Consumer complaint received 2021-10-18
Product: Mortgage — Conventional home mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage — 
Company: PENTAGON FEDERAL CREDIT UNION (VA)

Complaint : PenFed Credit Union required me to get an unnecessary house appraisal during my mortgage refinancing application process. ( This process began on XX/XX/2021. ) Details : PenFed denied me a mortgage loan of {$310000.00} based on insufficient income ( see the attached denial letter dated XX/XX/2021 ). Specifically, they said my debt-to-income ( DTI ) ratio was too high. 

During the initial stage of the mortgage loan process, the PenFed loan officer collected all the information needed to calculate the DTI ratio and could have determined whether I qualified for a mortgage. But instead, the process proceeded to the underwriting stage during which I was required to get a house appraisal that cost me {$580.00}. Then I was denied the loan. 

PenFed could have determined the DTI was deficient at the beginning of the underwriting stage and stopped the application process. At that point, an appraisal would not have been needed because the house value would have been moot ( the DTI ratio does not even have any information from the appraisal ). Only if the DTI was sufficient would they have needed me to get an appraisal. 

PenFed 's response : When I asked PenFed to reimburse me for the unnecessary appraisal, they refused ( see attached document with the relevant email messages ). They said their procedure at the underwriting stage is to collect income and appraisal information simultaneously, then proceed with evaluating this information.

Conclusion : PenFed should not have required me to get an appraisal at the beginning of the underwriting stage. Instead, they should have first calculated my DTI based on the information from the loan officer and any other income information they may have retrieved. Then my deficient DTI ratio would have been apparent and the application process should have stopped before the appraisal request step. ( The appraisal took less than a week, so I dont think delaying this is much of a burden to their procedures ). Because the appraisal was not necessary, PenFed should reimburse me {$580.00}. 

Bigger Picture : It seems odd that I cant qualify for a {$310000.00} mortgage on a {$1.00} XXXX house even though I have a net worth of about {$4.00} XXXX and an excellent credit score. My assets include {$2.00} XXXX in retirement accounts ( Thrift Savings Plan and Roth IRA ) that are fully accessible for withdrawals, although I'm not currently taking withdrawals because I dont need to. PenFed said XXXX XXXX guidelines do not allow these accounts to be reflected in the DTI ratio if there are no periodic withdrawals. If this is the case, I believe XXXX XXXX guidelines have an age discrimination effect against retirees ( who obviously tend to be older people ) if they dont recognize accessible retirement accounts.

Im not sure PenFeds claim about XXXX XXXX guidelines is true. This website ( XXXX XXXX XXXX ) says XXXX XXXX can compute an income stream from assets that are not being used. 

Final note : I have since applied for a mortgage with another credit union. Unfortunately, they would not accept the appraisal I already have. But at least they first evaluated my DTI before requiring a house appraisal. They follow XXXX XXXX guidelines that do recognize unaccessed retirement accounts. My loan was approved.