Consumer complaint received 2023-03-02
Company: UNITED SERVICES AUTOMOBILE ASSOCIATION
State: MO
Product: Mortgage
Sub-product: VA mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage

Complaint:
XXXX XXXX ( XXXX # XXXX ), the loan officer assigned to my mortgage application, based on her incorrect understanding of VA regulations, deliberately falsified income information on my mortgage application before passing it to underwriting resulting in an unjustified denial and increased personal cost. 

Background : My wife and I applied for a VA Loan using my VA entitlement. My wife is also a veteran, but her status is immaterial to this instance as her entitlement is untouched. I am an engineer making roughly {$45000.00} annually and she is a XXXX  making roughly {$54000.00} annually. We also receive VA XXXX of roughly {$3300.00} monthly between us. Total household income is approximately {$10000.00} monthly, after taxes. Our outstanding monthly debts total less than $ 2500 monthly and include an existing six-year-old mortgage on a house in XXXX, TX paid at {$1000.00} monthly, including taxes and insurance, of which I am the sole owner. 

I recently accepted a position in XXXX  XXXX, Missouri and relocated to temporary lodging in that area in XX/XX/XXXX while I searched for a suitable home for our family. My wife remained in Texas at her current position due to contractual requirements and family preference. Our intent was to vacate and sell the Texas home during spring and summer of XXXX, generally the peak hiring season for teachers. While exact salaries would change slightly, there was never any intention for my wife to cease working and her marketability and income earning potential are both strong enough to lead a reasonable person to believe she would maintain employment. We decided to apply for a mortgage of roughly {$420000.00}. 

USAA claims to be unable to provide the exact information input on the mortgage application or what was eventually submitted to underwriting. However, the denial letter clearly states that the loan was denied for two reasons : excessive obligations in relation to income and temporary or irregular employment. 

Further investigation revealed that the information received by underwriting did not accurately reflect the realties of the situation, and instead relied on an incorrect and incomplete understanding of the rules and regulations set out by the VA. 

Issue # 1 : Our application was made as a VA joint loan despite not meeting the criteria for such a term. VA Pamphlet 26-7, Chapter 7, Section 1 lays out the applicability of joint loan considerations. Part ( a ) of that section specifically states the following : A loan involving a Veteran and his or her spouse will not be treated as a joint loan if the spouse is : not a veteran, or a veteran who will not be using his or her entitlement. As stated above, my wife did not use her entitlement meaning this loan can not be treated as a joint loan. 

Issue # 2 : My wifes primary residence should never have been considered. The occupancy requirements detailed in VA Pamphlet 26-7, Chapter 3, Section 5 apply only to those veterans whose entitlements are usedthats me. The cause for consideration was the treatment of the loan as a joint loan, contrary to established procedures, as spelled out clearly in the email between XXXX XXXX and myself. 

Issue # 3 : My wifes income was incorrectly listed as {$1.00} annually. This was done to capture that my wife would not be able to continue her employment in Texas and so her income will not continue. As stated above, this was never the case. VA Pamphlet 26-7, Chapter 4, Section 2, contains instructions on how to treat income, including special considerations for consideration of spousal income and unstable or truncated income. To be clear, there is no interpretation of these regulations in which a gainfully employed spouse should have their income discounted entirely on the basis of geographic position. Even if other negative factors such as employment length play a role, there are procedures for proration of income. While XXXX could have listed the correct income amounts and detailed the extenuating circumstances, she chose instead to list the {$1.00} figure. This is especially problematic because it reflects a loan officer exercising judgement apparently reserved for underwriting. 

During our discussions, I raised issue with the XXXX methodology, and cited the guidance in VA Pamphlet 26-7 several times. XXXX was adamant in her perspective despite ample evidence to the contrary. XXXX insisted that this was a VA Joint Loan. XXXX applied a fictitious primary residency requirement to my wife. XXXX took it upon herself to make a determination of suitability about my wife 's income. 

While I understand there was no guarantee of success with the mortgage application, Im fairly confident it would have been acceptable had the correct information been includedseveral other lenders raised no issue at all with our situation, and we have since been granted the mortgage. 

Instead, there was substantial time wasted in dealing with a loan officer who refused to accurately present our financial situation. The application was subsequently denied, and by the time I was able to apply with a more capable institution, interest rates had increased by XXXX basis points. This debacle directly caused an increased financial burden for my family.

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