start dates are scheduled for summer XXXX. Therefore, these positions could not be used to qualify our mortgage loan application as we would not be receiving paystubs until 90+ days after our scheduled closing date. Given that we already had relayed that we'd like to use our current jobs to qualify for the loan, I am not sure why we were asked for these documents. Still, we provided them because they show that we are due for a substantial salary increase and thought that would strengthen our application. 

On XX/XX/XXXX, we received an email notifying us that our employment could not be verified given the start dates for our future job offers were for 90+ days after closing. Again, we already knew these future positions could not be used to qualify for a mortgage and thus, asked for the underwriter to verify incomes for our current positions. We received an emailed response stating " From my knowledge, you need to stay employed with your current employer for at least about a month through closing for us to qualify it. Can you confirm when you and [ SPOUSE ] will both end your employment with your current employers? '' We responded with signed appointment letters from our current employers showing that we would indeed be employed in our positions for at least a month after closing. As is common in our industries ( I am employed in academia, my spouse is employed by the federal government ), we sign annual contracts which are both current through 30+ days after closing. These contracts are renewed on a yearly basis and we have been re-appointed in these positions for several years. Our plan was to maintain our current employment with these contracts and only resign once we are 30 days out from starting our new positions. 

On XX/XX/XXXX, we received another email from Ally stating that underwriting was still unable to qualify us with our current employers as our employment has " determined end dates ''. In fact, these are not determined end dates, rather contract renewal dates. I tried calling Ally to discuss this but was told my assigned " team member '' was on the other line and unavailable. 

I also reached out to my assigned team member 's supervisor via email to try to better understand the situation. He responded that the " reason we are unable to move forward with your application is due to continuity of income. Since you will no longer be working for your current employers we are unable to use that income. Based on the offer letter/contract that you have provided and the verbiage in contract we are unable to use that income as well. The contract does not indicate employment ends in 12 months but is subject to annual reappointment. We as a lender must document the likelihood of continued receipt of the income for at least three years. '' This explanation ( " continuity of income '' ) Is incorrect for two reasons. First and foremost, XXXX XXXX makes it very clear in its guidelines ( XXXX XXXX XXXX XXXX XXXX XXXX XXXX : XXXX XXXX XXXX ) that as long as income has been stable and predictable, it can be used as qualifying income. Again, we have been in our current positions for several years and our incomes have stayed the same or have slightly increased during that time. Second, the Continuity of Income requirements do not apply to base salary income, so there is no need to document that the income will continue for the next three years. Based on this, I am not sure why were asked to provide current employment contracts and offer letters of future employment since these should not have been applicable to our situation. However, as honest people, we provided these documents as requested. 

My spouse and I have worked very hard over the past few years to earn PhDs, find stable jobs, maintain excellent credit scores ( XXXX ), limit debt ( no credit card debt, only student loans ), and save for a down payment. We were so looking forward to buying our first home, and now feel extremely frustrated. More than that, we feel misled by Ally. People move to start new jobs all the time... It appears that Ally will not provide mortgages to such people unless 1. ) they change jobs immediately after closing ( in order to be able to provide paystubs ) or they 2. ) wait years after moving to buy a house. I don't understand why there's no option for people who want to buy a house and then start new jobs after getting settled in, as long as they can provide supporting documentation.

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