Consumer complaint received 2018-04-04
Company: JPMORGAN CHASE & CO.
State: IL
Product: Mortgage
Sub-product: Home equity loan or line of credit (HELOC)
Issue: Applying for a mortgage or refinancing an existing mortgage

Complaint:
We believe Chase has violated the ECOA and Regulation B and the CFPB and FTC rules prohibiting unfair and deceptive trade practices in its handling of our HELOC application. 

Background Our current HELOC with Chase was set to expire in XX/XX/XXXX. We had no balance on the account. On XX/XX/XXXX we submitted an application at Chase for a new HELOC of {$320000.00} to replace the existing HELOC. 

We both have personal checking accounts with Chase and a joint savings account. We also have a credit card account and XXXX has a business account with Chase. We have been Chase customers for 20+ years and so Chase has extensive financial information on us and had the authority to receive information from others based on the authority we provided in the loan application. 

XXXX is XXXX and at the time of our application was employed as a XXXX XXXX XXXX XXXX XXXX. XXXX retired on XX/XX/XXXX. XXXX is XXXX and in the process of closing his business. He filed his final business tax return for the year XXXX. XXXX is XXXX and receives social security benefits. Based on the counteroffer letter XXXX has a credit score of XXXX and XXXX has a credit score of XXXX. Our only outstanding debts are our {$200000.00} first mortgage and credit card debt that is paid in full monthly. 

Issues 1. Chase provided us with a counteroffer letter on XX/XX/XXXX that did not include the reasons for adverse action as required under 12 CFR 1002.9 ( a ) ( 1 ) ( i ) and ( iv ). Copy attached. Chase used Model Form C-4 as is permitted under Comment 9 ( a ) ( 1 ) -6 however the letter was revised to delete the following : We are unable to offer you credit on the terms that you requested for the following reason ( s ) : _____. The letter did not inform of us our right to receive the reasons for adverse action if requested. 

When XXXX called Chase on XX/XX/XXXX, XX/XX/XXXX and XX/XX/XXXX to request the reasons for adverse action and/or the procedure for requesting this in writing if required. Each representative informed her that we received a counteroffer letter and that the reasons for adverse action were only provided if our application was denied. Regulation B defines adverse action as both a denial of credit and a counteroffer. 12 CFR 1002.2 ( c ) ( 1 ) ( i ). The only time a counteroffer is not adverse action is when the applicant expressly accepts the credit offered. We did not accept the counteroffer. A statement of specific reasons for adverse action is required after taking adverse action on a complete application. 

2. The application process was long, difficult and confusing. In the course of phone calls with various Chase representatives during the application process, XXXX was informed that ( 1 ) our combined income was insufficient ; ( 2 ) Chase needed to review our investment accounts to determine whether we were qualified ; ( 3 ) XXXX would be approved if she applied individually ; ( 4 ) XXXX withdrawals from his investment accounts to fund our sons start up were a concern ; ( 5 ) although we pay each of our credit card balances in full each month we would have to pay the balances ( not yet due ) of our XXXX and XXXX account in full before closing and if so, we would receive a line amount of {$20000.00} ; ( 6 ) the appraised value of our home was {$620000.00} and with our outstanding first mortgage of {$200000.00} the value of the collateral was insufficient ; and ( 7 ) the losses on XXXX business made it impossible to make the loan. Chase personnel informed XXXX that as a result of these concerns, federal law prohibited them from granting the loan terms we requested. 

We were unable to understand or apparently respond sufficiently to the myriad of issues Chase raised during the application process. The statement that federal law prohibited Chase from granting our request for credit is false and could mislead an applicant to think she had no option but to accept the counteroffer. The counteroffer letter did not inform us of our right to request the reasons for adverse action or provide us with the reasons as required by Regulation B. Finally, the statement that we were not entitled to the reasons for adverse action is false and misleading. 

Section 5 of the FTC Act prohibits creditors from engaging in unfair and deceptive trade practices and the Dodd Frank Act prohibits creditors from engaging in unfair, deceptive and abusive trade practices. Chases actions in handling our application were unfair, deceptive and abusive. 

3. We applied for a HELOC from XXXX XXXX XXXX  in the amount of {$370000.00} on XX/XX/XXXX. As part of the application process XXXX XXXX sent an appraiser to our home to do a full appraisal because its underwriting standards indicated that the public information available was dated and insufficient to prepare an adequate appraisal. The property was appraised at {$740000.00}. We received our loan in the amount requested on XX/XX/XXXX. 

We understand that the underwriting standards of financial institutions vary and that XXXX XXXX decision to make our loan based on the same information does not mean that Chase engaged in discriminatory credit practices when it refused to offer the credit line requested. However, based on the only information available to us -- Chases behavior in handling our loan application -- we question whether Chase followed its underwriting standards in reviewing our loan application and question whether Chase took adverse action on a prohibited basis such as our age and source of income. This behavior includes the following : ( 1 ) the multiple concerns Chase raised that made it frustrating and confusing for us to provide a response ; ( 2 ) its false statement that federal law prohibited it from making the loan we requested based on our creditworthiness ; ( 3 ) its failure to provide us with the reasons for adverse action as required under federal law ; and ( 4 ) its false statement that we were not entitled to those reasons after our multiple requests. 

We appreciate your help in addressing our concerns and are happy to provide any other information you require. 

Thank you.

Company response to consumer: Closed with explanation