Consumer complaint received 2023-05-26
Company: NAVY FEDERAL CREDIT UNION
State: TX
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage

Complaint:
Background : On XX/XX/XXXX, I submitted an appeals request regarding the outcome of Mortgage Loan Application # XXXX which was the second mortgage application I submitted to Navy Federal Credit Union in less than a thirty ( 30 ) day window. This second mortgage application was denied due to a high debt-to-income ratio exceeding 70 % as well as one of my primary income sources was not considered for the application. Below I will outline and describe why Loan Application # XXXX should have been reopened, reworked, and reconsidered for approval. 

On XX/XX/XXXX, I submitted a mortgage application by phone at Navy Federal Credit Union. The Loan application number is XXXX. My loan officer was XXXX XXXX. XXXX contacted me a few days after I submitted my application to verify some information on my loan application and to remind me to upload my income-driven repayment plan for my student loans. After submitting all documents for processing and waiting a few days for the underwriting review of this first mortgage loan application, I was advised that underwriting could not approve my loan. The reason was that my debt-to-income ratio was one ( 1 ) percentage point higher than what the underwriters accept based on the loan amount requested and my credit score. Any and all documents I submitted prior to the underwriting review were accepted. 

On Thursday, XX/XX/XXXX, I reapplied for a mortgage loan and completed the application by phone at Navy Federal Credit Union. This time the documents that were listed on the online portal for my application were a Purchase Agreement ( I did not submit a purchase agreement because I did not have home chosen for purchase yet ), Paycheck stubs for the past month, end-of-year pay statement for my primary source of income, and W2s for the past two years ( I submitted W2s for XXXX and XXXX ) for both of my jobs ). I never received an initial phone call or contact with a loan officer with this application. 

On XX/XX/XXXX, I emailed XXXX ( the loan officer assigned in my online Homesquad page ) and received an auto-generated out-of-office reply stating that XXXX is out of the office until XX/XX/XXXX. I emailed XXXX because I submitted my second mortgage application and found it to be very strange that no loan officer had followed up with me at all regarding this mortgage application. A representative by the name of XXXX followed up with me over email as she is XXXX 's backup. XXXX called me shortly after her email to inform me that my second application ( loan # XXXX ) was denied due to the debt-to-income ratio exceeding 70 % ( excessive debt obligations ) as well as informed me that one of my income sources was not considered because I have not been employed at the company for two ( 2 ) years. 

Here is why my application should have been reconsidered and reworked : 1. I never received an initial call from a loan officer to verify my information or documentation needed for processing 2. My second application mirrors my first application except with the second application, I requested a significantly lower mortgage loan amount. Therefore given that none of my provided income was changed, I should have qualified for a mortgage on this second application ( a lower loan amount requested would certainly lower the overall DTI ).

3. All my income from application number 1 should mirror the income information on application number 2 as my income information is still the same and I still have the same employers and paid at the same rate.

4. I have been with my primary employer ( in banking ) for over six months, but have been continuously employed in banking and financial services in operational risk and compliance for well over two years ... so it should not matter that I got a new job and promotion with better salary at another place of employment as far as the second application is concerned. The two W2s provided will show income and that I have been continuously employed in the same industries and capacity for well over two ( 2 ) W2 periods.

5. My income-driven repayment plan obviously was not considered in the second application, which further caused the calculation for my debt-to-income ratio to not be completely accurate ( over 70 % on the second application only ) based on the information I provided. 
6. I have been employed with my secondary employer since XX/XX/XXXX and have my XXXX W2s to prove it. 

I was advised that on XX/XX/XXXX, after multiple follow ups with Navy Federal over email that the decision on my second application remained the same and that Navy Federal could not extend credit. 

Based on the above information, I believe Navy Federal did not address my concerns in my appeal regarding the outcome of of the decision to not extend credit on the second application. Navy Federal Credit Union failed to include my documented income-based student loan repayment as well as disregarded my income after I further proved that I could afford the mortgage payments based on my salary and based on my continuous employment in banking and financial services for over six ( 6 ) years.

The lack of diligence and skewed practices towards minorities like myself is a major reason why persons like myself in this situation can not create generational wealth through home ownership.

Additionally, my first mortgage application took 30 minutes or less to co
mplete by phone with a Navy Federal customer service agent around XX/XX/XXXX. My second mortgage application on XX/XX/XXXX, took longer than 2.5 ( two and a half ) hours to complete because the Navy Federal customer service agent kept trying to force me into stating that I am an XXXX American applicant. I identify as a mixed-race person and this should not have been an issue based on completing the application which caused the phone application to be longer and more strenuous and stressful than needed. I feel that because I identify as a mixed-race minority that my second application was not processed fairly. And to this day, I have never received any letter stating the reasons for the denial for either application in writing from Navy Federal Credit Union.

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