Consumer complaint received 2023-11-17
Company: NAVY FEDERAL CREDIT UNION
State: TX
Product: Mortgage
Sub-product: VA mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage
Sub-issue: Changes in loan terms during the application process

Complaint:
We applied for a NFCU VA mortgage on XX/XX/XXXX after locking in a mortgage rate of 6.125 %. I had shopped with 5 other lenders and NFCU was the cheapest by a full point so we were happy. We provided everything requested by our loan officer within 24 hours and he told us he had zero concerns about financing and we would be approved. We both have XXXX credit scores, have been XXXX XXXX for 20 years, and our tax return showed an AGI of around {$270000.00}. Additionally we have zero debt and are outstanding credit risks in absolutely every way. 
On XX/XX/XXXX, after hours on a Friday night, we received an automated denial email. We were unable to speak to anyone until Monday, when we were told that NFCU had to make a decision within 30 days and the underwriters needed to go home on Friday and since they didn't have everything they may have needed that they issued a denial. I had last spoken to our loan XXXX on XX/XX/XXXX and he told us he had everything they needed so far and if the underwriters needed anything he would let us know. We were shocked at the denial. 
We immediately asked for an appeal, then we were told that the underwriters said we showed a monthly loss of {$25000.00}. This is ridiculous, our tax returns clearly show this is not true. The underwriters were deducting depreciation and showing it as a loss. I sent them the language from the XXXX XXXX  for lenders that stated " Depreciation shall be added back into income '' and " Lenders are encouraged ot make VA loans to all qualified Veterans who apply ... .Underwriters must apply reasonable judgment and flexibility in administering this important Veteran 's benefit. '' NFCU then sent me a screenshot of my supposed loan application. I immediately noticed several errors, including incorrect phone number, incorrect address, incorrect LLC dates, {$25000.00} loss, etc. I let them know I had never seen this before and I didn't know who filled that out. The next day I logged into the NFCU portal to look at the application again, and it was different from the screenshot NFCU had sent me. Clearly someone at NFCU was modifying our loan application without our knowledge or consent. I have attached screenshots of both versions so you can see this for yourself. 

At this point we were {$10000.00} into sunk funds paying for appraisals, non-refundable earnest money, etc. so we offered to put 20 % down on the VA loan. While it wasn't our first choice, it would retain the 6.125 % interest rate. NFCU denied that, but offered us a loan for 5 % down at 8.250 % or 20 % down at 7.375 %.

When we finally received our official denial letter it stated that we had an incomplete credit application ( we had NEVER been told this, in fact we were told all along that they would let us know if they needed anything else. I believe they stated the application was " incomplete '' because they ran out of time with the 30 days ) ; and that we had insufficient income for the amount of credit requested. This is ridiculous. I make {$150000.00} a year and my husband makes {$180000.00} a year. They had our taxes showing AGI of {$270000.00}. We asked for a loan of around {$910000.00} and even offered to put 20 % down which would take it to around {$730000.00}. 

It is ludicrous that NFCU denied us for a VA loan with 20 % down but offered us a conventional at 5 % down. The only difference is the interest rate. We ended up not getting the house, and losing the {$10000.00} due to NFCU.

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