Consumer complaint received 2020-02-19
Company: NAVY FEDERAL CREDIT UNION
State: VA
Product: Mortgage
Sub-product: Home equity loan or line of credit (HELOC)
Issue: Applying for a mortgage or refinancing an existing mortgage

Complaint:
During XX/XX/2020, I applied for a home equity loan with Navy Federal Credit Union ( NFCU ). 
By way of background, on reviewing my credit profile, I discovered that although my XXXX and XXXX scores were good - XXXX and XXXX respectively. I also learned that there are two general factors that are negatively affecting these scores : ( 1 ) high credit card capacity utilization of 67 % and ( 2 )  approximately {$710.00} of medical collection accounts. I had no knowledge of the medical collections. 
In order to resolve these two issues, I discussed several loan restructure options with NFCUs loan representative. We agreed that the most sensible resolution would be to negotiate a home equity line of credit ( HELOC ) with three initial draws pay-off the open NFCU mortgage loans and the NFCU credit card and include an additional unused line of credit for possible future major home repairs. We also discussed the relatively small medical collection accounts that I was actively disputing them and had sufficient funds on deposit to fully and promptly settle any open, proven debts. 
The result of this restructure would solve both issues and result in a substantial improvement of my credit score by at least 50 points. My current XXXX score is XXXX very respectable. 
The NFCU loan representative took my complete loan application, pulled my credit report and score and rendered a rate quote, subject to verification as he explained of Prime + 1.75. We  agreed that my profile was strong - long-term ( 30-year ) NFCU member with an outstanding current NFCU loan record, good credit score despite the negative aspects and a solid plan of restructure. Further, the aggregate LTV is calculated to be around 50 % - very positive equity position for NFCU. 
Shortly thereafter, I received an Adverse Action Notice citing the medical collection accounts ( delinquency ) and high credit card utilization and that NFCU does not grant credit on the terms requested. I challenged this by letter to NFCUs CEO, XXXX XXXX stating that the reasons for the loan denial were considered as the basis of applying for the loan in the first place and that this was known to and considered by the loan representative at the time of conditional approval and rate quote. Further, if HELOCs were no longer available as the notice provided, I asked why an application for such a loan was accepted. NFCU later confirmed that the HELOC product was available ( contradicting the Adverse Action Notice ) NFCU responded that the reason for the loan denial was a result of the credit score. That was not referenced in the Adverse Action Notice. I asked for a full and responsive explanation which has not been provided, except that I have received conflicting explanations all non-responsive. Among these explanations was the previously undisclosed and the ACTUAL reason for the denial failed FICO. When I demonstrated that the FICO score reported on NFCUs site qualified me, I was told that they relied on a different score. Then I was told that the original loan request was incorrectly set up in their system and this may have influenced the result, yet NFCU refused to make the correction. Later, NFCU invited me to contact them to discuss options that they apparently neglected to offer before ; however, then later advised that no such exceptions were available. Regarding the rate quote referenced above, I never received an a plausible explanation for the disparity between offering a quote on an otherwise declined loan application or how the loan representative used my credit profile to offer a product that was destined for declination rather than a product that would have qualified AND that I was encouraged to pursue the loan facility that was destined for declination rather than the alternative that would have been approved. 
NFCU did, however, admit that they failed to properly disclose the nature of their declination or, in their words, their lack of transparency I am not interested in any loan accommodation from NFCU, as the primary financial institution recommended by my brother-in-law offered me a loan facility consistent with my desires and did so within a couple days. What I do seek is an examination of NFCUs lending practices as applicable to my case in order to determine violation of applicable regulations. I understand that you are unable to advocate for me personally. 
Attached is a copy of my letter dated XX/XX/2020 to NFCUs CEO that gave rise to this issue. Given NFCUs conduct to me, I expect that any response to you may very well not be fully accurate or responsive. As such, I ask that I be made aware of how they respond so that I can offer a documented rebuttal.

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