Consumer complaint received 2020-09-24
Product: Student loan — Private student loan
Issue: Getting a loan — Denied loan
Company: Splash Financial, Inc. (MA)

I found a company called Splash Financial who offers student loan refinancing. I submitted my application for pre-approval where they asked me for my gross income, defined as base income before tax. I submitted a conservative estimate of my gross income based on my current wages.With a soft credit pull, I was pre-approved for my loan at 3.79 % with a 10 year term for a roughly {$91000.00} loan. They requested copies of my current pay stubs as well as my last 2 years of W2s. On XX/XX/XXXX, I was notified that my loan was approved. When I attempted to complete the rest of my application, they approved me for a 15 year term with an interest rate of 4.32 %. I called and questioned why there was a discrepancy and they informed me that they could not verify my stated gross income of {$67000.00}. I have received bonuses and overtime income consistently for the years XXXX, XXXX and XXXX which increase my income. Based on wages already earned for XXXX and adding in solely base pay for the remainder of the year, my calculated gross wages were over {$67000.00}. The average of the last two years ( XXXX ) of gross wages was also over {$67000.00}. I was told that the only way to verify overtime/bonus to count towards income was to look at gross wages for the last 2 years and average them. Despite the fact that they only asked for gross wages in their application, the manager that I spoke with ( who dealt with the head of underwriting ) said that they use boxes XXXX and XXXX of W2 income to verify income, which is not considered gross wages by any normal standard. Boxes XXXX and XXXX are for taxable wages for XXXX  XXXX  and XXXX respectively and are calculated by taking actual gross wages and deducting tax differed benefits such as health insurance, so no longer considered gross wages but rather, taxable income which are distinctly different. Following HMDA reporting, since my original loan was met with a counter offer that I did not accept, they have technically denied my original loan. The pre-approval application was misleading and deceptive because they specifically ask for gross income while using something other than gross income in their underwriting process which makes it not reasonable to avoid the denial of the loan application which could constitute a UDAAP violation. When pushed, the manager that I spoke to did agree that I am correct in their application being misleading. I informed her that I would not have continued with the approval process which required a hard credit inquiry after the pre-approval with a soft credit inquiry had I known that I wouldn't be approved and my credit score has since dropped causing me to look less favorable to other lenders if I chose to apply elsewhere. Based on that, the manager has since removed the hard credit inquiry from my credit report. I have refinanced my student loans roughly 5 times in the last 3 years since graduating from college and have never had a problem with any of my other applications or them verifying my stated income so I would say their underwriting standards are not common in the industry. I work in lending/underwriting and I have never seen the underwriting standards/guidelines both in my own workplace or in any other lending institution who deals in consumer lending. I believe that their misrepresentation of requested information would lead to others being in the same spot as me where they are lured in with a pre-approval for a low interest rate loan only to be denied and offered a loan with a higher interest rate and term causing them to spend significantly more over the life of than loan. I am lucky enough to understand the financial implications of higher interest rates and longer terms but my level of financial education is not commonplace and this company could be unintentionally causing financial harm to those who accept the higher rate loan they are counter-offered.