Consumer complaint received 2021-01-08
Company: NAVY FEDERAL CREDIT UNION
State: VA
Product: Vehicle loan or lease
Sub-product: Loan
Issue: Managing the loan or lease
Sub-issue: Billing problem

Complaint:
On XX/XX/2020, I applied and was approved for a auto refinance loan from Navy Federal Credit Union in the amount of {$22000.00}. Rather than disburse the funds to me or my current auto loan provider ( XXXX XXXX ) directly, the requirements of the loan required that I pick up the check in person, endorse it, and mail it to my loan provider. I adhered to those requirements and sent the check to XXXX XXXX via first class mail on XX/XX/2020. 

On XX/XX/2020, I noticed that the funds had not posted to my current loan account and so contacted XXXX XXXX. I was informed by a XXXX XXXX representative that they had not received the check. That same day, I called a Navy Federal representative, apprised her of the situation, and requested that the check be canceled to avoid it falling into the wrong hands and being cashed by an entity other than XXXX XXXX. The Navy Federal representative indicated that the check would be canceled an that I had two options going forward : ( 1 ) cancel the loan, or ( 2 ) cancel the first check and have a new check in the same reissued In order to move forward with the loan, I initially selected option 2. 

On XX/XX/XXXX, I visited Navy Federal to pick up the reissued check. There, I was informed that in order to do so, I would need to sign an indemnity agreement with the following language : " I understand that if the item ( s ) [ the first check ] is/are later presented for payment and Navy Federal pays the item ( s ), I am obliged to refund the payment to Navy Federal. '' Because I was unwilling to indemnify Navy Federal for taking action that I have explicitly asked Navy Federal not take ( i.e., paying a check I have asked to be canceled ), I declined to take the reissued check and told the in-person representative that I would rather cancel the loan. I was told that I would need to contact Navy Fed by phone to do so. That same day, I contacted Navy Federal by phone to cancel the loan and was told that in order to cancel the loan, I would need to sign the same indemnity agreement, holding Navy Federal harmless for paying a check I have asked canceled. 

Currently, my account shows that I owe Navy Federal {$22000.00}, with the first payment due XX/XX/XXXX, despite the fact that Navy Federal has yet to distribute the funds to me or my current loan provider. Navy Federal has also reported this debt to credit agencies, negatively impacting my debt-to-income ratio as credit agencies now report that I have two outstanding auto loans in excess of {$22000.00}. 

Today XXXX XX/XX/XXXX ), I contacted Navy Federal to resolve the issue. The representative confirmed that a " stop payment '' order has been placed on the check, but insists that I sign the indemnity agreement to cancel the loan. ( If a stop payment is actually on the check, why must I agree to refund Navy Federal if they cash the check regardless? ) The representative I spoke to insisted that unless I sign the onerous indemnity agreement, I am bound by the terms of the loan, regardless of whether the funds are distributed or not. Navy Federal refuses to cancel the loan or redact the credit agency reporting ( which is actively harming credit score ).

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