Consumer complaint received 2019-05-15
Company: NAVY FEDERAL CREDIT UNION
State: TN
Product: Mortgage
Sub-product: VA mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage

Complaint:
We recently applied for a Department of Veteran Affairs ( VA ) Cash-Out refinance mortgage loan with Navy Federal Credit Union ( NFCU ), Application Loan # XXXX, NFCU ID # XXXX. We chose Navy Federal because of your very competitive rates and reputation with military families. However, our application was very poorly handled. We incurred wasted time, money and were overall very frustrated with the inconsistent or incorrect guidance that we received. Furthermore, we received a credit denial letter after we had withdrawn our application. 

We submitted our initial application in mid-XX/XX/XXXX with the expectation of mid-XX/XX/XXXX approval/funding. We had purchased the home using a {$250000.00} Family Loan Agreement dated XX/XX/XXXX. Our assigned Navy Federal representative, Ms. XXXX XXXX, advised us that we met the requirement for the loan to be in place for 180 days after the title transfer ( XX/XX/XXXX ) in order to be refinanced by the VA. In early XX/XX/XXXX we were advised by Ms. XXXX that a lien was required to be filed with the local county. Per Tennessee XXXX County requirements, the document was signed and notarized on XX/XX/XXXX. After completing this request, we paid {$550.00} in mid-March for the requested assessment and termite inspection. In late XX/XX/XXXX, just a few weeks before our closing date ( XX/XX/XXXX ), we were informed by Ms. XXXX that the underwriters viewed our loan as commencing when we filed it with XXXX County. Therefore, they returned the loan because our existing personal family loan did not meet the VA seasoning requirement. No further details, explanation or apologies were given. 

Through our phone calls to the VA and researching the VA circular policy updates ( specifically Circular 26-18-30 ), we ascertained that a VA Cash-Out refinance loan requires the existing loan to have 210 days of seasoning ( vice 180 days as stated by Ms. XXXX ), commencing with the first payment on the existing loan. The regional VA office and another lender we contacted confirmed this understanding and advised us that our seasoning period began with the first payment on the original loan in XX/XX/XXXX. This differed from the Navy Federal interpretation that the seasoning started with the first payment on the amended loan in XX/XX/XXXX. Although I disagree with the Navy Federal interpretation, I understand that this is the lenders prerogative. In either case, the seasoning period would extend our closing date months beyond the original mid-XX/XX/XXXX closing date given. We were given the option to convert our application to a traditional loan, but declined in favor of applying for a VA loan at a later date or paying of the personal family loan with our savings. We therefore elected to withdraw our application and communicated this to our representative, Ms. XXXX. 

In light of the withdrawal, we were shocked to receive, on XX/XX/XXXX, a Statement of Credit Denial, Termination or Change from Navy Federal with the description of action taken as credit denial. The cited principal reasons were Value or Type of Collateral not Sufficient and NFCU does not grant credit under the terms requested. 

We have several serious concerns about how this loan application was handled : Since the required 210-day seasoning period is very clearly defined in VA Circular 26-18-30, we should have been made aware of that when we applied for the loan. NFCU advertises that Navy Federal Credit Union 's staff of trained mortgage professionals is here every step of the way to guide you through the ( mortgage ) process. The fact that the loan application was continued for nearly 45 days with no chance of approval by the agreed upon closing date is clearly a grave oversight and shows a lack of expertise. 
The Statement of Credit Denial we received on XX/XX/XXXX is not accurate. Upon fully grasping the situation due to my own independent research, we requested that the loan application be withdrawn. A credit denial was never discussed with us and was not required since we withdrew our application. 
The fact that our loan application was initiated and continued due to NFCUs poor counsel and gross ignorance of clearly documented VA policy incurred damages to us. 
We paid {$550.00} for a home assessment and termite inspection the week prior to withdrawing the loan because we were not made aware of the 210 day seasoning that would not even start until XX/XX/XXXX, per Navy Federals interpretation. If we decide to re-apply for a VA Cash-Out loan this fall, we will have to pay for a new assessment and termite inspection. 
We paid {$290.00} to XXXX County to register our personal family loan and {$15.00} to notarize it. If we decide to pay off our personal family loan with our savings, this money was wasted. 
The Statement of Credit Denial may be viewed as adverse information on our credit history and would impact our ability to obtain financing or receive the most competitive rates. In speaking with Ms. XXXX XXXX after receiving the statement, she referred to it as an adverse letter. 
Expecting a mid XX/XX/XXXX loan approval, we delayed renovations to our home that are important to the livability of this house. 
We spent many fruitless hours completing our application forms and gathering requested documents. 

We have addressed the credit denial issue with our loan representative Ms. XXXX XXXX on Friday XX/XX/XXXX at XXXX and she said she would forward the issue to her supervisor Ms. XXXX XXXX. We were promised that we would receive an answer within 24 hours. We never received a response. 

On XX/XX/XXXX, we submitted a letter to the President and CEO of Navy Federal Credit Union explaining the above. We requested the following remediation by XX/XX/XXXX : 1. Navy Federal Credit Union rescind the Statement of Credit Denial, Termination and Change for XXXX XXXX XXXX XXXX and XXXX XXXX XXXX 2. Navy Federal Credit Union send a confirmation letter that clearly states that the previously sent Statement of Credit Denial was in error and is withdrawn. 
3. Navy Federal Credit Union send a letter of apology to us ( XXXX and XXXX XXXX ) and our personal family lender ( Mr. XXXX XXXX ) for the extended waste of time and resources in pursuing this loan. 

We received a confirmation letter from Navy Federal that the letter was received, but nothing else in the past 30 Thank you for your time and attention in rectifying these problems.

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