Consumer complaint received 2020-12-21
Company: U.S. BANCORP
State: FL
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage

Complaint:
My wife and I were looking to refinance a home we owned. We were told by US Bank verbally that the reason why they were denying our loan was due to the fact that we filed a fraud lawsuit against a financial advisor. 

However, we received a " Statement of Credit Denial, Termination or Change '', that stated the reason for our denial was because of : Value or type of collateral not sufficient Collection action or judgment. 

We fully understand if this financial institution 's underwriting guidelines prevents us from receiving a loan, due to litigation concerns. However, the denial of credit explanation letter is different than the verbal explanation we received, which is an issue as we need accurate documentation due to the pending lawsuit. 

Being our loan to value on the home was in the 65 % range ( significantly lower than the lending program guidelines ), we were confused as to why there was a collateral issue. 

The second reason for denial was another mystery. The letter states we were denied due to collection action or judgment. However, neither of us have collection or judgments against us and the denial letters state that my credit score was XXXX and my wife 's score was XXXX. 

We called to discuss the discrepancy with US Bank. The original person that told us they were denying our application due to the lawsuit XXXX XXXX XXXX, was just as confused as we were. 

XXXX called back the next business day and told us that US Bank stated the collateral issue had to do with a piece of siding that was blown off the house and notated in the appraisal. Despite never being notified by US Bank that the siding was an issue, it was fixed as soon as it was discovered, long before we were told our loan was to be denied due to the lawsuit. 

XXXX went on to tell us that the credit denial had to do with XXXX  checking the collection action or judgment box and that was all the information she could provide. 

We were told that once the denial letters went out and the files closed, there was no way to update the letters. 

It is my understanding that Truth in Lending rules requires factually accurate denial letters to be sent out to mortgage applicants, which did not happen here. 

6500 - Consumer Financial Protection Bureau Appendix C to Part 1002Sample Notification Forms 4. If the reasons listed on the forms are not the factors actually used, a creditor will not satisfy the notice requirement by simply checking the closest identifiable factor listed. For example, some creditors consider only references from banks or other depository institutions and disregard finance company references altogether ; their statement of reasons should disclose " insufficient bank references, '' not " insufficient credit references. '' Similarly, a creditor that considers bank references and other credit references as distinct factors should treat the two factors separately and disclose them as appropriate. The creditor should either add such other factors to the form or check " other '' and include the appropriate explanation. 

It seems like someone may have made a judgment call not to provide us the mortgage based on us filing a lawsuit against a 3rd party, but then used common templated response reasons to justify their reason for denying the loan. 

All we wanted was a factually accurate denial letter, but we are now wondering if US Bank did not break other lending laws when denying our application, which caused them to makeup alternative reasons for the denial.

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with monetary relief