Consumer complaint received 2022-10-30
Company: NAVY FEDERAL CREDIT UNION
State: FL
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage

Complaint:
Refinance Loan Application Dispute Since XX/XX/XXXX, Navy Federal has held a first mortgage on my residence located at XXXX XXXX XXXX XXXX, XXXX XXXX, FL XXXX ( hereinafter, the Property ). On XX/XX/XXXX, I submitted a refinance application with Navy Federal to refinance the first mortgage loan on the Property. 

My primary source of income is XXXX, XXXX ( hereinafter, XXXX ), a company that I have owned and operated since XX/XX/XXXX. I have been a W2 employee of XXXX since XXXX. When I applied for the mortgage loan with Navy Federal in XXXX, XXXX was my ONLY source of income. 

With respect to XXXX, I spoke with XXXX XXXX at the beginning of the application process for the refinance, and specifically expressed my desire to have my qualification reviewed solely based on my W2 Income status with XXXX. I did not want my ownership in the LLC to be considered. XXXX advised that this would not be a problem and this was the normal for most business owners. 

On or around XX/XX/XXXX, I received a request to e-sign various documents in relation to the refinance application. I noticed the following errors : - My address was listed as XXXX XXXX  XXXX XXXX, XXXX, FL XXXX- The subject property address was listed as XXXX XXXX  XXXX XXXX, XXXX, FL XXXX XXXX XXXX XXXX XXXX, XXXX, FL XXXX was the rental property in which I resided in XXXX when I applied for the initial mortgage loan with Navy Federal. I have never owned any interest in the property located at XXXX XXXX XXXX XXXX, XXXX, FL XXXX and I never had a mortgage loan with Navy FederaXXXX on the property located at XXXX XXXX XXXX XXXX, XXXX, FL XXXX. 

I immediately asked Navy Federal to correct this error. At this point, my understanding is that Navy Federal created a new loan application with the correct address. I later learned that the notations regarding my preference to omit my ownership in XXXX, were not carried over to the new application. 

On XX/XX/XXXX, Navy Federal requested the XXXX and XXXX tax returns for XXXX. When I asked why this information was needed, in light of the fact that I only wanted my W2 income to be considered, the response received from XXXX XXXX was I have informed that information to the underwriter up front. I believe your underwriter still needs those tax returns to verify your salary. 

On XX/XX/XXXX, I received the following message from Navy Federal : 1. Business returns appear to be incomplete for XXXX. Unable to determine percentage of ownership. Need XXXX which will detail names and ownership percentages. Underwriter understands borrower does not want to use XXXX income from business ; however, it must be reviewed as it's his primary employment. Confirmed with senior underwriter. 
A review of Form XXXX reveals that this form is submitted to the IRS by certain entities with total receipts of {$500000.00} or more. I confirmed with my tax preparer that the returns submitted to Navy Federal were complete and that we did not submit an XXXX because we did not have receipts of {$500000.00} or more. I relayed this information to Navy Federal and was again told that my return was incomplete and asked to submit an XXXX. When I again asked why this form was being requested in light of the fact that I did not want to have my ownership of XXXX considered, to which the response was that Navy Federal needed to verify the ownership percentages in order to consider the W-2s. This raises a huge problem because an XXXX  only shows an officers name, social security number, percentage of time devoted to the business, PERCENT OF STOCK OWNED, amount of compensation. As an XXXX, XXXX has membership interests. There are no stock shares in existence for XXXX, therefore even if the document requested by Navy Federal did exist, it would not serve the stated purpose expressed by Navy Federal to verify the ownership percentages. 

Throughout the loan application process, I repeatedly asked Navy FederaXXXX what other documentation could be provided to meet the ownership verification requirement. I specifically asked if a notarized document submitted by my business partner would suffice. To this day, Navy Federal has failed to inform me of any alternate document that could be used to meet the requirement. 

Multiple times I had conversations and emails with XXXX XXXX when I asked if a notarized document would be sufficient and she told me it was not necessary and to hold until this document was sent to her team to discuss with underwriting. 

XX/XX/XXXX I spoke with XXXX XXXX the supervisor to XXXX and XXXX who still could not give me a proper answer on what document would be needed or sufficient to prove my ownership being less than 25 % in XXXX. 

On XX/XX/XXXX, my loan application was denied for the following reasons : 1. Unable to verify employment. At XXXX XXXX on XX/XX/XXXX, XXXX XXXX confirmed receipt of verification of employment from my business partner XXXX XXXX and advised that she was submitting the verification to the underwriter that night. 
2. Length of employment. I have been a W2 employee of XXXX since XXXX. This was confirmed by Navy Federal during my XXXX loan application. Additionally, all tax returns and paystubs submitted to Navy FederaXXXX reflected the length of employment going back as far as XXXX. As of today, Navy Federal has failed to clarify this basis of denial. 
3. Credit application incomplete. The only document that was requested and not provided was the non-existent XXXX. Despite my repeated written and verbal requests, Navy Federal has failed to provide me with alternate documentation that I may submit in lieu of an XXXX.

I immediately appealed the denial. In response to my appeal of the denial, Navy Federal has advised as follows : 1. Unable to verify employment. member may not have XXXX, but underwriting does need something to support what his ownership percentage is. While an XXXX XXXX verify compensation to an officer, it is not the only method of employment verification. I have been a W2 employee of XXXX since XXXX. This was confirmed by Navy Federal during my XXXX loan application. Additionally, all tax returns and paystubs submitted to Navy Federal reflected the length of employment going back as far as XXXX. Further, my business partner verified employment, as confirmed by XXXX XXXX on XX/XX/XXXX. Other than the non-existent XXXX, Navy Federal has not requested any other documentation to verify my employment with XXXX. 
2. Length of employment. As of today, Navy Federal has failed to clarify this basis of denial. I have provided them with paystubs, tax returns and bank statements. 
3. Credit application incomplete. member may not have XXXX, but underwriting does need something to support what his ownership percentage is. Again, the only document ever requested by Navy Federal is a non-existent XXXX, which would NOT show ownership percentages of an XXXX, even if it did exist. Navy Federal refused to advise of any alternative documents that would be accepted in lieu of an XXXX. 

All correspondence is in email, recorded phone calls and text messages. 

As a result of Navy Federals failure to properly review my loan application, I was compelled to secure financing through XXXX Mortgage at a higher interest rate. 

- My interest rate with Navy Federal would have been 4.875 % - My interest rate with XXXX Mortgage was 5.99 %, which I ultimately bought down to 4.99 %. 
- I would have bought my Navy Federal Mortgage down to 3.5 % The total loss incurred over the life of the new loan as a result of Navy Federals failure to properly review this loan application was {$100000.00}. 

I have been a loyal member of Navy Federal Credit Union since XXXX. At this time, I am seeking to be made whole by either a payment of the incurred loss of {$100000.00} or a refinance through Navy Federal at 4.875 %, and the additional {$15000.00} in which I will buy down to 3.5 %. Additionally, if the loan is refinanced, I expect Navy Federal to pay for any and all closing costs, as I already paid closing costs for the refinance that was completed with XXXX due to Navy Federals willful negligence.

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