Consumer complaint received 2020-06-26
Company: JPMORGAN CHASE & CO.
State: NY
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage

Complaint:
I have a question related to fair lending practices. 

Can a bank deny a mortgage loan because of whats going on with COVID19? 

My wife and I applied to Chase for a cash-out refinance of our primary residence which is a 2-family home. We live in XXXX where 2-family homes are very common. 

At the suggestion of my local Chase Bank branchs loan representatives, my wife and I applied to Chase Banks website for a mortgage loan ; we did this Sunday, XX/XX/XXXX. 
After submitting the application, I immediately received a call from Chase asking me to contact them to go through my application. I called back the number and the rep began collecting the same information I had already provided online. 

After going through the " application process '' again over the phone, the rep asked for my, and my wifes, social security numbers and permission to run our credit. The rep said the credit profiles came back with scores from all 3 credit bureaus exceeding 800. He then asked for the type of property, its estimated value and loan amount. 
He ran all the info through a computer program and after about 3 minutes the rep informed me that there are no loan programs available for me, and that we did not qualify for a cash-out refinance. I asked why, and he said, because Chase is not doing cash-out loans on 2 family homes due to COVID-19. Needless to say, I was beside myself. 
Yet, the rep said, that Chase will do a cash-out refinance for single family homes and condos that are the primary residence for account holders. 

The rep did not ask me the type of propertys until after he collected our social security numbers and ran our credit. This bothered me because had I known they were not doing loans on my property type, then I would not have bothered to submit an online application to Chase. Further, I was upset because I am aware that running credit too many times would negatively impact our credit scores. 

Anyway, Chase ran my and my wifes credit, and our credit was not a problem, we are, and have been, gainfully employed for over 30 years. My wife has an account at Chase, I have Chase issued credit cards, and we meet the financial requirements without any rental income from the 2nd apt , or funds from the requested loan. Further, the requested loan amount and LTV are very low ; 15-20 % LTV depending on an appraisal. In fact, based on the requested loan an appraisal is not required because the loan amount does not meet the minimum threshold needed for an appraisal, so Chase could rely on an Automated valuation ModeXXXX ( AVM ) instead of a full appraisal. 

The purpose of the loan is personal ; it is NOT for a business-related purpose. However, I was not even asked the purpose of the loan. But I was asked if I intended to live at the property for the next 5 years and I said, yes because I do intend to remain here for the foreseeable future. 

I made 2 follow up calls today to verify the reason which made me more upset. Because on the first call I was told the initial rep should not have run my credit before asking about the property type for which the rep from the first follow-up call apologize. And on 2nd follow-up call, I was told that the process I went through is a " pre-qualification/vetting process '' of some sort, and I may not receive a letter of denial/adverse action. BUT, CHASE TOOK OUR INFO, RAN OUR CREDIT AND DENIED THE LOAN! So, as far as Im concerned, we applied for a mortgage loan, and we were denied. 
Moreover, I received a letter from Chase informing me and my wife, about what credit scores mean and how scoring works. Essentially, Chase is denying we applied for a mortgage loan. 
Please note the branch rep who directed us to apply online was no help. We contacted him before applying to ask a few questions and he did not return our calls. Instead, he sent an email directing us to apply online. Only after this incident, and after my wife went to the branch asking why were declined, did he contact us to explain that Chase is not doing cash-out loans for 2-4 family home. And he suggested I can apply for and FHA loan at 5.25 % which is 2 % above the regular rates ; because to quote him " it's guaranteed by the federal government '' in case of default. What non-sense is that about? Trying to steer me to a higher cost loan? 
The Federal Reserve Bank reduced the prime rate so that Banks can make loans and stimulate the economy. However, Chase appears to be doing the contrary. 

So, Id like to know if Chase is legally allowed to deny an application for a mortgage loan on the basis of the COVID-19 pandemic. Because, if they are NOT allowed, then I would like to formally file a complaint against Chase because I feel they may be discriminating against us due to our age or engaging in redlining.

Company response to consumer: Closed with explanation